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First order of business for Disney's social gaming acquisition: settle a lawsuit

Earlier this year, Disney acquired a company called Playdom. A main competitorof Farmville publisher Zynga, Playdom focuses on the emerging market of social games. But before Disney could really do much with it, it had to take care of one thing. Zynga and Playdomwere in the middle of a costly legal battle.

Back in 2009, Zynga filed a claim against Playdom, saying former employees who jumped over to Playdom stole trade secrets before they left. Specifically, the four ex-workers were accused of taking the "Zynga Playbook," described by the company as its own "secret sauce."

As such, Playdom, publisher of the popular Facebook game Mafia Wars, became mired in the lawsuit and unable to move forward in its competition against Zynga. This March, one of the alleged had to spend 10 days in jail and pay $4,000 in a fine related to withholding evidence in the case.

In July, Disney acquired Playdom for $563 million, knowing full well of the legal action in the wings. Given its enormous backbone, though, it figured it could settle without crippling the business. It did that today.

Details of the settlement were kept under wraps, but Zynga wanted to make sure it didn't undermine the importance of the lawsuit.

"The settlement reflects the very serious nature of the conduct involved, as reflected by the preliminary injunction, restraining orders and contempt order issued by the Santa Clara Superior Court," said Zynga general counsel Reggie Davis.

Now, Disney can move forward in its rush to join the social gaming space. So get ready to be poked by people encouraging you to join Jonasville and Miley Cyrus's Second Life. Or something like that.

[Source:LA Times]

Nov 24, 2010