In the ongoing dispute between Anascape, Ltd., an invention and license-holding company, against Nintendo of America regarding Nintendo's use of three patents a jury had found the video game company to infringe, the judge on July 23, 2008, granted a permanent injunction in his final decision. The injunction was stayed with certain conditions.

The injunction prevents Nintendo from selling its Wii Classic controller, GameCube controller and GameCube Wavebird wireless controller in the U.S. until the expiration of the earliest of the three patents, at least through 2012.

Judge Clark stayed the injunction, however, pending appeal, but Nintendo must deposit 7% of the sales price of each of the three controllers sold and 5% of the sales price of each Wii Remote sold into an escrow account. The number of Wii Remotes that Nintendo must deposit money for the sales of maxes out at twice the number Wii Classic controllers sold. Nintendo must deposit the funds for the controllers regardless of whether they're sold individually or bundled with other products. The money can be released to either party by either a court order or a settlement between the two companies. Clark also awarded costs to Anascape and denied all other pending motions.

Judge Clark had indicated that the case "presented the classic 'battle of the experts,' and the jury clearly chose to believe Anascape’s infringement expert.”

The patents in the case were U.S. Patent Numbers 5,999,084; 6,102,802; 6,135,886; 6,208,271; 6,222,525; 6,343,991; 6,344,791; 6,347,997; 6,351,205; 6,400,303; 6,563,415; and 6,906,700.

The case is Anascape Ltd. v. Microsoft Corp. et al., case number 9:06-cv-158, in the U.S. District Court for the Eastern District of Texas.

An appeal is sure to follow.

Banner & Witcoff Secures Favorable Settlement for Client Regarding Intellectual Property and Land Dispute in Second Life

(Washington, D.C., July 22, 2008) - Banner & Witcoff Ltd., one of the largest law firms in the United States dedicated solely to the practice of intellectual property law, is pleased to announce they have secured a favorable settlement on behalf of its client regarding a dispute in Second Life regarding ownership of regions of virtual land, and associated intellectual property. Second Life is an online virtual world, owned by Linden Research, Inc., and created by its millions of residents around the world.

The land in dispute is Sailor’s Cove, a collection of twenty-one regions (private islands) within the virtual world of Second Life. Sailor’s Cove was developed by three parties and designed as a waterfront community that allows avatars to purchase land, participate in virtual yachting and sailing events, and become active in the community of residents of Sailor’s Cove.

The property and ownership dispute was between Patrick Leavitt, owner of record of Sailor’s Cove with Linden Research, Inc., and Izabella Bentham and Tasha Kostolany. While not owners of record with Linden Research, Inc., Bentham and Kostolany were each publicly acknowledged within Sailor’s Cove as “Owner and Sailor’s Cove Partner,” and were instrumental in the development and success of Sailor’s Cove. Patrick Leavitt had subsequently asserted sole ownership of Sailor’s Cove.

Ross A. Dannenberg, partner at Banner & Witcoff, represented Bentham and Kostolany. Dannenberg successfully avoided litigation and secured financial compensation for Bentham’s and Kostolany’s contributions to Sailor’s Cove. Dannenberg states “while Second Life may be a virtual world, the intellectual property is real, the contracts are real, and residents are still subject to real world laws.”

Dannenberg is one of several attorneys at Banner & Witcoff that specializes in protecting intellectual property rights for clients in the video game, virtual world, and computer industries. Collectively, Banner & Witcoff attorneys have decades of experience counseling clients and litigating cases involving computers, video gaming and virtual worlds, and electronic arts. Please visit our website at www.bannerwitcoff.com for more information regarding Ross Dannenberg and Banner & Witcoff.

*Please note: to protect individual privacy, all parties involved in the case are referred to by their Second Life avatar name, except Ross Dannenberg (SL avatar: Aviator Kidd).

Please direct all media inquires to Colleen Strasser at cstrasser@bannerwitcoff.com or 312.463.5465

About Banner & Witcoff, Ltd.

Banner & Witcoff, Ltd. is dedicated to excellence in the specialized practice of intellectual property law, including patent, trademark, copyright, trade secret, computer, franchise and unfair competition law. The firm actively engages in the procurement, enforcement and litigation of intellectual property rights throughout the world, including all federal and state agencies, and the distribution of such rights through licensing and franchising. The firm has over 90 attorneys and agents in its Chicago, Washington, DC, Boston and Portland, OR offices.

Please note, the facts of every case are different. Prior results don't guarantee future success.

If you build it, they will come. The tagline from Kevin Costner’s baseball film “Field of Dreams” seems appropriate to describe patent litigation. If the industry builds a successful product type, in this case, music-based rhythm games, then competitors will inevitably jockey for position. Patents, being a quintessential tool for protecting innovative market space, are a classic approach to this jockeying.

