Tencent’s Supercell gaming unit must pay US$8.5 million in ‘freemium’ dispute
- Japanese company Gree said Supercell’s Clash of Clans, Clash Royale and Brawl Stars games infringed its patents
- Supercell ranked as the world’s fourth-biggest video game publisher by revenue, behind industry leader Tencent, NetEase and Activision Blizzard
The jury also found that the infringement was wilful, so District Court Judge Rodney Gilstrap could increase that amount by as much as three time the figure set by jurors. The dispute is over features in “freemium” games – a portmanteau of the words “free” and “premium” – that are free to download, but make money by letting users buy virtual items or upgrade during the game. Gree was one of the pioneers of the technique, also known as gacha.
Gree said Supercell’s Clash of Clans, Clash Royale and Brawl Stars games infringed its patents for methods for controlling and presenting downloadable games to smartphone players, controlling their in-game purchases and transfers of objects between players, and enhancing the visual effects for multiplayer mobile games.
Supercell denied using any of Gree’s patented technology, and argued that the patents were invalid. The jury rejected Supercell’s invalidity arguments.
Supercell co-founder and chief executive Ilkka Paananen said in February that the company of 300 employees recorded a profit of US$577 million on revenue of US$1.56 billion last year.
By itself, Supercell ranked as the world’s fourth-biggest video game publisher by revenue, according to a March report by researchers at App Annie. Shenzhen-based Tencent, which gets a third of its revenue from online games, topped the list.
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Gree reported 71 billion yen (US$680 million) in revenue last year, but the firm and other Japanese game developers were starting to see falling revenue, in part from overseas game competition, before the pandemic lockdown gave a boost to sales.
Supercell had filed its own suit against Gree in 2017, but the case was dismissed last year after a federal judge invalidated a Supercell patent for obtaining login information.
The company had tried to get the trial postponed, saying its Finnish witnesses refused to come to the US because of the coronavirus pandemic. Finland has had fewer than 8,800 Covid-19 cases, and fewer than 350 deaths, according to data from Johns Hopkins University.
That request for postponement was denied, with US Magistrate Roy Payne indicating that there has already been a trial in the district without problems. In that case, Apple was hit with a US$506 million verdict over wireless communications.
The case is Gree Inc v. Supercell Oy, 19-70, US District Court for the Eastern District of Texas, Marshall division.
