Disney’s Playdom settles legal battle with Zynga

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Rival social video game makers Zynga and Playdom have settled a contentious, yearlong lawsuit over the alleged theft of trade secrets.

In September 2009, Zynga, maker of the wildly popular online FarmVille game, filed suit in Santa Clara against Playdom, alleging that four former employees had stolen trade secrets before leaving to join Playdom. Playdom, which has developed such online games as Mobsters and Sorority Life, was acquired in July by Walt Disney Co. for $563 million.


No terms of the settlement were disclosed. In a joint statement Tuesday, the two companies said they had reached a ‘confidential resolution of their litigation.’ Zynga general counsel Reggie Davis said, ‘The settlement reflects the very serious nature of the conduct involved, as reflected by the preliminary injunction, restraining orders and contempt order issued by the Santa Clara Superior Court.’

Zynga accused its former employees -- Raymond Holmes, David Rohrl, Martha Sapeta and Scott Siegel -- of taking sensitive documents when they left the company, including the ‘Zynga Playbook.’ In the lawsuit, Zynga described the book as the company’s ‘secret sauce’ and its contents as ‘invaluable to a competitor like Playdom.’

In March and again in August, the court granted injunctions in Zynga’s favor and forbade Playdom from using any of the allegedly swiped trade secrets. The court also sentenced Holmes to 10 days in jail and a $4,000 fine for destroying and withholding evidence pertinent to the case.

This is not the first legal tussle for Zynga. Last June the San Francisco company sued Playdom for the first time, alleging that it created misleading advertising intended to confuse players about similar mobster games offered by both companies (Zynga’s Mafia Wars and Playdom’s Mobsters).

In February 2009, Zynga was sued by David Maestri, creator of the Facebook-based Mob Wars game, who claimed Mafia Wars infringed his copyright; the two sides settled for an undisclosed amount.


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-- Shan Li