As previously reported, Beneficial Innovations, Inc. (“Beneficial”) filed suit in the Eastern District of Texas accusing several entities of willfully infringing claims of U.S. Pat. No. 6,712,702 entitled “Method and system for playing games on a network.” Beneficial, a patent-holding company based out of Nevada, subsequently amended its complaint to include U.S. Pat. No. 6,183,366 entitled “Network Gaming System.”

On November 30th, Beneficial and three defendants - Digg Inc., CBS Interactive Inc, and Jabez Networks Inc. indicated that a settlement had been reached and filed motions requesting dismissal. The motions, which were granted by Judge Ward, dismissed all claims, affirmative defenses, and counterclaims between the three defendants and Beneficial with prejudice. While the terms of the settlements are confidential, the court’s order indicated that each party would bear their own legal fees and costs.

The ongoing litigation is Beneficial Innovations, Inc. v. Blockdot, Inc. et al., Case No. 2:2007cv00263 (E.D. Tex. 2007). We will continue to follow the litigation.

Activision has responded in federal court to a lawsuit originally filed in California state court by No Doubt over Activision’s use of the band’s likeness in “Band Hero.” According to Activision, the case implicates federal copyright law, and thus federal court (rather than state court) is the proper place for the litigation.

Previously, No Doubt sued Activision alleging, among other things, that Activision improperly used digital representations of the band members in unauthorized ways in making “Band Hero,” such as the way that the band members sing and dance in-game.

Now, in responding, Activision is denying all accusations of wrongdoing and arguing that all uses of No Doubt’s likeness are within the licensing contracts obtained from the band before the game’s release. Interestingly, there are also allegations that No Doubt’s contract with Activision does not include certain limits on the scope of the license that the licensing contracts of other artists include.

We will continue to follow this case.

With the growing popularity of video game systems such as Nintendo's Wii, Sony's Playstation 3 and Microsoft's Xbox 360, it seems that all sorts of patent holders are coming out of the woodwork to share in a piece of the profit pie. In what is undoubtedly another case of unwanted attention, Nintendo, Sony and Microsoft have been sued by Eleven Engineering, Inc. ("Eleven Engineering") in the District of Delaware for allegedly infringing three patents: U.S. Patent Nos. 6,238,289 ('289 Patent), 6,346,047 ('047 Patent) and 6,684,062 ('062 Patent). Each of the patents pertains to wireless game control devices. Eleven Engineering's complaint specifically identifies Sony's DualShock and Sixaxis wireless game controllers, Nintendo's Wii Remote and Balance Board and Microsoft's Xbox 360 Wireless Controller and Wireless Racing Wheel as allegedly infringing products.

'289 Patent - "RADIO FREQUENCY GAME CONTROLLER"

The '289 Patent is directed to adjusting a frequency of a wireless controller when weakness in signal strength is detected. One or more of the keys on the controller may further be used to manually change the frequency. Additionally, the game controller may include an indicator light that conveys signal strength by amount of time it is on (e.g., a constant "on" light would indicate strong signal strength whereas an intermittent light would indicate a weaker signal strength). Claim 1 is reproduced below as an illustrative example of the ‘289 Patent’s scope:

1. A game controller for communication between a user and an electronic game device transmitting signals to a receiver, comprising:

a portable housing; game controller keys attached to said housing for permitting the user to generate signals;

a radio frequency sender engaged with said game controller keys for transmitting the signals to the receiver; and

a controller attached to said sender for determining a selected parameter regarding the signals and for communicating said parameter to the user.

A point of contention between the parties may involve whether any of the accused controllers communicates a signal parameter to the user. Note that the claim does not require the controller to specifically include an indicator light.

'047 Patent - "RADIO FREQUENCY GAME CONTROLLER"

The '047 is similarly directed to radio frequency communication between a game controller and a game console device. In contrast to the '289 Patent, the claims of the '047 Patent are directed to the transmission of radio frequency signals from a game controller using time domain multiplexed transmissions. Thus, whether Sony, Nintendo and Microsoft infringe the ‘047 Patent may include a determination of whether their wireless controllers use time domain multiplexing transmission protocols. Claim 1 is reproduced below for reference.

