Iron Mace’s game “Dark and Darker” (Image courtesy of Steam)
SEOUL, Feb. 18 (Korea Bizwire) — A South Korean court has ordered Iron Mace, a startup game developer, to pay 8.5 billion won to gaming giant Nexon in a trade secrets case that hinged on whether game design concepts and rules developed at a company constitute protected business secrets.
The Seoul Central District Court ruled on February 13 that while Iron Mace’s game “Dark and Darker” did not violate Nexon’s copyright for “Project P3,” the company did misappropriate trade secrets, according to local news reports.
The ruling comes after nearly four years of litigation between the two companies. Nexon had alleged that a former Project P3 team leader, identified only by his surname Choi, had transferred source code and data to personal servers before leaving to establish Iron Mace and develop Dark and Darker. The legal battle began in 2021.
In its decision, the court emphasized that the trade secrets in question weren’t the specific files from Project P3, but rather the “information” comprising the game’s components and their combination. Iron Mace had argued that Dark and Darker didn’t use any exported Project P3 data and that the overall game concepts and rules weren’t trade secrets.
The court rejected this argument, stating that “P3 information cannot be considered general knowledge, skills, or experience that defendant Choi acquired during his employment.” The judges added that the information belonged to Nexon rather than being of a personal nature attributable to individual employees.
The ruling noted that Project P3′s specific components and their combination weren’t found in earlier games, suggesting that competitors could gain significant time and cost advantages by using this proprietary information.
Several factors influenced the court’s decision, including Iron Mace’s hiring of eight former Project P3 team members, some of whom received company shares, and evidence that Iron Mace skipped initial planning stages to begin server system construction immediately.
However, the court found no copyright infringement, noting substantial differences between Dark and Darker and Project P3 as of June 30, 2021. The judges pointed out that Project P3 lacked essential extraction game elements like escape mechanics and character progression outside matches, as well as Dark and Darker’s distinctive features like a tavern-themed waiting room and altar of resurrection system.
The verdict has potential implications for an ongoing criminal investigation. The Gyeonggi Southern Police Agency referred Choi and another associate to prosecutors last September on charges of trade secret disclosure and breach of trust. Iron Mace and a third associate face copyright violation charges.
While Iron Mace filed a counter-lawsuit against Nexon for business interference, the court dismissed these claims. Nexon, which prevailed on the trade secret claims despite losing on copyright infringement, is expected to increase its damages claim to over 20 billion won in the appeals process.
The court noted that Dark and Darker generated revenue of 49.5 billion won between August 2023 and September of last year, with estimated operating profits of 29 billion won during this period.
Kevin Lee (kevinlee@koreabizwire.com)
