You have to watch what you say at a party.
A conversation at a shindig at the recent Casual Connect game conference has led Machine Zone, the maker of the top-grossing Game of War: Fire Age mobile game, to file a trade secret theft lawsuit against mobile gaming rival Kabam. The parties dispute what happened at the party, but they agree that some friendly banter between two rivals escalated out of control.
The dispute started as a conversation on the evening of August 12 at a party at the Clift Hotel between Gabe Leydon, the chief executive of Palo Alto, Calif.-based Machine Zone; and Daniel Wiggins, a director of corporate development at Kabam. During this conversation, which Kabam described as banter and sparring, Wiggins made a reference to a document that Leydon considered to be top secret.
The lawsuit accuses Kabam of misappropriation of trade secrets. We don’t know for sure, as the documents filed in San Francisco Superior Court don’t say, but multiple third-parties sources have told GamesBeat that it’s about Machine Zone’s pitch to potential investors to raise $500 million in funding. The mobile publisher hasn’t acknowledged it is raising this round, but we wrote a story about how Machine Zone had circulated a pitch document before this incident took place.
Wiggins allegedly made reference to facts about Machine Zone and its profit and revenue figures, which were in the confidential document. (Any such figures have been redacted from the court records). That comment set Leydon off, and he immediately said he would sue.
In the lawsuit, Machine Zone said it “does not know how Kabam obtained this document, but brings this lawsuit because it is of paramount importance that Kabam ceases using it immediately. Machine Zone is a private company operating in a highly competitive, fast-moving industry. Disclosure of that document to Kabam has already caused it harm and Machine Zone is now at risk of suffering further, irreparable harm if Kabam is permitted to continue to possess this information.”
In his own declaration to the court, Leydon said that Wiggins made a specific reference to facts about Machine Zone that Wiggins wouldn’t know unless he had seen the document. Leydon said in the filing that the document contained information on “new technology that Machine Zone is developing, plans for future mobile games including screenshots that reveal the art work and themes of the game, Machine Zone’s business plan and analysis of its unique position in the market,” and other facts including its profit and loss information.
“I was shocked to learn that Mr. Wiggins and other Kabam employees had accessed the information in the Machine Zone Trade Secret Presentation and P&L,” Leydon said in a filing.
In a statement to GamesBeat, “Machine Zone is a quiet company that prefers to focus on our own business, but we are forced into this lawsuit because an executive at Kabam claimed directly to our CEO in front of several witnesses to have obtained Machine Zone’s confidential financial information and internal documents. Given that Kabam’s current defense is that their executive was lying we are even more certain this action is necessary.”
Kabam has a different view. In his declaration, Wiggins said he was making it up in order to make a point in the argument.
“This is like a script for HBO’s farce, Silicon Valley,” said Steve Swasey, senior vice president of corporate communications at Kabam, in an interview with GamesBeat. “This gives them fodder for Season Three. This was banter between a mid-level Kabam employee and the CEO of a competitor, at a cocktail party, glasses of wine in hand. They were sparring, with a little braggadocio, a little machismo, in a very immature way. Our employee said something he shouldn’t have said. It’s embarrassing. The fact is there is no document. There is nothing to this. The fact this has gone this far is ludicrous. It’s preposterous. It’s tantamount to what HBO is making a great comedy on.”
Machine Zone said that the danger of a competitor getting their hands on the document is that the rival could make a competitive game and get it to market faster.
This conversation had numerous witnesses, the court filings say. Game developer Arseny Lebedev declared that he participated in the conversation and that Wiggins told something (redacted) to Leydon, upon which Leydon was “extremely upset.” Jason Park, a fellow listener and game developer, declared the same thing in a court document. Park said that Wiggins had said Machine Zone’s advertising campaign with supermodel Kate Upton was a waste of money. He said there was a point in the conversation where Wiggins said he had seen a “deck from Morgan Stanley” that showed Machine Zone’s P&L. In a separate declaration, Leydon said that Wiggins had brought up specific secret metrics.
“This was when Mr. Leydon seemed to get really upset and started to shout at Mr. Wiggins,” Park declared in the court document. Park said that Leydon kept repeating that Wiggins was going to be fired, and at one point, Leydon showed Wiggins his phone and how he was immediately contacting his lawyer to initiate a lawsuit. Leydon yelled for what seemed a very long time, Park said.
“During Mr. Leydon’s rant, Mr. Wiggins was very quiet and still,” Park said.
Chris Petrovic, the senior vice president of corporate development, licensing, and publishing at Kabam, is Wiggins’ boss. Petrovic said in a filing that, a day after the party, Wiggins told him what happened and that Leydon had said disparaging things about Kabam and, in the heat of the moment, Wiggins said in response he had seen the Machine Zone document. But Wiggins told Petrovic he had not, in fact, seen the document.
Kabam also noted in a court filing that it searched files on Wiggins’ computer and didn’t find any references to the secret Machine Zone document. Machine Zone has asked the court to seal certain documents.
Machine Zone has asked for two temporary restraining orders asking, among other things, to keep Kabam’s declaration of facts private. The court has denied them both.
To access the documents, go to the San Francisco Superior Court website.
- Click “Online Services” and then “Case Query.”
- Enter “547375” for the Case No. and click Submit.
- Click on the Machine Zone v. Kabam, Inc. link.