Zynga’s IPO lawsuit dismissed

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The U.S. District Court of San Francisco has dismissed a lawsuit against Zynga, which accused the company of misleading investors and inflating the value of its stock price before and after its 2011 IPO.

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Exclusive: Zynga’s Alan Patmore case gets more complicated with Kixeye cross-complaint

Zynga’s lawsuit against Alan Patmore just had another legal layer added to it: Kixeye’s legal team filed a cross-complaint against Zynga yesterday afternoon. Kixeye’s complaint alleges that Zynga’s lawsuit against Patmore is designed to “send a message to its employees about the consquences of leaving Zynga to work at Kixeye and to gain access to Kixeye’s confidential information and trade secrets.

Kixeye’s complaint says the company is looking to prevent Zynga from continuing to pursue legal action against Kixeye, keep the company from threatening or initiating litigation against employees from leaving Zynga to work at Kixeye, stop Zynga from interfering with Kixeye’s business relationships, force Zynga to notify employees of their rights to seek employment with competitors and to require Zynga to provide the court with quarterly sworn statements of compliance. Kixeye is also seeking restitution in legal fees and damages, to be determined by the court.

The cross-complaint highlights the fundamental differences between Zynga and Kixeye, primarily that Kixeye makes mid-core games for a smaller audience while Zynga develops large titles designed for maximum appeal to casual audiences. “Comparing Kixeye’s games to Zynga’s games is like comparing a Ducati racing motorcycle to a minivan. Both are motorized vehicles, but Ducati motorcycles, like Kixeye’s midcore games, appeal to a small but passionate group who are focused on quality and performance,” the complaint reads. “Zynga is more concerned with cranking out games that will fit the whole family without offending anyone.” (more…)

Zynga scores court victory in lawsuit against Alan Patmore

Zynga’s won the first round in its case against former studio GM Alan Patmore, allowing the suit to continue forward and granting further requests from the developer’s legal counsel.

Zynga filed the suit on Friday, when a judge granted a temporary restraining order that prevented Patmore from using, discussing or copying the info in the documents Zynga alleges he stole from his work computer before he left the company this summer. Patmore was also prevented from engaging in any activity that has anything to do with developing online games that would use Zynga’s trade secrets.

The judge presiding over the case also ordered more categories of relief in Zynga’s favor. Now, there will be an expedited deposition of Patmore (who wasn’t present in court today and was instead represented by an attorney) as well as forensic examinations of Patmore’s work and personal computers, iPhone and personal Dropbox account.

According to a statement by Zynga Deputy General Counsel Jay Monahan, “Patmore does not dispute that he took 763 files from Zynga, which contained confidential game designs from teams around the company, and that he transferred those files to his computer at Kixeye where he’s currently the VP of Product. We are pleased with the judge’s decision and will continue to work to protect the ideas and assets of our employees.”

You can read the full court document here.

Zynga suing Alan Patmore for alleged theft of trade secrets

Alan Patmore, who left Zynga in August, is being sued by his former employer. Zynga’s lawsuit alleges misappropriation of trade secrets and breach of contract.

Patmore joined Zynga in July 2011 and served as the company’s studio general manager; he left in August to become Kixeye’s new VP of Product. Zynga’s suit claims Patmore, on his last day at the company, took 760 documents from his office computer and backed them up online. These documents apparently offer insights into Zynga’s core game mechanics and monetization practices, which would allow a rival company like Kixeye to compete more effectively against Zynga. These documents Patmore allegedly took with him include unreleased game design documents, his entire email inbox, revenue projections and monetization plans.

On Friday, Zynga was granted a temporary restraining order, which prevented Patmore from using, discussing or copying the info in these documents. Likewise, Patmore is also prevented from engaging in any activity that has anything to do with developing online games that would use Zynga’s trade secrets, which will probably affect his new position at Kixeye.

Patmore’s defection to Kixeye was seen by many as a major coup for the hardcore social game studio, which has made no secret of its disdain for Zynga and even went so far as to bash the FarmVille developer in its latest recruitment ad. Kixeye itself is staying out of the lawsuit, but the company issued the following statement when we asked for a comment: “Kixeye has nothing to do with the suit. Unfortunately, this appears to be Zynga’s new employee retention strategy: Suing former employees to scare current employees into staying. They’ve clearly exhausted other options in their employee retention playbook.”

This isn’t the first time Zynga’s found itself engaged in a lawsuit like this. In 2009 the company claimed four former staffers had stolen trade secrets and were using them against Zynga at their new positions at Disney Playdom. The case was settled a year later for undisclosed terms, but Zynga told TechCrunch it was “extremely pleased” with the outcome.

We’ve reached out for a comment from Zynga and will update the story if we receive one.

Developing.

Update: 6waves, Spry Fox settle Triple Town cloning suit

6waves has chosen to settle the cloning lawsuit brought against it by Triple Town creator Spry Fox. The details of the settlement were not disclosed.

