Zynga Inc. Business Law

7/30/2019 Zynga Inc. Business Law

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Zynga Inc. Business Law



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Abstract

The Internet today has grown in to something that not even its creators 40 years ago could have imagined.

No one thought even 20 years ago that so much information would be available to us on devices small

enough to fit in our pocket or that a village without running water or wired telephones would have cell

phones and satellite Internet Cafes. The Internet has create a society that is connected more than in any

other time in history. Along with this opportunity has come an equally great challenge in staying

successful in a world where you may have know idea how far you product might reach and who it might

touch. With the rise of the smart phone and the application market place there has been a boon to many

software developers and out of nowhere many software development companies have quickly and easily

found they were managing a small software empire, but along with this success comes a substantial

number of legal issues and risks. At Zynga Inc. we develop and publish casual video game applications

including FarmVille, CityVille, Empires & Allies and Words With Friends for users of various social

networks such as Facebook, as well as mobile devices such as the iPhone and the Android OS. These

games connect people from across the room to across the world. Residents of every state and many

countries around the world might use our products, thus we must understand the wide variety of laws that

apply to our products and how to comply with those laws. These issues included personal privacy laws,

intellectual property laws, and labor laws. I hope that I will give the reader a glimpse of a company that

produces casual social games is influenced by so many legal ideologies.



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Introduction

The Internet today has grown in to something that not even its creators 40 years ago could have

imagined. No one thought even 20 years ago that so much information would be available to us on

devices small enough to fit in our pocket or that a village without running water or wired telephones

would have cell phones and satellite Internet Cafes. With the rise of the smart phone and the application

market place there has been a boon to many software developers and out of nowhere many software

development companies have quickly and easily found they were managing a small software empire, but

along with this success comes a substantial number of legal issues and risks.

At Zynga Inc. we develop and publish casual video game applications including FarmVille,

CityVille, Empires & Allies and Words With Friends for users of various social networks such as

Facebook, as well as mobile devices such as the iPhone and the Android OS. These games connect

people from across the room to across the world. The games may collect certain information from users

in order to save their game status and connect them with friends. These games are free to play, but users

may purchase virtual items or virtual currency for use in game. (Zynga 2012)

Internet Privacy Law

I will first discuss some to the personal privacy issues an application development company must

face in the complicated environment of the Internet today. Zynga's Privacy Policy is designed to provide

clarity about the information collected from our users and how it is used to provide a better social gaming

experience. By accepting Zynga’s Privacy Policy and Terms of Service in registration or game

installation, the user consents to the collection, storage, use and disclosure of his or her personal

information as described in this the Privacy Policy. (Zynga 2012)

Because, at Zynga we operate in may countries and on many platforms, compliance with

international privacy standards and regulations can be complicated and includes legal risks. Requirements

regarding how users personal information is handled should be formed to ensure that the application not

only meets these privacy and security guidelines but also complies with any regulatory requirements in



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the countries where the application is available. In producing applications that will be available in various

jurisdictions developers are required to comply with all state, federal, and international privacy laws

regarding user data collection, and picture or voice capture. Accordingly, personal information collected

from a user may not be disseminated without the user’s consent; the unauthorized use of a user’s name or

likeness for gain is prohibited; and a user’s voice may not be recorded absent a conspicuously displayed

noticed indicating that a recording is taking place. (McHale 2010)

If an application collects any personal information, the user must be notified about what is being

collected, why it is being collected and whether the information will be shared with anyone else. The

notice should be easy to find and easy to read. You should obtain affirmative opt-in consent from an

individual before collecting their personal information. This requirement is usually accomplished by

requiring the user to agree to the terms and conditions of the application prior to initialization. Before any

personal information collection, you should clearly define the reason why you need to collect personal

information prior to obtaining it from an individual. (Intel 2011) The application may not use personal

information for any other reason than the purpose specified to the individual at the time of collection

without their prior consent, including secondary uses, like direct marketing purposes.

