The Wars over Mafia Wars: Dissecting Digital Chocolate’s Case Against Zynga

8/26/10Follow @wroush

If we all lived inside a digital game, Digital Chocolate might be sending a guy over to Zynga right about now to break a few kneecaps.

Fortunately, we live in a world of law and order, so Digital Chocolate has merely filed a trademark infringement lawsuit against Zynga. At issue: the rights to the name Mafia Wars. San Francisco-based Zynga (which recently expanded to Boston) introduced a role-playing game under that title in 2008, and along with FarmVille, it’s become one of the social gaming juggernaut’s flagship titles. Mafia Wars players complete gangster-inspired missions and fight other players in order to advance within a fictional crime syndicate. The title has 28 million monthly active users on Facebook, and its viral success has helped boost Zynga’s valuation to somewhere north of $3 billion.

The only problem: San Mateo, CA-based Digital Chocolate has been making mobile games under the title Mafia Wars since 2004. The similarities between the games are more than skin deep. Players of the Digital Chocolate games—the most recent version of which, Mafia Wars New York, came out last year—complete gangster-inspired missions in order to advance within a fictional crime syndicate. Sound familiar?

Zynga's Mafia Wars for FacebookNow Digital Chocolate is moving to take down its larger rival. The company filed a trademark infringement complaint against Zynga yesterday in U.S. District Court for the Northern District of California in San Jose. The suit claims that Digital Chocolate has senior rights to the Mafia Wars trademark, and asks the court to force Zynga not only to stop using the trademark, but to hand over to Digital Chocolate all of its revenues from its version of the game, along with all Zynga materials using the Mafia Wars mark, from posters to T-shirts.

Digital Chocolate is also asking the court to invalidate Zynga’s own trademark registration application, and to force the company to “engage in corrective advertising in an amount double that which Zynga has spent promoting its products and services under the Mafia Wars mark.”

I spoke this morning with Digital Chocolate’s chief financial officer, Mark Richman. He says the suit is all about defending Digital Chocolate’s rights to its own creations.

“We have to establish that we are going to protect our trademarks,” Richman says. “We work hard to create original intellectual property, and we have to establish that we are going to protect that property. That is the primary goal here.”

Zynga hasn’t commented in detail about Digital Chocolate’s complaint. In response to Xconomy’s request for an interview, a Zynga spokeperson forwarded the company’s official, two-sentence response. “We are surprised and disappointed by Digital Chocolate’s lawsuit,” Zynga’s statement said. “The timing of the action appears to be opportunistic, and we plan to defend ourselves vigorously.”

It’s impossible to know exactly what Zynga means by “opportunistic.” But the runaway success of Zynga’s version of Mafia Wars has definitely earned the company a few detractors, as well as at least one other lawsuit. In 2009, developer David Maestri sued Zynga for copyright infringement, alleging that Zynga’s Mafia Wars was a ripoff of his Facebook game Mob Wars. Zynga and Maestri reportedly settled the case for several million dollars.

Richman acknowledges that Digital Chocolate never registered “Mafia Wars” as an official company trademark with the U.S. Patent and Trademark Office. But that doesn’t necessarily undermine its case against Zynga: companies can gain common-law rights to trademarks simply by being the first to use them commercially. “Under common trademark law, you have other legal rights, which we have established by having the game out since 2004,” says Richman.

Digital Chocolate was founded in 2003 by William “Trip” Hawkins, who previously founded video game giant Electronic Arts and was long its CEO. (Hawkins is a member of Xconomy’s unpaid, informal group of advisors, called Xconomists.) The company is known for its line of multi-platform casual games for Facebook, the iPhone and other smartphones, game consoles, and desktop and laptop PCs.

Digital Chocolate’s complaint makes pretty good reading, at least compared to a lot of other legal documents; you can browse the key opening section of the complaint on the following page. The complaint contends, among other things, that Zynga’s use of the Mafia Wars title has injured it by engendering confusion among consumers. (There’s little doubt about this confusion: the Zynga version of Mafia Wars seems to have almost completely overshadowed the Digital Chocolate version in the marketplace. If you search for “Mafia Wars” on Wikipedia, for example, you are deposited on a page about the Zynga game.)

The company’s main worries, according to the complaint, are that consumers will think that Zynga’s version of Mafia Wars is endorsed by Digital Chocolate, or even worse, that they’ll think Digital Chocolate is infringing on Zynga’s purported trademark.

Digital Chocolate says in the complaint that it tried to resolve the Mafia Wars dispute by more peaceful means. In January 2009, according to the complaint, Digital Chocolate’s attorneys sent Zynga a cease-and-desist letter. In a written response in May 2009, Zynga’s attorneys said that “Zynga disclaims any trademark rights in the term ‘Mafia Wars’ in connection with its game.”

But that didn’t stop Zynga from later filing a trademark application for that very term in the United Kingdom and the United States, or from claiming—in its own trademark infringement suits against rival Playdom and a group in San Francisco selling virtual goods related to the Zynga game—that “Zynga is the senior user of the ‘Mafia Wars’ mark” and that “Zynga coined the trademark Mafia Wars,” in the words of legal actions cited in the Digital Chocolate complaint.

Digital Chocolate sums up its case this way: “Through duplicity and bad faith, Zynga has effectively hijacked the Mafia Wars mark from Digital Chocolate and is aggressively marketing its games under the Mafia Wars mark to Digital Chocolate’s substantial detriment.”

Hijacking may be a strong word—but Zynga is certainly known for mimicking rival companies’ games and eventually outcompeting them. In an illuminating piece in January, BusinessInsider highlighted the earlier games that may have inspired Zynga games such as Farmville (Slashkey’s FarmTown), FishVille (TallTree Games’ Fish World), Cafe World (Playfish’s Restaurant City), PetVille (Playfish’s Pet Society), and Word Twist (GameHouse’s TextTwist). “One way Zynga creates huge hits is by identifying popular games from other studios, creating a near replica, and then beating the original with a bigger marketing budget,” BusinessInsider’s Nick Saint wrote. “As with Microsoft, this strategy has made Zynga unpopular…But unpopularity—and even perpetual legal battling—may be problems Zynga is happy to put up with. As Microsoft has demonstrated, the strategy works.”

Barring an early settlement, the next step in the Digital Chocolate suit will be a case management conference, scheduled for November 2. Magistrate Judge Patricia Trumbull is presiding in the case.

Click to read the opening pages from Digital Chocolate’s complaint >>

Click on the images below to see full-size versions of the pages.

Digital Chocolate complaint against Zynga, cover page
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Wade Roush is a contributing editor at Xconomy. Follow @wroush

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