Case Update:

This case was dismissed on February, 18, 2011. Given the large number of defendants, the case was resolved in different ways. Zynga voluntarily dismissed the case against several defendants early on. Judgments were entered against several defendants and were satisfied. In these the court found that Zynga indisputably owned the trademark rights to its name, and the defendants knowingly infringed Zynga’s rights. They were ordered to pay monetary compensation, and to cease any use of the mark. Consent judgments were entered against several other defendants who admitted infringing use of the mark, and agreed to stop use and pay monetary damages. Lastly, some defendants never showed up and default judgments were entered against them.

Original Post:

Zynga, the popular online social gaming company, has filed yet another lawsuit. Much like its suit against John Does 1-5, Zynga is again going after website operators infringing on its ZYNGA trademark. This time, however, Zynga has a problem with more than just the domain names.

One of the games Zynga operates is Texas Hold ‘Em Poker which uses virtual “chips.” Players get a set amount of chips when they first sign up and then may win more through game play or purchase more from Zynga. Zynga alleges that the defendants operate sites that sell virtual chips that can be used in the game for real world money, an act that Zynga’s Terms of Service expressly forbid.

The defendants are unnamed “John Does” for the time being because they “registered their domain names using the Domain by Proxy privacy protection service, preventing Zynga from accessing the name and contact information Defendants used to register the domain names.”

Examples of the domain names, some of which include Zynga’s mark, are: 123chips.net, facebookchips.com, and zyngachips.org.

Zynga alleges 7 causes of action for which it’s seeking an injunction and damages:

1. Trademark Infringement – False Designation of Origin Regarding the Mark ZYNGA: The complaint alleges that consumers may be confused or misled into thinking a connection exists between Zynga and the defendants by the defendants’ use of the ZYNGA mark.



2. Trademark Infringement – Federal Cybersquatting Regarding the Mark ZYNGA: The complaint alleges that the defendants registered domain names with the bad faith intent to profit from use of the ZYNGA mark.



3. California Statutory Unfair Competition: The complaint alleges that by using the ZYNGA mark and selling the virtual chips required for the game the defendants are attempting to trade on Zynga’s goodwill and have gained an unfair advantage.



4. Common Law Trademark Infringement of the Mark ZYNGA: The complaint alleges that the defendants’ use of the ZYNGA mark causes confusion or deception as to the source of, and authorization for, the defendants’ products in violation of California common law.
   


5. California Common Law Passing Off and Unfair Competition: Zynga is seeking punitive damages for the defendants’ allegedly intentional and malicious actions which Zynga says resulted in an unfair advantage.



6. Breach of Contract: Zynga claims the defendants agreed to be bound by the game’s Terms of Service by participating in the poker game. “By selling ‘chips’ for use in the Game through the Infringing Websites, and by using the Game itself to transfer the ‘chips’ they sell, Defendants have breached the Terms of Service, which specifically prohibit Game users from exchanging ‘chips’ “for ‘real-world’ money or otherwise exchange items for value outside of the Game.”



7. Intentional Interference with Contractual Relations: Zynga alleges that the defendants intentionally acted to induce consumers to breach their contracts with Zynga by selling chips without authorization at a lower price than Zynga offered and by distributing the chips in a manner prohibited by the Terms of Service.

Read the full complaint here.