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Zynga, Playdom Settle Lawsuit Over Alleged Trade Secret Theft

Zynga, Playdom Settle Lawsuit Over Alleged Trade Secret Theft

November 23, 2010 | By Eric Caoili

November 23, 2010 | By Eric Caoili
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A year after FarmVille creator Zynga filed suit against rival social game developer Playdom over alleged trade secret theft among other charges, the two companies have settled their dispute.

In its lawsuit filed in September 2009, Zynga accused Playdom Inc. and four Playdom employees, all of whom previously worked at Zynga, of misappropriation of trade secrets, breach of contract, breach of the duty of loyalty, and inducing breach of the duty of loyalty.

It also accused Playdom of tortious interference with contract, tortious interference with existing and prospective economic advantage, and unfair competition. The company claimed a Playdom recruiter asked its former employees to provide private data for Zynga titles as assignments.

The FarmVille developer alleged that one specific ex-employee, Raymond Holmes, stole Zynga's "playbook" outlining its "secret sauce" and the key strategies behind its successes. Zynga claimed the other former workers who joined Playdom took non-public documents, too.

Not long after Disney acquired Playdom in July for as much as $762 million, the case seemed to be going in Zynga's favor when Santa Clara County Superior Court judge Mark Pierce found Holmes in contempt for destroying evidence and signing false court certificates.

Judge Pierce sentenced Holmes to ten days in county jail and a $4,000 fine before suspending the sentence. The court believed it would be "appropriate to impose a non rebutable evidentiary presumption in favor of Zynga regarding the meta data lost when Def Holmes erased his hard drive."

Neither Playdom/Disney or Zynga revealed terms for their settlement, but Zynga's released the following statement, which was posted by TechCrunch: "Zynga is extremely pleased with the final resolution of its trade secret suit against Playdom and various individuals."

"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. We have great respect for Disney and are thankful that following its acquisition of Playdom, Disney resolved the matter to our satisfaction."


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