1. A game controller system communicating between a user and an electronic game device, comprising:

a portable housing;

a sensor attached to said housing and responsive to operation by the user to generate signals;

a radio frequency sender engaged with said sensor, wherein said sender transmits said signals with time domain multiplexed transmission; and

a radio frequency receiver engaged with the electronic game device for receiving the signals from said radio frequency sender.

‘062 Patent – “WIRELESS GAME CONTROL SYSTEM”

The ‘062 Patent is generally directed to a wireless system for video game control that allows one or more wireless controller to concurrently communicate with a base transceiver. The benefits touted by the ‘062 patent include advantages in the areas of latency, reliability, power consumption and cross platform compatibility. The ‘062 Patent includes 2 independent claims. Independent claim 1 is directed to a combination of features including automatic channel/frequency adjustment and signal transmission using synchronous time domain multiplexing. Independent claim 13, on the other hand, is directed to controller-base transceiver compatibility and suggests a system that offers compatibility amongst multiple types of controllers and base transceivers. The issues surrounding the ‘062 Patent are likely to be more complex and infringement harder to demonstrate than for the other two asserted patents.

It is no secret that Microsoft, Nintendo and Sony have seen their fair share of gaming technology lawsuits in the past several years. For example, both Microsoft and Sony were sued by, and ultimately settled with, Immersion Corp. for use of force feedback technology in their controllers, while Nintendo entered into an out-of-court settlement with Hillcrest Laboratories for its motion sensing controllers earlier this year. Given Microsoft, Nintendo and Sony’s history of IP troubles involving its controllers and video game systems in general, it will be interesting to see whether the parties settle or decide to go the distance.

The case is Eleven Engineering, Inc. et al. v. Nintendo Co., Ltd. et al., Case No. 1:09-cv-00903-UNA (D. Del. filed Nov. 25, 2009). This is more of a hardware case, so we are not actively tracking it further.

Further to our previous report, a motion for reconsideration was filed by MGA Entertainment Inc. and the retailer defendants in this case, and on November 17, 2009, that motion was denied by the U.S. District Court for the Eastern District of Louisiana.

To succeed on the motion for reconsideration, MGA had to overcome a high hurdle. Specifically, under applicable Fifth Circuit law, MGA had to show that there was a mistake of law or fact in the court’s previous ruling, or MGA had to present newly discovered evidence that could not have been discovered previously. See Slip. Op. at 3. In other words, MGA could not prevail by simply relitigating old matters, raising new arguments, or submitting evidence that could have been presented earlier. See id.

In support of its motion, MGA argued that the court, in finding that MGA’s Laser Battle game infringed Innovention’s patent, misapplied the patent claim’s “movable” limitation to the Tower pieces in the Laser Battle game because according to the rules and strategy of the Laser Battle game, the Tower pieces should not be moved during game play.

Unfortunately for MGA, however, the court was not convinced by this argument. Indeed, the court simply cited its previous opinion, where it noted that it was enough that the Tower pieces were capable of being moved, even if the game’s instructions said that they should not be. See Slip. Op. at 4-5. In addition, the court noted that MGA made the same argument on the motion for summary judgment, and it also noted that MGA seemed to be simply disagreeing with the outcome of the court’s previous ruling rather than presenting any mistake or law or fact or newly discovered evidence. See id.

Now that MGA’s motion for reconsideration has been denied, the next ruling in this case will be on Innovention’s motion for a permanent injunction, which the court is scheduled to hear on January 13. We will continue to follow this case.

