Electronic Arts Sues Zynga for Infringement for The Ville - Businessweek

Electronic Arts Inc. (EA) (EA), the second-largest U.S. video-game maker, sued Zynga Inc. (ZNGA) (ZNGA) claiming the company’s “The Ville” video game infringed copyrights for “The Sims Social,” an EA game that runs on social media site Facebook Inc. (FB) (FB)

Zynga’s “The Ville” copies original elements of “The Sims Social,” lawyers for Electronic Arts said in a complaint the company said was filed in federal court in San Francisco. The filing couldn’t immediately be confirmed from court records.

“The Sims” gives players the ability to create their own virtual persons, known as “Sims.” “The Sims Social” lets users interact with their Facebook friends as fellow Sims. “The Ville” mimics the entire framework of “The Sims,” Electronic Arts alleges in the complaint.

“The similarities go well beyond any superficial resemblance,” Lucy Bradshaw, general manager of Electronic Arts’ Maxis label, said in an e-mail. “Zynga’s design choices, animations, visual arrangements and character motions and actions have been directly lifted from ‘The Sims Social.’”

Zynga is the biggest developer of games played on Facebook. Electronic Arts, No. 2 on Facebook, publishes video games such as “Madden NFL” and “Battlefield,” in addition to “Sims’ titles. Its social games include “Plants vs. Zombies” and “Bejeweled.”

Consoles, PCs

“The Sims” titles have sold more than 150 million units since it was first published more than a decade ago, according to Redwood City, California-based Electronic Arts.

The games are available on consoles, for the PC and more recently on social networks like Facebook. “The Sims Social,” released in August 2011, has averaged about 3 million daily users in the past month, Frank Gibeau, president of Electronic Arts Labels, said on a post-earnings conference call on July 31.

“The game has generated more than $50 million in revenue since it launched last summer,” Gibeau said.

The follow-up title, “SimCity Social,” released in June, has more than 10 million monthly average users, interim Chief Financial Officer Ken Barker said on the same call.

Electronic Arts seeks a court order barring copyright infringement and unspecified damages, according to the complaint.

Earlier Games

Reggie Davis, Zynga’s general counsel, said in an e-mail that “The Ville” builds on the San Francisco-based company’s earlier games.

“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,” Davis said. “It’s also ironic that EA brings this suit shortly after launching SimCity Social, which bears an uncanny resemblance to Zynga’s CityVille game.”

In the first quarter, Electronic Arts lost 41 cents a share, excluding some items, less than the 42-cent loss estimated by analysts. Sales, excluding changes in deferred revenue, fell 6.3 percent to $491 million in the period ended June 30, Electronics Arts said in a July 31 statement. Analysts projected $501.6 million, the average of 19 estimates compiled by Bloomberg.

Zynga, founded in 2007, is grappling with slowing sales and lower demand for the virtual goods it sells in online games. Its stock has fallen about 72 percent since its December initial public offering, a decline that accelerated last week after the company reported sales and profit that missed analysts’ predictions.

Existing Games

Zynga said July 25 that second-quarter sales were $332.5 million, less than the average $343.1 million analyst projection compiled by Bloomberg. Excluding some items, profit was 1 cent a share, less than the 6-cent estimate.

Zynga blamed the shortfall in part on Facebook, saying changes to the site made it harder for users to find existing games.

Zynga has 274 million monthly users on Facebook while Electronic Arts has 53 million players, according to website AppData. Activision Blizzard Inc. (ATVI) (ATVI), maker of “World of Warcraft,” is the largest U.S. video-game maker.

The case is Electronic Arts v. Zynga, 12-4099, U.S. District Court, Northern District of California (San Francisco).

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net