The news comes less than a month after a Seattle court denied 6waves’ request to dismiss the suit, stating the games were similar enough in both concept and visual presentation for Spry Fox’s case to proceed.

Game Politics has obtained a copy of the court filing dated Oct. 10, 2012. It reads:

The Court has been notified that the parties have reached a settlement in this matter. If the parties have not submitted a stipulation and proposed order of dismissal or a voluntary dismissal by 10/26/2012, the Court may enter its standard order of dismissal. Should additional time be needed to perfect settlement, the parties are directed to contact the in-court deputy.

Spry Fox originally filed suit against 6waves in January, alleging the publisher arranged to have a clone of Triple Town called Yeti Town created, despite the fact that the two companies had signed a non-disclosure agreement while they were negotiating a publishing agreement for the game on Facebook and mobile. Yeti Town was developed by Escalation Studios and published by 6waves in December 2011. In January 2012 6waves acquired the Dallas-based developer, further complicating the case.

In the original suit Spry Fox called for an injunction against Yeti Town, damages up to $100,000 and any profits 6waves earned from the game in an amount no less than $500,000. 6waves’ decision to settle the case out of court is unsurprising, not only because of the recent developments in the case — while allegations of cloning may be common in the game industry, jury trials are not. Most publishers choose to settle out of court.

UPDATE: Spry Fox co-founder David Edery responds with the following statement:

“As several news outlets have already discovered, we have amicably settled our lawsuit with 6waves. We are very happy with the outcome and glad to be finished with this matter. The full terms of the settlement are confidential, but I can disclose that as a consequence of the settlement, ownership of the Yeti Town IP has been transferred to Spry Fox. We look forward to putting 100% of our time and energy into our games, like the upcoming Leap Day, Steambirds 2 and Panda Poet mobile.”

Court denies 6waves’ petition to dismiss Spry Fox lawsuit

Gamasutra reports 6waves’ petition to dismiss the lawsuit brought against it by developer Spry Fox has been denied by a U.S. court, stating Spry Fox plausibly identified enough copying in their suit to file for relief.

Spry Fox filed the original lawsuit against 6waves in January over the iOS game Yeti Town, a clone of the former’s popular game Triple Town. In the suit, Spry Fox said it was seeking $100,000 in damages and any profits 6waves had received from Yeti Town (for an amount no less than $500,000). On its blog, Spry Fox explained that it was in publishing negotiations with 6waves over Triple Town, which gave the latter access to the game’s private beta months before it was released on iOS and that there were non-disclosure agreements in place.

When we talked to 6waves CEO Rex Ng in April, he told us his company had moved to have the case dismissed but declined to go into any detail. The court clearly disagreed, since the new filing says Triple Town and Yeti Town are undeniably similar and, “those similarities pervade the games, from their underlying concepts to their rules to the visual appearance of their characters and backgrounds.”

While the court’s filing mentions the similarities between the two games, it also notes there are differences between them but Spry Fox’s allegations satisfy both intrinsic and extrinsic tests.

The dismissal of 6waves’ petition comes at a particularly inopportune time for the developer, which was already having a rough week. Six days ago, the developer laid off six full-time staffers from its U.S. office, reducing its North American team to only seven full-time employees.

We’ve reached out to both Spry Fox and 6waves for statements, but have yet to receive responses.

Gametek sues major social games companies over virtual currency patent

A company called Gametek has filed lawsuits in the Southern District of California against Facebook, Zynga, Electronic Arts, and many other companies in the social games business, claiming infringement of its U.S. patent No. 7,076,445, which relates to virtual currency and goods.

The patent, which was filed on September 29, 2000 and issued July 11, 2006 credits Shawn D. Cartwright as the inventor of “a system and methods allowing the creation, integration, and transaction of advantages (e.g. desired environment features and/or elements).”

A page from patent 7,076,445

 

Paid Content reports that the patent was assigned to to Theados Corporation, which in turn transferred the patent to a California shell company called Gametek LLC which filed the complaint.

We traced Gametek LLC to Acacia Research Group LLC, which partners with “primarily individual inventors and small companies with limited resources to deal with unauthorized users but include some large companies wanting to generate revenues from their patented technologies.” We have reached out to Acaia but they have yet to respond.

From Acacia's website

The complaint names companies like 6wave, Lolaps, Big Viking Games as well as specific games like CityVille, Crime City, FarmVille, and Mafia Wars 2.

The complaint mainly asks that the Court issue a permanent injunction to stop the defendants from infringing on Gametek’s ‘445 patent and to entitle Gametek to 2.5 percent of all revenue backdated since they acquired the patent (2006), up until 2020.

