The UK High Court’s decision that Zynga’s ‘Scramble With Friends’ word game for mobile devices does not infringe the SCRABBLE trademarks of the world’s largest toy manufacturer is the latest court victory for the social games company. Zynga appears to be aggressively policing its trademark rights and its increased proactivity has coincided with a rally in the company’s share price. While a clear link between the two is hard to evidence, the relationship between IP protection and business success should not be underestimated.
The decision in its dispute with Mattel will be a welcome relief to Zynga – while they will have to change their game’s logo, they will not have to change the name itself. As WTR previously reported, the decision follows another victory over Mattel at the UK Court of Appeal which argued that Mattel’s Scrabble ‘tile mark’ was not a viable trademark. Zynga were able to demonstrate that tiles with well-known combinations, such as O2 and F1, would be covered by the Scrabble registration, thus causing confusion with the public.
Earlier this year, Zynga also launched a trademark infringement action against the makers of a “casual sex matchmaking app” called Bang With Friends. Zynga argued that Bang With Friends Inc had selected the name Bang With Friends for its casual sex matchmaking app with its game trademarks fully in mind in an attempt to leverage Zynga’s well-known mark. Roland Mallinson, a partner at Taylor Wessing, told the BBC at the time that Zynga would have to weigh up whether the action would be less harmful to its reputation than any parody of the brand. “Some parody uses actually support a brand and can make it more ‘cool’ – but ultimately you want to control your brand and how it is presented”. The action resulted in a clear win for Zynga as Bang With Friends were forced to settle, acknowledge Zynga’s trademark rights, and changed the name of the app.
Clearly the company felt that, in this instance, action was required and while the Mattel and Bang with Friends disputes were of a very different nature, the company is increasingly proactive in protection of its content.
The disputes come at a busy time for Zynga. Earlier this year several executives announced their departure from the company, including co-founder Justin Waldron. The company also recently shut down four of its games and the website for Draw Something creator OMGPOP.
When the online games company made its stock market debut in December 2011 it was valued at $1 billion. But since then it has struggled to replicate the success of its most popular games ‘FarmVille‘ and ’Words With Friends‘. The company has also seen year-on-year revenues fall 36% in 2013 to $202.5 million –while the number of fee-paying players has also halved to about 1.6 million.
However, a corner appears to have been turned with October seeing a net loss of $68,000 for its third quarter, compared to a $57.3 million loss for the same period last year. Zynga’s share price has also risen 60% over the past year, which has coincided with the successes in its recent trademark disputes.
Whether there is any correlation between Zynga’s victories in its recent cases and its stock market prices is hard to say, as a number of factors play into company value. However, protection of its content and trademarks is paramount to success, particularly in the social games sector. The link between IP and business success is something Zynga are clearly aware of.
WTR requested comment from the in-house legal team at Zynga in relation to its most recent cases but, as of yet, have received no response.
This blog was first published in World Trademark Review on 6 September 2013