Zynga must pay IBM nearly $45 million in damages after a jury ruled that popular games in its FarmVille series, as well as individual hits like Harry Potter: Puzzles and Spells, infringed on two early IBM patents.
In an SEC filing, Zynga reassured investors that the patents at issue have expired, meaning that Zynga will not have to modify or stop operating any of the affected games. However, substantial damages owed will likely have financial implications for Zynga’s parent company, Take-Two Interactive Software, analysts said, unless Zynga successfully overturns the verdict. A Take-Two spokesperson stated, “We are disappointed in the verdict; however, believe we will prevail on appeal.”
For IBM, the win follows a decade of unsuccessful attempts to stop what it claimed was Zynga’s willful infringement of its patents. IBM had first alerted Zynga to the alleged infringement in 2014, detailing how its games utilized patented technology from the 1980s that originated from IBM’s Prodigy.
Instead of negotiating, Zynga allegedly delayed discussions and postponed meetings for years. During this period, IBM alleged that Zynga expanded its infringing activities and openly admitted that litigation was the only solution. This left IBM “no choice but to seek judicial assistance.”
IBM argued that its patent, initially used to launch Prodigy, remains fundamental to the efficient communication of internet content. The jury agreed that Zynga infringed on this patent and another designed to improve the performance of internet apps by reducing network communication delays.
Zynga tried to contest the validity of the patents, including claiming that the 1980s patent never should have been issued, but these arguments were dismissed. IBM’s proactive defense of its early patents has previously led to settlements with companies like Priceline and Twitter, while other companies, like Chewy, successfully defended against similar claims.
Despite this setback, Zynga’s games remain accessible, and the company plans to continue its legal battle. According to Take-Two’s SEC filing, “Zynga believes this result is not supported by the facts and the law and intends to seek to overturn the verdict and reduce or eliminate the damages award through post-trial motions and appeal.” Further coverage of this case can be found on Ars Technica.