Gametek claims it owns the patent for these types of transactions

A source on the side of the defendants told us that this is a huge threat to social gaming: “During early stages of game creation, social game companies run on a loss and at best a razor-thin profit.  A further percentage taken off from *all* social game developers – as this will inevitably lead to – would be crippling.”

Facebook updates payments terms to reflect addition of subscriptions, Credits phase out and more

Facebook has updated its payment terms for both users and developers following Tuesday’s announcement that it would support monthly subscription billing for apps and games on its platform and phase out Credits in favor of a user’s local currency.

Note that Facebook’s transition from Credits to local currency is not an indication that the social network is getting out of the payments business. In fact, it is expanding it to be more similar to Apple’s iTunes App Store model, rather than emphasizing virtual currency. This should give Facebook more flexibility as it looks to monetize apps beyond games.

Overall, the new policies are more comprehensive and better organized, which is important as the number of users and developers who use Facebook’s payments platform expands over the next year to include more non-game transactions.

Continue reading about the changes to user and developer terms on our sister site, Inside Facebook.

Zynga sues over PyramidVille’s name 15 months after launch

Despite being available on Facebook for over a year without incident, Zynga has filed suit against French developer Kobojo, alleging the name of Kobojo’s game PyramidVille infringes on Zynga’s intellectual property rights.

Zynga has a history of pursuing legal action against developers who add “Ville” to their games’ titles, but what makes this case surprising is the delay. PyramidVille launched in January 2011, and Zynga filed suit on May 7, 2012. Zynga tells us it felt legal action was necessary after Kojobo refused to change PyramidVille’s name.

Zynga may also feel the need to sue now because of how rapidly Kobojo has managed to expand the PyramidVille brand. The game was a modest hit when it first launched on Facebook, but Kobojo has since gotten the game onto smartphones and into Arabic-speaking regions. Published via Peak Games,  مدينة الأهرامات (“City of the Pyramids”) is the No. 2 Arabic game on Facebook, currently boasting 2.4 million monthly active users and 470,000 daily active users. The localized version is very close to passing the peak numbers posted by the original English language version of PyramidVille, which saw 2.9 million MAU and 610,000 DAU in June of last year. Zynga doesn’t have an Arabic language presence on the Facebook canvas.

While expanding PyramidVille, Kobojo has also expanded its business, securing $7.5 million round of funding last year that the developer used to open new studios in Berlin and Madrid. Kobojo also told us at that time that it would push out a slew of new titles for Facebook and mobile during 2012, with some light investment in developing HTML5 games.

Zynga’s main obstacle is that it doesn’t hold the trademark for the word “Ville.” The company is currently trying to secure the trademark, but the process is still working through the U.S. Patent and Trademark Office. Zynga filed for a trademark of the phrase “With Friends” in 2011, with similar results.

Historically, trademark lawsuits over words or phrases in a name have been difficult to win. Case are typically settled out of court or languish for years after being filed. For example, Zenimax recently settled its suit against Minecraft developer Mojang, which claimed the upcoming title Scrolls infringed on the trademark of The Elder Scrolls games. Active Network sued Electronic Arts over the latter’s Wii game Active 2.0, but no results were ever announced afterwards. Tim Langdell of Edge Games was notorious for suing anyone who used the word “Edge” in a title, but this strategy eventually backfired and several of his trademarks were canceled in 2010 after he sued Electronic Arts over Mirror’s Edge.

We’ve reached out to Kobojo for a comment, but haven’t received a reply at the time of writing.

RockYou settles with FTC over security flaw charges

Social developer RockYou has settled with the Federal Trade Commission over charges it failed to protect user privacy.

According to the FTC, although RockYou touted the strength of its site’s security, security flaws allowed hackers access the personal information of 32 million users. The FTC also brought charges against RockYou for violating the Children’s Online Privacy Protection Act Rule (COPPA Rule) by collecting personal information from roughly 179,000 children — many of whom were younger than 13-years-old — without their parents’ consent.

The settlement bars RockYou from violating the COPPA Rule in the future, requires the company to create and maintain a data security program and pay a $250,000 civil penalty. Additionally, RockYou will delete all information previously collected from users younger than 13-years-old and submit to security audits by independent auditors every other year for 20 years.

When we contacted RockYou about the settlement, CEO Lisa Marino responded with the following statement:

RockYou is pleased to reach a settlement and gratified to put this matter behind us. We appreciate the work the FTC has done in this process as they have been fair, reasonable and timely throughout. The events that led to this complaint occurred over two years ago and we have long since removed the features that led to this investigation. The focus of our business has evolved – we no longer operate applications such as those included in the complaint, and we are in full compliance with Facebook’s policies. 

The settlement continues RockYou’s efforts to turn itself around after a troubled year and a half. The developer laid off over half of its workforce in November 2011. At the time Marino told Inside Social Games, “we made a lot of mistakes in the last 12 months,” but also stated the company was expecting to be profitable for the first time this year.

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