Innovention Toys LLC (“Innovention”) previously filed suit against MGA Entertainment Inc., Wal-Mart Stores Inc. and Toys R Us Inc. for allegedly infringing U.S. Patent No. 7,264,242, (“the ‘242 patent”) entitled "Light Reflecting Board Game." As summarized by Judge Martin Feldman in his recent order, the ‘242 patent is directed towards a “chess-like board game in which opposing players shoot a laser beam at mirrored game pieces in order to reflect the beam in an attempt to strike (and thus eliminate from the game) an opponent's key playing piece.” MGA Entertainment Inc. (“MGA”) is the manufacturer of the Laser Game which is distributed through Wal-Mart Stores Inc. and Toys R Us Inc. Innovention asserted that the Laser Game infringed independent claims 31, 39, 40, 41 and dependent claims 32, 33, 43, 44, 48, 49, 50, 53, and 54. One of the claims at issue, independent claim 39 recites:

A board game for two opposing players or teams of players
comprising:
a game board, movable playing pieces having at least one
mirrored surface, movable key playing pieces having no
mirrored surfaces, and a laser source,
wherein alternate turns are taken to move playing pieces
for the purpose of deflecting laser beams, so as to
illuminate the key playing piece of the opponent.

MGA filed a motion for summary judgment of non-infringement and invalidity. As part of their non-infringement arguments, MGA asserted that the Laser Battle game cannot infringe the asserted claims of the ‘242 patent because not all the game pieces are "movable." Specifically, MGA argued that game pieces known as “Tower pieces” are intended to remain in a single space during the game. Innovention, the owner of the ‘242 patent filed cross-motions for summary judgment of infringement and validity.

On October 14, 2009, Judge Martin Feldman of the U.S. District Court for the Eastern District of Louisiana granted Innovation’s motions for summary judgment of infringement and validity. The court held that Laser Game was “virtually identical” to the asserted claims. Regarding the “movable” limitation, the court construed "movable" to mean "capable of movement as called for by the rules of the game or game strategy." The court determined that the “Tower pieces” were moveable because “even if the instructions suggest the pieces ‘should’ not so be moved, that capability is nevertheless present.” The decision inherently indicates that sizing the Tower pieces differently from the other pieces as to preclude movement to another position would likely have avoided a finding of infringement.

Regarding validity of the ‘242 patent, the court considered references that disclosed chess-like computer games using lasers. The court first determined that the claims were not anticipated. Regarding obviousness, the court first noted the higher standard required for a finding of invalidy in a motion of summary judgment and determined that the defendants “failed to provide convincing evidence that adapting a laser chess computer game to a physical board game was a design step well within the grasp of a person of ordinary skill in the relevant art, which they suggest is a layperson.”

One of the attorneys for the defendants indicated that they would be filing a motion for reconsideration. The case is: Innovention Toys LLC v. MGA Entertainment Inc., Wal-Mart Stores Inc. and Toys R Us Inc., Civil Action No. 07-6510 (E.D. La.). We will follow this case.

Harmonix Music Systems, Inc., along with a host of game retailers, is asking a court in Tennessee to resume proceedings in a patent suit brought by Gibson Guitar Corporation over the "Guitar Hero" line of video games.

The suit was filed by Gibson in 2008, and alleged that the Guitar Hero games infringed U.S. Patent No. 5,990,405, entitled “System and Method for Generating and Controlling a Simulated Musical Concert Experience.” The claims in the patent were generally directed to simulating participation in a musical performance, and included the following language (claim 1) specifying a “musical instrument”:

a. a musical instrument, the musical instrument generating an instrument audio signal at an instrument audio output, the instrument audio signal varying in response to operation of the instrument by the user of the system;

Shortly after the suit was filed, it was stayed (e.g., placed on hold) because the U.S. Patent and Trademark Office (PTO) had decided to open a reexamination proceeding to reconsider the validity of the patent. It is common for courts to stay cases pending reexamination, since the outcome of the reexamination can alter the patent’s scope (or render it invalid altogether).

During the PTO reexamination, the patentee altered the scope of the claim 1 “musical instrument” as follows:

a. a musical instrument adapted for (i) making musical sounds and (ii) generating an instrument audio signal representative of the musical sounds at an instrument audio output, the instrument audio signal comprising an electrical signal output by the musical instrument that varies in response to operation of the instrument by the user of the system;

This change was made after the PTO rejected the original claim as being the same as another U.S. patent (Zimmerman, U.S. Patent No. 5,488,196, entitled “Electronic Musical Re-Performance and Editing System”). The patentee argued that the Zimmerman patent did not show a musical instrument adapted for “making musical sounds” and “generating an instrument audio signal …” as recited in the new claim 1. The PTO agreed, and indicated that it will be issuing the reexamined patent with the new claim language.

