Tencent Unit Told to Pay Gree $92 Million in ‘Freemium’ Case

Tencent Holdings Ltd.’s Supercell gaming unit was told to pay $92.2 million in damages to Japan’s Gree Inc. in a patent trial over features used in popular online games.

Supercell games infringed six patents, a federal jury in Marshall, Texas, found Friday. The verdict follows an $8.5 million win for Gree against Supercell in another patent trial held in September. A third trial between the two is scheduled for later this year.

The dispute is over features in “freemium” games, a portmanteau of “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 claimed Supercell’s Clash of Clans, Clash Royale and Hay Day games infringed its patents for ways to make the network games work, including ways to perform virtual “battles” between players, determine the frequency of acquiring valuable items and storing user and game piece information.

Gree’s lawyer Steve Moore of Kilpatrick Townsend told jurors Supercell made about $3 billion from those three games in the U.S. during the time of infringement. Gree patented the features that are the biggest revenue drivers for the games, including including getting weapons for battles and acquiring items for faster progression in the game, he said.

Supercell denied using any of the patented technology, and argued that the patents were invalid. The jury rejected Supercell’s arguments and said the infringement was willful, meaning the judge could increase the award by as much as three times the amount set by the verdict.

“Supercell respects the jury system, but is of course disappointed in the verdict,” the company said in a statement. “Supercell plans to appeal.”

Clash of Clans, with millions of players around the world who build virtual villages and compete in clan wars, has been on the market for almost a decade and still ranks as third among all strategy games on Apple’s App Store.

Tencent bought an 84% share of Supercell for $8.6 billion in 2016. The Finnish company makes some of the most popular games for mobile devices. Tencent is the world’s biggest maker of mobile games and Supercell, on its own, ranks No. 7, according to a report by researchers at App Annie.

Supercell in February reported that its 2020 revenue fell to 1.3 billion euros ($1.58 billion) though the number of active players rose.

The case is Gree Inc. v. Supercell Oy, 19-237, U.S. District Court for the Eastern District of Texas (Marshall)

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