Tencent Gaming Units Have to Pay $ 8.5 Million in “Freemium” Disputes

(Bloomberg)-Tencent Holdings Ltd.’s Supercell gaming unit was ordered to pay $ 8.5 million in royalties to Gree Inc. of Japan in a patent trial for features used in popular online games.

Supercell’s game infringes four patents, discovered by a federal jury in Marshall, Texas, on Friday. The jury said that $ 8.5 million, less than Gree was asking for, covered past and future sales. The jury also admitted that the infringement was intentional, allowing Judge Rodney Gilstrap in the district court to increase that amount by three times the number set by the jury. The controversy is that “free” and “premium” can be downloaded for free, but users can make money by purchasing or upgrading virtual items during the game. Gree was one of the pioneers of this technique, also known as gacha.

Supercell’s Clash of Clans, Crash Royal, and Broll Star games control downloadable games and present them to smartphone players, controlling in-game purchases and transferring objects between players, and are multiplayer. Gree claimed to have infringed the patent on how to enhance the visual effect. Mobile games.

Supercell refused to use the patented technology and claimed that the patent was invalid. The jury dismissed Supercell’s theory of invalidity.

Tencent purchased 84% of Supercell for $ 8.6 billion in 2016. The Finnish company manufactures some of the most popular games for mobile devices. Eight years later, Clash of Clans is still in the top five of the most popular strategy games on the iPhone App Store. Supercell Chief Ilkkapananen said in February that a company with 300 employees recorded $ 757 million in revenue last year at $ 1,566 million.

According to a March report by App Annie researchers, Supercell alone ranks as the fourth largest publisher by revenue. China-based Tencent’s Shenzhen, which earns one-third of its revenue from online games, has surpassed the list.

Last year’s sales of GREE were 71 billion yen ($ 680 million), but before the pandemic lockdown boosted sales, due to the influence of overseas game competition, Japanese game developers began to show a decrease in profits. I was there.

Supercell filed its own proceeding against Gree in 2017, but the proceeding was dismissed last year after a federal judge invalidated the Supercell patent for obtaining login information.

Supercell tried to postpone the trial, saying the Finnish witness refused to come to the United States because of a coronavirus pandemic. According to data from Johns Hopkins University, there were less than 8,800 cases of Covid-19 and less than 350 deaths in Finland. The request was dismissed, and US Justice of the Peace Roy Payne pointed out that the district was already being tried without problems. In that case, Apple Inc. received a $ 506 million verdict for wireless communications.

The proceeding is Gree Inc. v. Supercell Oy, 19-70, in the United States District Court for the Eastern District of Texas (Marshall).

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