Because definitions of personal information may vary in different countries developers should use

a broad interpretation of the term when deciding what should be considered protected. This is to include

any information that is directly or may be associated with a person. Application distributers, such as

Apple with its App Store and the Android App Marketplace, define privacy as an individual's right to

have a private life, to be left alone and to be able to decide when their personal information is collected,

used or disclosed. (Android 2012) Any information that can be used to identify, contact, or locate

someone is considered personal information (e.g. name, address, telephone number, mobile phone

number, e-mail address, social security number, government identification number, etc.). In addition, any

information which is linked to personal information or from which other personal information can easily

be derived is also considered personal information. If any of this information is shared with third parties,

one must obtain the user's permission before the information is transferred, unless it was specified



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explicitly in the company’s privacy policy. To ensure individual's privacy is preserved and compliance to

appropriate regulatory standards has been met certain security controls must be employed. In the case

where personal information is stored and transmitted it must be done in a secure manner. Reasonable

measures must be taken to protect personal information from unauthorized access, use, modification,

disclosure or loss. When collecting personal information on the wire, it should not be transmit in clear

text and encryption techniques like https or secure socket layer technology should be implemented.

Completing a code review and/or vulnerability assessment helps to catch possible vulnerabilities

that could lead to a compromise of user data. Application developers should develop security controls

necessary to preserve the individual's personal information and account login information and protect it

from a security breach. Some data elements are considered more sensitive than others (e.g. biometrics

and children's personal information) and may require additional compliance efforts with statutory rules

and regulations. In order to provide a secure environment to store user data developers should create a

secure user profile that requires a unique identifier and password combination to allow the individual to

maintain their personal information. The potential risks of not complying with established privacy

polices and regulations are severe and can go far beyond just civil and criminal penalties.

They can include:

Damage to the company’s reputation, brand or business relationships

Legal liability and industry or regulatory sanctions

Charges of deceptive business practices

Disruption of international business operations

Termination of the application distribution

Intellectual Property Law

Copyright Law

Developers of smart phone applications must concern themselves with protecting their works

against misappropriation or infringement by others. In the United States, copyright ownership is



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automatically obtained upon the physical creation of a copyrightable work. In order to assert your

copyrights against an alleged infringer in court, you must first obtain a copyright registration. While it is

possible to obtain an expedited registration in the last moment before filing a lawsuit, the process is quite

expensive and certain rights are lost if you do not have a registration in hand prior to the occurrence of an

alleged infringement. Accordingly, it is highly recommended that any software author obtain a copyright

registration for her work. Further, any significant updates to the software should be the subject of new

registrations. (Danielson 2010)

Obtaining a copyright registration for a software work is fairly straightforward, however, if you

are attempting to register an application that is based on a previous work, or if you’re registering an

application that is already several versions deep, questions can arise. It is advised your copyright

registration application completed with the assistance of an expert IP attorney.

Patent Law

Certainly for larger software companies, patent protection is something to which a significant

amount of effort and expense has been devoted. Many developers, however, may not know what is novel

and non-obvious enough to warrant patent protection in the United States or elsewhere. If an application

developer believes that some feature or function of their software is indeed different enough from

anything else in the field, then patent protection may be worth looking into. Searching for prior art in your

field of interest should give someone a basic sense of just how novel the invention is and, accordingly,

whether it would be worth the costs of further searching and/or having a patent application drafted.

(Danielson 2010) The more detailed description, including any relevant drawings, that can be provide to

the patent attorneys, the better the application will be and it will be more likely to stand up in an

infringement court case.

Trademark Law

When we are selecting a name for our application or service it is important to understand what

protections will be afforded to the name. Trademark law generally does not protect words or phrases that



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merely describe a product; the theory is that others in the industry should have a fair chance to use such

words to describe their own products. Choosing a unique name that is not descriptive is probably most

important in establishing trademark rights. One must also be careful in choosing a name that is not

similar to any other company’s trademarks. (McHale 2010) Most important among these factors are the

similarity of the marks and the similarity of the goods or services offered in connection with each mark.

If we use a name that is too similar to other trademarks or other products already in use, we may be

infringing on a trademark or we may not be able to get a trademark for our name. (Danielson 2010) The

other important thing to remember is to separate our brand name from the product or service itself. If a

trademark becomes to generic or a household name used to describe the product, we may lose our rights

to the trademark.

