The bad news does not seem to end for Zynga Inc (NASDAQ:ZNGA).
After its disastrous quarterly result and gloomy guidance, and criticism for alleged insider trading, comes the latest bolt from the blue – Zynga Inc (NASDAQ:ZNGA) stands charged with copyright infringement.
Gamemaker EA has hauled Zynga to the courts for blatantly copying the Social Edition of its popular franchise, The Sims, in Zynga’s new “The Ville” game.
In fact people have noticed and commented on the alleged similarities between the two games ever since Zynga’s launch of “The Ville.”
Lucy Bradshaw, General Manager, Maxis, EA, has this to say on the company blog:
Zynga’s design choices, animations, visual arrangements and character motions and actions have been directly lifted from The Sims Social. The copying was so comprehensive that the two games are, to an uninitiated observer, largely indistinguishable………..This is a case of principle. Maxis isn’t the first studio to claim that Zynga copied its creative product. But we are the studio that has the financial and corporate resources to stand up and do something about it. Infringing a developer’s copyright is not an acceptable practice in game development. By calling Zynga out on this illegal practice, we hope to have a secondary effect of protecting the rights of other creative studios who don’t have the resources to protect themselves.
Last week, Zynga Inc (NASDAQ:ZNGA) was also sued by law firm Newman Ferrara in an insider trading case. Ferrara attorney, Roy Shimon, said, "Zynga's regular employees were still locked up from selling their shares. But the guys at the top, who saw what was coming down the pipe, got to cash out," referring to the April sale of $515 million worth of Zynga’s shares by top management of Zynga.
It is interesting though, that Zynga blamed the delay in launching The Ville as one of the reasons for the dismal quarterly performance, when they did finally launch the game, it was only a clone, as alleged in EA’s lawsuit!
In all fairness, Zynga Inc (NASDAQ:ZNGA) has attempted to put the matter straight, as follows:
"We are committed to creating the most fun, innovative, social and engaging games in every major genre that our players enjoy," said Reggie Davis, Zynga's general counsel. "The Ville is the newest game in our ‘ville' franchise — it builds on every major innovation from our existing invest-and-express games dating back to YoVille and continuing through CityVille and CastleVille, and introduces a number of new social features and game mechanics not seen in social games today. It's unfortunate that EA thought that this was an appropriate response to our game, and clearly demonstrates a lack of understanding of basic copyright principles. It's also ironic that EA brings this suit shortly after launching SimCity Social which bears an uncanny resemblance to Zynga's CityVille game. Nonetheless, we plan to defend our rights to the fullest extent possible and intend to win with players."
This latest charge against Zynga Inc (NASDAQ:ZNGA) is not likely to win it more admirers. Though the stock is presently up 2.22 percent at $2.77, in the long term, there can be severe financial liabilities for the company if the charges are proved.
Hapless investors are already bleeding from their losses in recent tech IPOs, and must be a worried lot. Facebook Inc (NASDAQ:FB) may also be worried, because Zynga is an important constituent of the social network’s fabric – gaming is extremely popular, and Zynga commands over 200 million users. If the game-maker goes under, everybody loses. In this article, ValueWalk commented how Facebook could end up acquiring Zynga, and that too at a very low price. Does the latest charge make it even easier for Facebook?