Activision Publishing, a division of
Activision Blizzard (
recently announced that it has filed a lawsuit claiming patent
infringement against Worlds Inc. and Worlds Online Inc.,
well-known developers of 3D virtual spaces. Activision Publishing
filed the lawsuit in the U.S. District Court for the Central
District of California.
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Activision alleged that Worlds Inc continues to violate two
patents related to interactions in the virtual world.
Activision's lawsuit counteracts Worlds Inc.'s earlier lawsuit
filed on Mar 30 this year. Worlds Inc. alleged that Activision
violated its patent related to "System and Method for Enabling
Users to Interact in a Virtual Space".
Activision's claims that Worlds Player violated two patents
namely "Navigation with optimum viewpoints in three-dimensional
workspace interactive displays having three-dimensional objects
with collision barriers" and "Climability: property for objects
in 3-D virtual environments".
Although it is very difficult to predict a winner in these types
of lawsuits as they tend to linger over a period of time, we
believe that eventually both the companies will settle in the
Activision is going through tough times following court's
decision to stall its proposed purchase of $8.17 billion worth of
shares from Vivendi SA, its majority shareholder. On Sep 18, a
Delaware Court judge ruled that Activision needs to seek
shareholder approval to move ahead with the proposed buyback.
On Oct 10, Activision is set to appear before the Delaware
Supreme Court to appeal against the lower-court injunction that
stalled the deal. Although Activision has confirmed its
commitment towards the deal and is also likely to take
shareholder approval, we believe that time will be a major
The agreement between Vivendi and Activision will automatically
terminate after Oct. 15. Hence, a successful appeal in the
Supreme Court will revive the chances of the completion of the
deal. However, an unsuccessful attempt will hurt the stock price
in the near term.
Nevertheless, Activision's innovative product pipeline is a major
growth catalyst going forward. However, stiff competition from
the likes of
Electronic Arts (
Take-Two Interactive Software Inc. (
Zynga Inc. (
remains a major headwind.
Currently, Activision has a Zacks Rank #3 (Hold).