Developer Terms and conditions

Anyone who wishes to develop applications must agree to the terms and conditions put forth by

the company that will be distributing the applications. One such example is Apple and its App store,

which it considers the only legitimate source of applications for its smart devices. These terms become a

legal agreement governing the manner in which the applications are developed and the functionality of

the applications themselves. Because Apple itself controls the only legitimate distribution channel for its

products’ applications, they have taken a fairly heavy handed approach in what they allow and don't allow

developers to do with their applications. (Apple 2012) It is particularly important to understand what the

agreement does and doesn't permit since every application must be reviewed and approved for

compliance before appearing in their store. Non-compliance will mean delays or denial in getting an

application to market. Other application distributors, such as Google with its Android and Research in

Motion with it Blackberry App World, each have their own set of requirements and even though they are

similar it is important to understand the differences.

Many of the best applications rely on third party services, or incorporate adds created by third

parties in to them. This allows us to produce high quality applications that are free to the consumer.



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However, anytime one chooses to rely on such third party services or materials, they need to be acutely

aware of their obligation to the end user and the content owner. In general, you cannot use any

copyrighted materials without express permission from the provider or creator of such material. Whether

it is you or a third party that provides the copyrighted material, we may be held liable for any damages

incurred by our application.

Two of the most recent features available to developers are push notification and in-app

purchasing. If a developer misused these features it could result in a diminished user experience or

worse, so it has been made clear that only specific uses of these features are allowed could easily abuse

these features. Developers wishing to push the envelope of creativity with either of these features should

carefully read the additional restrictions contained the user’s agreement before venturing to far over the

edge of commonly accepted practices. On the other hand the restrictions over in-app purchase are quite

exacting. You cannot use in-app purchasing to purchase stored value (gift certificates or other types of

currency), to obtain content for a limited period of time, or to trigger newly downloaded updates.

However, you may use in-app purchasing to unlock content already in your application, provided it does

not initiate a new download.

End User License Agreements

Most application distributers, such as Apple, have standard End User License Agreement (EULA)

that applies to all applications provided by the App Store. This allows developers to utilize the standard

EULA, add a supplement to it, or create their own from scratch provided it meets the minimum

requirements of the governing body, in this case that would be Apple’s App Store . (Apple 2012) For

those utilizing third party services, they should be sure that any notices that are required are contained in

the EULA as well as a description of what is collected from the user and what will be provided to any

third party. This needs to be uploaded during the application submission process so it can be reviewed for

compliance before the application can make its way to the market place. Also, the developer may wish to

place limitations on how, where, or when your application is used, which should be reflected in the end



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user’s agreement. Always be sure that the software license accurately reflects the functionality of the

application and its intended use. Not specifying this could leave the developer open to liability if it is use

in a way not specific that causes harm. Forcing users to acknowledge the license upon first running the

app is always preferred, as is keeping a log of when and who made such assent. If the user is not required

to accept the user agreement, even if it is available in the application, it will weaken the enforceability of

such agreement.

An important element of a user agreement is disclaimer of warranty. This provision states that

the application is being provided “as is” without any express or implied warranties regarding the

a pplication’s quality, performance, effectiveness or reliability. In those jurisdictions where disclaimers of

warranty are enforceable, such a provision protects the entity providing the end user’s license from

potential legal claims arising from the use of the application, as the licensor makes no promises of any

kind. Another important aspect is a limitation of liability. This provision protects the developer from

liability for personal injury, loss of profits, loss of data, or other direct and indirect damages arising from

the use of, or the inability to use, the application. This provision additionally places an upper dollar limit

on the total damages for which the developer may be liable, excluding damages for personal injury in

those states where such a limitation would not be enforceable.

Liability

DCMA - Section 512

The Digital Millennium Copyright Act provides recourse to copyright owners who believe that

their rights under the United States Copyright Act have been infringed by acts of third parties over the

Internet. One important section of this act that is particularly important to developer creating application

that utilize third party content or provide social networking services. (Fayle 2010)

Section 512(c) attempts to remove liability for copyright infringement from websites or

applications that allow users to post content, as long as the entity in charge of the site or app has a

mechanism in place whereby the copyright owner can request the removal of infringing content. It is



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however important to mention that the content provider must also not receive a financial benefit directly

attributable to the infringing activity. This creates an interesting problem for most social applications that

allow users to post music, photos or video. For instance, several content owners have sued YouTube, the

video-sharing site, for copyright infringement, and YouTube has claimed a 512(c) defense. Since

