Zynga 2012 Annual Report Download - page 15

Beginning on March 31, 2013, we will no longer be obligated to display Facebook advertising units or
utilize Facebook’s payment services (Facebook Credits and/or local-currency based payments) on any Zynga
game pages. We will have the right to process our own payments, and Facebook will no longer have the right to
receive 30% of the proceeds from payments made on the With Friends Network.
In addition, as of March 31, 2013, we will no longer be required to use Facebook as the exclusive social
platform for the Zynga properties, or be required to grant certain title exclusivities of Zynga games on the
Facebook platform, subject to certain exceptions. However, any social game launched after March 31, 2013 by
Zynga will generally be available through the Facebook web site concurrent with, or shortly following, the time
such game is made available on another social platform or a Zynga property.
The addenda, including our recent amendments, with Facebook will each expire in 2015. Our current
agreements with Facebook allow our users to use Zynga/Facebook co-branded game cards for the redemption of
Facebook Credits and also allow for our own Zynga game cards, which were previously printed and delivered to
our distributors and retailers, to continue to be sold to game players until all such cards are sold. We do not plan
to print and sell more of our own cards for redemption on the Facebook platform, however we have the right to
sell our own game cards on other platforms, including on the With Friends Network after March 31, 2013.
Intellectual Property
Our business is significantly based on the creation, acquisition, use and protection of intellectual property.
Some of this intellectual property is in the form of software code, patented technology and trade secrets that we
use to develop our games and to enable them to run properly on multiple platforms. Other intellectual property
we create includes product and feature names and audio-visual elements, including graphics, music, story lines
and interface design.
While most of the intellectual property we use is created by us, we have acquired rights to proprietary
intellectual property. We have also obtained rights to use intellectual property through licenses and service
agreements with third parties. These licenses typically limit our use of intellectual property to specific uses and
for specific time periods.
We protect our intellectual property rights by relying on federal, state and common law rights, as well as
contractual restrictions. We actively seek patent protection covering inventions originating from the company
and acquire patents we believe may be useful or relevant to our business. We control access to our proprietary
technology by entering into confidentiality and invention assignment agreements with our employees and
contractors, and confidentiality agreements with third parties. We also actively engage in monitoring and
enforcement activities with respect to infringing uses of our intellectual property by third parties.
In addition to these contractual arrangements, we also rely on a combination of trade secret, copyright,
trademark, trade dress, domain name and patents to protect our games and other intellectual property. We
typically own the copyright to the software code to our content, as well as the brand or title name trademark
under which our games are marketed. We pursue the registration of our domain names, copyrights, trademarks,
and service marks in the United States and in locations outside the United States. Our registered trademarks in
the United States include “Zynga,” the names of our games and company taglines, among others.
Circumstances outside our control could pose a threat to our intellectual property rights. For example,
effective intellectual property protection may not be available in the United States or other countries in which our
games are distributed. Also, the efforts we have taken to protect our proprietary rights may not be sufficient or
effective. Any significant impairment of our intellectual property rights could harm our business or our ability to
compete. Also, protecting our intellectual property rights is costly and time-consuming. Any unauthorized
disclosure or use of our intellectual property could make it more expensive to do business, thereby harming our
operating results.
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