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The Adventures and Travails of Zynga v. Vostu, Part 2.5 PDF Print E-mail
Written by Quinn Smith   
Tuesday, 30 August 2011 15:52

Sometimes on the blog, we like to dig deeper into cases or issues that illustrate the legal principles important for doing business in Brazil. Think of it as a case study that helps us all understand a little better doing business in and with Brazil. This week, we return to the Zynga v. Vostu case, a copyright infringement litigation currently playing out in the courts of California and São Paulo. For a little background on the case, check out our first post when Zynga filed suit against Vostu in California.

In the initial article, we mentioned the prospect of Brazilian litigation and how it may be necessary to really get effective relief from Zynga's position. We later mentioned the benefits of a parallel litigation approach, noting Zynga's success in getting an injunction quickly in Brazil. As the case has continued in both courts, Vostu has now responded with a request in the California court to enjoin, or stop, Zynga from enforcing the Brazilian injunction. The court initially complied, directing Zynga to not enforce the injunction on a temporary basis. The California court further directed Zynga to "show cause," or say why, the California court should not prohibit Zynga from continuing with its litigation in Brazil in all respects.

As one can imagine, this set off a flurry of motions and responses, and a week ago, the California court held a hearing to decide if it should require Zynga to stop any further litigation in Brazil. On August 26, the court issued a short order dissolving the temporary injunction and denying Vostu's request for a permanent injunction. In other words, the California court has decided it will not prohibit Zynga from continuing its lawsuit in Brazil. So what is going on and what can this case show us?

  • Wording is important. Looking at the decisions of the California court, it is exerting its power over Zynga because Zynga is located in California. The California court is not directing the Brazilian court to stop. The California court does not have this power, but it does have power over Zynga.
  • Dual-track litigation is complex. There are numerous filings from both sides, and the parties have relied on Brazilian professors and attorneys to explain Brazilian law to the US court. This is common and necessary when dealing with a foreign legal issue, and it adds a layer of complexity to the case. Both parties have done a good job getting into the meaning of the Brazilian law and then explaining that to the judge, another potentially tricky issue.
  • Corporate structure is key. One of the interesting things to note are the different names of the parties in the two litigations. For example, in the Brazilian lawsuit, Zynga targeted Google Brasil and Vostu Brasil, but in the US lawsuit, Zynga sued Vostu USA and Vostu LLC, both companies resident of the US. This distinction in the naming of parties may explain why Zynga is more willing to sue Google Brasil, even though Google is also an investor of Zynga in the US. Suing Google Brasil is one thing and quite often different than the US company.
Right now, the Brazilian appellate court has stopped the application of the injunction granted against Vostu while Vostu appeals the injunction. In the US, the California court has decided not to try and prohibit Zynga from continuing with its Brazilian lawsuit. Both cases will now continue, although Zynga does appear to have the upper hand at this point because it has an injunction in Brazil that could potentially be enforced when the appellate court decides Vostu's appeal.
In addition, it is a bit difficult to guess as to the direction of proceedings in both the US and Brazil. The California court says a fuller explanation of its decision is coming, and the Brazilian appellate court is considering Vostu's appeal against the entry of the injunction. We'll know more in the coming weeks and months, but in the meantime, the case is worth watching to see how parties can use dual-track litigation involving the US and Brazil.

 

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