YouTube is a subsidiary of Google, its future business plan most likely involves serving advertisements

according to the kind of video that users view or search for. If the site does this, however, it could

amount to a financial benefit directly attributable to the sharing of copyrighted materials. Those cases are

currently before federal district courts, and their resolution will greatly impact the services that social

networks offer, as well as their business models. (U. S. C. Title 17)

Communications Decency Act - Section 230

There is also another act that has become important to developers that allow users to interact with

each other through their applications. The most pertinent part of this act is section 230 of the

Communications Decency Act. It immunizes website from any liability resulting from the publication of

information provided by another. (Fayle 2010) This usually arises in the context of defamation, but

several courts have expanded it to cover other sorts of claims as well. So if a user posts defamatory or

otherwise illegal content, Section 230 shields the social application provider from any liability arising out

of the publication. Applications or websites that, in whole or in part, create or develop contested

information, on the other hand, are deemed content providers that do not benefit from the protections of

Section 230. A recent 9th Circuit opinion has called the section's broad coverage into question, and

created uncertainty for social networking sites that have relied on Section 230 to protect them from claims

relating to the content that their users create and post. (U. S. C. Title 47)

State Laws

Several states have enacted or proposed laws that would create requirements for social gaming or

networking sites and applications, particularly in regards to monitoring the presence and activities of

sexual predators using the application. Because our applications seek to connect people and we often



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operate on such social networking site these laws are very important for us to understand. Virginia, for

example, has enacted a law requiring sexual offenders to register their email addresses and instant

messaging screen names, and allows police officers to create mechanisms for web sites to check user

information against the resulting database. The North Carolina state senate recently passed a bill

requiring that parents and guardians register with a social networking site and verify their ages before

their children can sign up for an account. This is to counter the difficulty in verifying the ages of minors,

who usually lack credit cards or other sources of information concerning their ages. That bill still requires

approval from the North Carolina House of Representatives. Connecticut legislators have also proposed a

bill that would require social networking sites to verify the ages of their users and obtain parental

permission for users under 18. Under the proposed law, sites that failed to comply would be subject to

fines of $5,000 per day.

Employment and Labor Law

The next set of laws that are important are the ones that apply to businesses that employ 50 or

more people, generate more than $500,000 in revenue per year, or are publicly traded. They laws are very

important because noncompliance can create a myriad of legal issues.

Fair Labor Standards Act

The Wage and Hour Division of the Department of Labor administers the Fair Labor Standards

Act. The Act establishes standards for minimum wages, overtime pay, recordkeeping, and child labor.

The Act applies to enterprises with employees who engage in interstate commerce, produce goods for

interstate commerce, or handle, sell, or work on goods or materials that have been moved in or produced

for interstate commerce. The Act requires employers of covered employees who are not otherwise

exempt to pay these employees a minimum wage of not less than $7.25 per hour. Youths under 20 years

of age may be paid a minimum wage of not less than $4.25 an hour during the first 90 consecutive

calendar days of employment with an employer. Employers may not displace any employee to hire

someone at the youth minimum wage. The Act does not limit either the number of hours in a day or the



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number of days in a week that an employer may require an employee to work, as long as the employee is

at least 16 years old. Similarly, the Act does not limit the number of hours of overtime that may be

scheduled. However, the Act requires employers to pay covered employees not less than one and

one-half times their regular rate of pay for all hours worked in excess of 40 in a workweek, unless the

employees are otherwise exempt. (DOL 2012)

Occupational Safety and Health Act

The Act assigns Occupational Safety and Health Administration two regulatory functions: setting

standards and conducting inspections to ensure that employers are providing safe and healthful

workplaces. OSHA standards may require that employers adopt certain practices, means, methods, or

processes reasonably necessary and appropriate to protect workers on the job. Employers must become

familiar with the standards applicable to their establishments and eliminate hazards. (OSHA 2012)

