Zynga Faces $45 Million Penalty For Patent Infringement Against IBM

Zynga has been ordered to pay IBM nearly $45 million after a jury found that the gaming company infringed on two of IBM's patents related to technology developed in the 1980s. This ruling affects popular titles in Zynga's FarmVille series and other games, although Zynga plans to appeal the decision.

Key Takeaways

• Zynga must pay IBM $45 million for patent infringement.

• The ruling involves technology from the 1980s used in popular games.

• Zynga plans to appeal the jury's decision.

• No immediate changes to Zynga's games are expected.

Background Of The Case

The legal battle between Zynga and IBM has been ongoing for nearly a decade. IBM first alerted Zynga to the alleged infringement in 2014, claiming that Zynga's games utilized patented technology that was originally developed for the Prodigy online service. Instead of negotiating a licensing agreement, Zynga reportedly delayed discussions, leading IBM to pursue legal action.

The Patents Involved

The jury found that Zynga infringed on two specific patents:

1. Patent '849: This patent introduced methods for presenting applications and advertisements in an interactive service, optimizing the use of personal computers to reduce server demand.

2. Patent '719: This patent focuses on improving Internet app performance by minimizing network communication delays, making it easier to develop and update applications.

Implications For Zynga

While Zynga has reassured investors that the patents in question have expired and that no games will be affected, the financial implications of the $45 million penalty could impact its parent company, Take-Two Interactive Software. Analysts suggest that unless Zynga successfully overturns the verdict, the damages could have significant repercussions.

IBM's Perspective

IBM expressed satisfaction with the jury's decision, emphasizing the importance of protecting its intellectual property. The company has invested billions in research and development and views licensing its early technologies as crucial for sustaining innovation. IBM's spokesperson stated that Zynga's success was significantly driven by IBM's technology.

Zynga's Defense

In its defense, Zynga attempted to argue that the patents were invalid, claiming that the 1980s patent should never have been issued. However, the jury rejected this argument, leading Zynga to plan an appeal. The company believes that the verdict is not supported by the facts and intends to seek to overturn the decision through post-trial motions.

Conclusion

The ruling against Zynga marks a significant moment in the ongoing battle over intellectual property rights in the tech industry. As Zynga prepares to appeal, the outcome could set a precedent for how similar cases are handled in the future. The case highlights the complexities of patent law and the importance of negotiating licensing agreements to avoid costly litigation.

Sources

• Zynga owes IBM $45M after using 1980s patented technology for hit games | Ars Technica, Ars Technica.