Harmonix feels that the Guitar Hero game does not have the kind of “musical instrument” that will be required by the new claim 1. In its motion asking the court to lift the stay, Harmonix indicates that once the stay is lifted, it will file a motion for summary judgment that the Guitar Hero game does not infringe on this basis.

Harmonix also indicated that it will offer a second basis for summary judgment of non-infringement. That second basis comes from a California court’s ruling in another case involving Gibson and Activision, makers of the “Rock Band” game. In that case, the California court concluded that the Gibson patent simply did not cover interactive video games, and Harmonix will ask the Tennessee court to make a similar ruling.

So now we wait and see if/when the parties take the stage again. The motion to lift the stay seems likely to be granted, since the PTO reexamination proceedings are ending. Once the stay is lifted, we will likely see Harmonix’s summary judgment motion, and that may well signal the conclusion of this case. As a caveat, though, the patentee also added a number of new claims to the patent in the reexamination process, and some of those new claims don't have the "musical instrument" language quoted in claim 1. It remains to be seen whether those new claims become the new center of attention going forward.

The case is Gibson Guitar Corp. v. Wal-Mart Stores Inc., et al., No. 3:08-0279 (M.D. Tenn.), and we’ll keep you posted as we learn more.

Background

Bleem marketed a software emulator that allowed users to play Sony Playstation games on their personal computers. Bleem's emulator appealed both to gamers who did not want to buy a Playstation console and to those who sought the enhanced graphics and higher resolution offered by PC graphics cards. The program was written and marketed by two men who reverse-engineered the code in the Playstation's components in order to mimic its functions on a PC.

While Sony would undoubtedly have liked to strike down Bleem's software itself, the legality of emulation was not an issue before the court. See Sony v. Connectix Corp., 203 F.3d 596, 607 (9th Cir. 2000) (ruling that emulators are not a violation of the copyright laws). The court noted that the availability of emulators such as Bleem may actually increase the sales of games though it hurts the sale of consoles. With most consoles being sold at a loss, one has to wonder if Sony would have been better off with the competition.

The issue before the court was whether the use of screen shots showing scenes from Playstation games in Bleem's advertising amounted to copyright infringement. Screen shots are often included in video game advertisements in order to convey to a purchaser what the game will look like on-screen. Bleem included screen shots in its advertising and packaging comparing games played on the Playstation console and games played using the Bleem emulator on a PC. The comparison was intended to show that the games looked better when played on a PC.

The district court in the Northern District of California ruled in favor of Sony and entered an injunction against Bleem's use of the screen shots. Bleem appealed to the Ninth Circuit.

Fair Use

Sony alleged that Bleem's use of screen shots violated Sony's copyrighted material. Bleem admitted that its screen shots fell under Sony's copyright but argued that their use fell under the fair use exception.

Under 17 U.S.C. § 107, the “fair use” of a copyrighted work is not an infringement. The statute provides four factors to be considered in determining fair use:

(a) the purpose and character of the use, including whether such use is of a commercial nature...;

(b) the nature of the copyrighted work;

(c) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(d) the effect of the use upon the potential market for or value of the copyrighted work.

17 U.S.C. § 107. The purpose of the fair use doctrine is to permit “courts to avoid rigid application of the copyright statute when, on occasion, it would stifle the very creativity which that law is designed to foster.” Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994). Although the fourth factor is sometimes thought to be the most important, each factor must be considered, and no single factor is dispositive. See id.

1. Character of the Use

In analyzing the first factor, the court determined that Bleem's use of the screen shots represented comparative advertising. Bleem's emulator directly competed with Sony's Playstation console and the screen shots compared the user experience on the two platforms. Noting that the Ninth Circuit had not dealt with comparative advertising, the court referenced a Fifth Circuit opinion finding fair use where a newspaper displayed a cover of TV Guide for the purpose of comparing it to an analogous publication. Triangle Publications, Inc. v. Knight-Ridder Newspapers, Inc., 626 F.2d 1171 (5th Cir. 1980). The court also cited the FTC's stance that comparative advertising is an important source of information to consumers. According to the court, Bleem's use here helped consumers make rational purchasing decisions and could inspire Sony to improve their product.