Compliance with standards may include implementing engineering controls to limit exposures to physical

hazards and toxic substances, implementing administrative controls, as well as ensuring that employees

have been provided with, have been effectively trained on, and use personal protective equipment when

required for safety and health, where the former controls cannot be feasibly implemented. Employees

must comply with all rules and regulations that apply to their own actions and conduct. Even in areas

where the Occupational Safety and Health Administration has not set forth a standard addressing a

specific hazard, employers are responsible for complying with the Occupational Safety and Health Act's

general duty clause. The general duty clause states that each employer shall furnish a place of

employment that is free from recognized hazards that are causing or are likely to cause death or serious

physical harm to his employees. (OSHA 2012)

Family and Medical Leave Act

The Wage and Hour Division also administers the Family and Medical Leave Act. The FMLA

provides a means for employees to balance their work and family responsibilities by taking unpaid leave

for certain reasons. The Act is intended to promote the stability and economic security of families as well



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as the nation's interest in preserving the integrity of families. The FMLA applies to any employer in the

private sector who engages in commerce, or in any industry or activity affecting commerce, and who has

50 or more employees each working day during at least 20 calendar weeks in the current or preceding

calendar year. (FMLA 2012) To be eligible for FMLA leave, an individual must meet the following

criteria:

Be employed by a covered employer and work at a worksite within 75 miles of which that

employer employs at least 50 people;

Have worked at least 12 months for the employer; and

Have worked at least 1,250 hours during the 12 months immediately before the date FMLA leave

begins.

An employer need not count employment prior to a break in service of seven years or more unless

there was a written agreement between the employer and employee to rehire the employee, or the break in

service was due to fulfillment of military service in the National Guard or Reserves. (FMLA 2012)

The FMLA entitles eligible employees of covered employers to take job-protected, unpaid leave for

specified family and medical reasons. Eligible employees are entitled to:

Twelve workweeks of leave in any 12-month period for (FMLA 2012):

o Birth and care of the employee's child, within one year of birth

o Placement with the employee of a child for adoption or foster care, within one year of the

placement

o Care of an immediate family member who has a serious health condition

o For the employee's own serious health condition that makes the employee unable to

perform the essential functions of his or her job

o Any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter,

or parent is on active duty or has been notified of an impending call or order to active

duty in the U.S. National Guard or Reserves in support of a contingency operation



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Twenty-six workweeks of leave during a single 12-month period to care for a covered service

member with a serious injury or illness if the employee is the spouse, son, daughter, parent, or

next of kin of the service member (Military Caregiver Leave)

If an employee was receiving group health benefits when leave began, an employer must

maintain them at the same level and in the same manner during periods of FMLA leave as if the employee

had continued to work. An employee may elect the substitution of any accrued paid leave for periods of

unpaid FMLA leave. (FMLA 2012) Substitution means the accrued paid leave runs concurrently with the

FMLA leave period. An employee’s ability to substitute accrued paid leave is determined by the terms

and conditions of the employer’s normal leave policy. Employees may take FMLA leave intermittently

or on a reduced leave schedule when medically necessary or when the leave is due to a qualifying

exigency. However, employer approval is not required for intermittent or reduced schedule leave that is

medically necessary due to pregnancy, a serious health condition, or the serious illness or injury of a

covered service member. Employer approval also is not required when intermittent or reduced schedule

leave is necessary due to a qualifying exigency. (FMLA 2012)

When the need for leave is foreseeable, an employee must give the employer at least 30 days

notice, or as much notice as is practicable. When the leave is not foreseeable, the employee must provide

notice as soon as practicable in the particular circumstances. An employee must comply with the

employer’s usual and customary notice and procedural requirements for requesting leave, absent unusual

circumstances. In requesting leave an employee must provide sufficient information for the employer to

reasonably determine whether the FMLA may apply to the leave request. When the employee seeks leave

for a qualifying reason for which the employer has previously provided the employee FMLA protected

leave, the employee must specifically reference the qualifying reason for the leave or the need for FMLA

leave. An employer may require that a serious health condition, or a serious illness or injury of a covered

service member, be supported by a certification from the employee's health care provider, the employee’s

family member’s health care provider, or an authorized health care provider of the covered service



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member. An employer may also require periodic reports of the employee's status and intent to return to

work during the leave. (FMLA 2012)

Additionally, under certain conditions, an employer may require that an employee who takes

