The bad news is that the project might be dead. The good news is we can stop waiting for it.
According to All Games Beta citing a status page from the U.S. Patent and Trademark Office, SCEA has abandoned the trademark for The Last Guardian .
It seems Sony didn't file a Statement of Use or Extension Request after the "Notice of Allowance" was issued. Sony hasn't commented on the matter; the last official update is when designer Fumito Ueda said the game was moving forward "under completely new conditions." Most assumed that to mean the title had shifted development to PlayStation 4, after it was originally unveiled in 2009 for PS3.
I think it's feasible that the game will rise again with a new title. That's pretty much our only hope right now, it seems.
Related Game(s): The Last Guardian