Due to the nature of Bleem's use as comparative advertising, the court found that the first factor favored Bleem. Bleem's use provided great benefits to the public without a substantial impact on the integrity of Sony's copyrighted work.

2. Nature of the Copyrighted Work

The second factor is often less important than the others; indeed, the Supreme Court has stated that the second factor is often “not much help.” Campbell, 510 U.S. at 586. The Ninth Circuit found that the copyrighted work here was generally creative in nature, but that screen shots were merely inanimate slivers of the game. Without much discussion, the court decided that this factor neither supported nor detracted from Bleem's claim of fair use.

3. Degree of Copying Involved

The third factor recognizes that the closer the copied portion gets to the whole of the copyrighted work, the less likely it is to be fair use. The court analogized video games to motion pictures and characterized a screen shot as representing 1/30th of a second's worth of the video game. The court determined that a screen shot was of little substance to the overall copyrighted work.

The court stated that “the third factor will almost always weigh against the video game manufacturer because a screen shot is such an insignificant portion of the complex copyrighted work as a whole.” Op. at 1028. Here, the third factor supported Bleem's fair use claims.

4. Effect Upon the Potential Market for the Copyrighted Work

The fourth factor, often the most important factor, looks to the impact of the use upon the market for the copyrighted work. Beyond just the defendant's use, the fourth factor considers the impact of unrestricted and widespread conduct of the sort engaged in by the defendant. Campbell, 510 U.S. at 590. The court questioned the existence of a market for screen shots but found that, even if such a market existed, any harm to the market would be the result of critique or have a de minimis effect in light of the comparative nature of Bleem's advertising. Any losses suffered by Sony would not be in the market for its copyrighted material but in its console business.

Finding that Bleem's use would have no effect on Sony's ability to do with its screen shots as it pleased, the court ruled that the fourth factor favored Bleem.

Holding and Conclusion

The court, seeing that on balance the four factors favored Bleem, held that Bleem's use was a fair use and vacated the preliminary injunction imposed by the district court, remanding for further proceedings. The holding was qualified by a caveat that the finding of fair use only applied insofar as the screen shots accurately represented how games looked on the Playstation console. The court made clear that they were persuaded by “the need for Bleem to impose minimally upon Sony's copyright with respect to these screen shots because there is no other way to create a truly accurate comparison for the user.” Op. at 1030.

This case is a good example and good precedent for the use of comparative advertising with respect to audiovisual works, and video games in particular.

Thanks to Scott Kelly for his assistance with the preparation of this case summary

A colleague from across the pond, David Musker of RGC Jenkins, forwarded to me an interesting (and humorous) article that he wrote back in 2007. It's a funny tongue-in-cheek perspective on the technical effect test used in Europe with respect to patentability of business method and software patents. The article uses the fictitious world of "Wasted Life" to illustrate his points, and instead of using business methods, the allegedly patentable (or unpatentable) subject matter is BEER. A good read.

Enjoy the article here.

This litigation has been transferred to the Northern District of California (San Francisco Division). Specifically, NCSoft filed a motion in the Eastern District of Texas alleging that, other than the marketing and sales of the allegedly infringing video games, neither party had any significant connections with the district. NCSoft’s motion noted that these actions were conducted throughout the country and additionally, Worlds.com did not oppose the motion.

The case was subsequently transferred to the Northern District of California. Worlds.com, however, declined to have the case proceed before a Magistrate Judge. The case was assigned to Judge Patel, who conducted a Management Conference held on September 14, 2009. At the Conference, Judge Patel scheduled a Status Conference for March 1, 2010, and ordered the parties to file a joint status report one week before the March 2010 Conference. Judge Patel also reserved June 6, 2010, for conducting the Markman hearing. We will follow this case and provide updates as they occur.

Well, it has finally happened. Someone got so upset that they filed a class action suit against Linden Research, the owner of Second Life.