FMLA leave for his or her own serious health condition submit a certification from the employee’s health

care provider that the employee is able to return to work. An employee who returns from FMLA leave is

entitled to be restored to the same or an equivalent job with equivalent pay, benefits, and other terms and

conditions of employment. The employee may, but is not entitled to, accrue additional benefits during

periods of unpaid FMLA leave. However, the employer must return him or her to employment with the

same benefits at the same levels as existed when leave began. (FMLA 2012)

Workers Compensation

When an employee is a qualified worker within the workers' compensation system, his or her employer is

required to pay for workers’ comp insurance. If the worker is injured while performing job duties, then

he or she will be generally be entitled to collect benefits through workers compensation insurance. The

laws in place that create this system of compensation are also known as strict liability laws, which means

that negligence on the part of the employer is not a factor when deciding whether or not a worker may

collect benefits. But this type of strict liability comes with consequences; namely, the worker gives up his

or her right to file a lawsuit against the employer using the civil court system, even if the employer is at

fault for the accident itself. (OWCP 2012)

Corporate and Criminal Fraud Accountability Act (Whistleblower Acts)

Under the Corporate and Criminal Fraud Accountability Act, Title VIII of the Sarbanes-Oxley Act,

employees of certain publicly traded companies, companies with certain reporting requirements with the

Securities and Exchange Commission (SEC), and their contractors, subcontractors, and agents may file

complaints with the Occupational Safety and Health Administration if they believe that they have

experienced discrimination or retaliation for reporting alleged violations of the federal mail, wire, bank,



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or securities fraud statutes, any rule or regulation of the SEC, or any other provision of federal law

relating to fraud against shareholders. (SEC 2012) Generally, the employee protection provisions listed

above prohibit covered employers from discharging or otherwise discriminating against any employee

because the employee engaged in certain activities protected by law. (OSHA 2012)

The protected activities typically include:

Initiating a proceeding under, or for the enforcement of, any of these statutes, or causing such a

proceeding to be initiated and testifying in any such proceeding;

Assisting or participating in any such proceeding or in any other action to carry out the purposes

of these statutes; or complaining about a violation.

Many of the statutes specifically protect an employee's internal complaints to his or her employer, and it

is the Department of Labor's position, as set forth in regulations, that employees who express safety or

quality assurance concerns internally to their employers are protected under all of the whistleblower

statutes administered by the Occupational Safety and Health Administration. (OSHA 2012)

Conclusion

The Internet has create a society that is connected more than in any other time in history. Along with this

opportunity has come an equally great challenge in staying successful in a world where you may have

know idea how far you product might reach and who it might touch. At Zynga Inc. we are operating in a

diverse and complicated legal environment. Residents of every state and many countries around the

world might use our products, thus we must understand the wide variety of laws that apply to our

products and how to comply with those laws. I have just scratched the surface of a few of the legal issues

that face a company that strives to push the outer limit of what technology can bring to people, but I hope

that I addressed some of the most important. These issues included personal privacy laws, intellectual

property laws, and labor laws. I hope that I have given the reader a glimpse of a company that produces

casual social games is influenced by so many legal ideologies.



17

Bibliography

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Danielson, Miguel, iPhone Developers Legal Guide, Intellectual Property Law and Strategy, Danielson

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Fayle, Kevin, Understanding the Legal Issues for Social Networking Sites and Their Users, Find Law,

2010

Google Inc., Developers - Android Market (02/22/2012), http://developer.android.com/index.html

Intel Inc., Privacy Requirements and Recommendations for Application Development for the Intel

AppUp(SM) developer program, 2011

McHale, Robert, A practical Guide to iPhone Application Development, R McHale LLC., 2010

US Code, 47 U.S.C. § 230, Section 230: Protection for private blocking and screening of offensive

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http://www.copyright.gov/title17/

United States Department of Labor, FMLA (01/29/2012), http://www.dol.gov/whd/fmla

United States Department of Labor, Office of Workers' Compensation Programs (OWCP) (01/29/2012),

http://www.dol.gov/owcp/owcpabot.htm

United States Department of Labor, Corporate and Criminal Fraud Accountability Act,

Sarbanes Oxley Act (SOX) (01/29/2012), http://www.whistleblowers.gov/acts/ccfa.html

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Zynga Inc., Legal (01/21/2012), http://company.zynga.com/about/legal

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Documents

Zynga Inc. Business Law