This jockeying took another step forward this week when Konami, makers of the upcoming Rock Revolution® musical group rhythm game, filed suit against Harmonix, makers of the popular Rock Band® musical group rhythm game, accusing Harmonix of infringing three of Konami’s patents.

Perhaps because Konami has already established itself in the general rhythm game space, with the popular Dance Dance Revolution® and Karaoke Revolution® series of games, Konami appears to have entered the musical group rhythm game space with patents in mind, filing early patent applications on its concepts, and the three in suit are directed to fairly straightforward elements of such games.

The first, U.S. Patent No. 6,390,923, is entitled “Music Playing Game Apparatus, Performance Guiding Image Display Method, and Readable Storage Medium Storing Performance Guiding Image Forming Program,” and generally appears (reading claim 10 of this patent) directed to dividing the game play screen into sections for different instruments, displaying instruction patterns for each instrument, and outputting a sound corresponding to operation of the instrument. Figure 15 from the '923 patent shows an example screen.

NOTE: Formal interpretation of the patents will require a more thorough legal analysis of the patent and its history. The initial summaries here should not be construed as formal legal opinions of any kind.

Copies of the patents in suit (6,390,923, 6,425,822, and 6,645,067) are available for free from the USPTO web site or from Google patent search.

Copy of the complaint: KonamiComplaint.pdf

If you owned a Sega Genesis at any time in your life, chances are you will NEVER forget the singsong jingle Sega played every time you started up your system. Who would have thought that the unforgettable sound effect you grew to love (or hate) had a secret agenda?

The inclusion of Sega’s logo during the beginning of every game actually started out as part of an anti-piracy measure, and became the flashpoint of an important copyright lawsuit affecting reverse engineering and the gaming industry in 1992. The developer and publisher Accolade, who brought games like “Ishido” and “Turrican” to gamers, wanted to bring their games to the new Sega Genesis system in the early nineties. However, Sega only allowed officially licensed games play on the Genesis system, and used the anti-piracy measure to enforce this policy. After reverse engineering the Sega anti-piracy code, and including the functionality of that code in their ported games, Accolade was able to sell their games without buying an official license from Sega.

Not amused by Accolade bypassing its financially-beneficial licensing program through reverse engineering, Sega filed a lawsuit against Accolade for copyright infringement. Sega alleged that Accolade infringed on the copyrighted anti-piracy code to port Accolade’s games, but Accolade claimed defended itself by saying that this was necessary to make Accolade products compatible with Sega’s console, and thus should be considered fair-use. The Ninth Circuit Court of Appeals agreed.

The court recognized the possible fair use implications, and proceeded to determine whether Accolade’s actions, while detrimental to Sega’s anti-piracy practices, may have a greater “public benefit” and be considered a fair use. In order to determine whether a use of a copyrighted work is a fair use, a court considers 1) the purpose and character of the alleged infringing use (e.g., commercial, educational, research, etc); 2) the nature of the copyrighted work (creative versus factual/functional); 3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole (e.g., did the alleged infringer take 90% of the copyrighted work; did the infringer take the “heart” of the copyrighted work; or was only a de minimus amount used); and 4) the effect on the potential market for the copyrighted work. Judge Reinhardt stated that the actions of Accolade would not hurt Sega’s game sales, for the important part of the game is the content, not the compatibility code segment that Accolade reverse engineered. An individual will purchase one game over the other based on content and creativity, neither of which was copied by Accolade. Accolade, by standing up to the licensing fees demanded by Sega, essentially represented the independent gaming community.

The court understood that if more game developers were able to bring their products to market because of a lack of licensing fees, the increase in suppliers would have a two-fold impact on the market. The more companies supplying video games, the lower the price of video games will fall. Also, with the influx of new games in the market, the content of every game will have to improve to separate each game from the others.

In addition, the court believed that Accolade had no way to make their product compatible with the Sega Genesis other than to reverse engineer Sega’s copyrighted code. The unique nature of machine code meant that the only way to make the code human-readable was to disassemble it, and only then could one study the code and understand the functional ideas behind it (functional aspects and ideas contained in a work are never copyrightable).

For these reasons, Reinhardt’s decision declared that “[w]here there is good reason for studying or examining the unprotected aspects of a copyrighted computer program, disassembly for purposes of such study or examination constitutes a fair use.” Accolade could disassemble Sega’s code and copy it to study the anti-piracy measures. As long as Accolade’s actions were beneficial to the public, the court saw no reason to uphold Sega’s copyright infringement claim. Accolade, by standing up to the licensing fees demanded by Sega, essentially represented the independent gaming community. Software and hardware developers soon began to reexamine their anti-piracy measures and licensing fees in view of this ruling, which established initial legal guidelines for reverse engineering as fair use.

(With thanks to Mike Harkness for his assistance in the preparation of this post.)