Monday, September 17, 2012

Zynga Inc (NASDAQ:ZNGA) Files Countersuit Against Electronic Arts

Zynga Inc (NASDAQ:ZNGA) is firing back at rival game maker Electronic Arts in a legal tussle filed by the latter in San Francisco federal court, had accused Zynga of copying key elements of its popular "The Sims Social" game for Zynga's own title, "The Ville".

Zynga a dominant publisher of games on Facebook, has been accused of obtaining “private” information about the Sims game after hiring three of Electronic Arts top employees shortly before its launch.
The document in court filling on Friday said that Zynga has reached a deal with Electronic Arts in 2011 with lawful restrictions on how Zynga solicits Electronic Arts employees. In exchange, Electronic Arts released Zynga from legal claims surrounding its hiring practices.

With intention of making its information blacked out of public view, it inadvertently made those details public in its Friday court filling.

In the filling Zynga said that by initiating its lawsuit last month Electronic Arts breached promises it made in 2011 deal. Hence, Zygna declined to comment on the material that was intended to be redacted.

John Reseberg Electronic Arts spokesman, on Friday called Zynga's claims "a predictable subterfuge," which aimed at diverting attention from its copying of other artists.

Reseberg said "Zynga would be better served trying to hold onto the shrinking number of employees they've got, rather than suing to acquire more."

According to Zynga's filing, an Electronic Arts lawyer told Zynga that Electronic Arts Chief Executive John Riccitiello was "adamant" about obtaining a no-hire agreement that would shut down Zynga's ability to hire Electronic Arts employees.

In September 2011, a non-monetary settlement agreement was to be signed between Zygna and Electronic Arts, Zygna filling said.

That deal included "lawful, appropriate and extremely narrow non-solicit restrictions" in the context of a non-monetary settlement agreement, according to the filing.

Zygna’s general counsel, Reggie Davis, said in a statement that Electronic Arts copying claims have no merit. In the filing, Zynga said Electronic Arts "undertook an anti-competitive and unlawful scheme to stop Zynga from hiring its employees."

The case in U.S. District Court, Northern District of California is Electronic Arts Inc. vs. Zynga Inc., 12-4099.

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