Nothing major, but it does look like the case management conference was conducted on Sep. 14, and the claim construction hearing, i.e., Markman hearing, has been set for June 8, 2010:

Minute Entry: Initial Case Management Conference held on 9/14/2009 before Hon. Marilyn Hall Patel (Date Filed: 9/14/2009); Claims Construction Hearing reserved for 6/8/2010 09:00 AM; Further Status Conference set for 3/1/2010 03:00 PM in Courtroom 15, 18th Floor, San Francisco. (Court Reporter Christine Triska.) (awb, COURT STAFF) (Date Filed: 9/14/2009) (Entered: 09/15/2009)

Engage! Expo, taking place September 23-24 at the San Jose Convention Center, provides insight into the best practices, current trends, and effective strategies of social media and user engagement. They have 200 free expo-only passes available. This is a great chance to walk the floor and get some fantastic networking in. First come-first serve. Grab one before they're gone. Full show details are here at http://www.engageexpo.com/sj2009/

A colleague of mine, Mikko Manner, recently published an article regarding Pirate Bay in the Entertainment Law Review. The article begins, as you may know:

On April 17, 2009, the District Court of Stockholm, Sweden announced its verdict in the so-called ‘‘Pirate Bay case’’1 against four individuals associated with a file-sharing website and service called The Pirate Bay, directed at the file-sharing community. The court found all four guilty of contributory copyright infringement, and each was sentenced to one year in prison. In addition to imprisonment, the defendants were ordered to pay damages in the amount of 30 million Swedish kronor ($3.6 million, 2.7 million Euros) to a handful of entertainment companies, including Sony Music Entertainment, Warner Bros, EMI and Columbia Pictures, for the infringement of 33 specific movie, music and gaming titles.

Read the entire article here.

www.PlayCrafter.com

Here's a nice article from Wired.com about it, too.

Wi-Fi network company Bandspeed, Inc. has filed a patent infringement suit against Sony Electronics Inc., Nintendo of America, Inc. and Apple, Inc.

In the suit, Bandspeed alleges that the Sony PS3, Nintendo Wii and Apple iPhone 3G all infringe upon two of Bandspeed’s patents. The patents are U.S. Patent No. 7,027,418 (entitled “Approach for Selecting Communications Channels Based on Performance”) and 7,570,614 (entitled “Approach for Managing Communications Channels Based on Performance”), and they appear to be generally related to managing wireless communication channels using frequency hopping, so the suit is likely to target the wireless network functionality of the accused products - here’s a sample claim from the ‘418 patent:

1. A method for selecting communications channels for a communications system,
the method comprising the computer-implemented steps of:

selecting, based upon performance of a plurality of communications channels at a first time and channel selection criteria, a first set of two or more communications channels from the plurality of communications channels;

selecting, based upon performance of the plurality of communications channels at a second time that is later than the first time and the channel selection criteria, a second set of two or more communications channels from the plurality of communications channels;

wherein the communications system is a frequency hopping communications system and the plurality of communications channels correspond to a set of frequencies to be used based on a hopping sequence according to a frequency hopping protocol; and

wherein at each hop in the hopping sequence, only one communications channel is used for communications between a pair of participants.

We’ll keep you posted as we learn more. The suit is Bandspeed, Inc. v. Sony Electronics Inc. et al., No. 09-593 (W.D.Tx filed Aug. 7, 2009).

• Zynga Game Network, Inc. v. Does 1-5, Case No. 5:09-cv-03210-HRL, filed in N.D. Cal. on July 14, 2009.


• Zynga Game Network, Inc. v. Andrew Moss et al., Case No. 5:09-cv-03208-RMW, filed in N.D. Cal. on July 14, 2009.


• Zynga Game Network, Inc. v. Chris Sim II, Case No. 5:09-cv-03211-RS, filed in N.D. Cal. on July 14, 2009.


• Zynga Game Network, Inc. v. Danny Bling, Case No. 4:09-cv-03263-CW , filed in N.D. Cal. on July 16, 2009.


• Zynga Game Network, Inc. v. John Does 1-5 dba fbpokerchips.com, Case No. 3:09-cv-03265-MHP, filed in N.D. Cal. on July 16, 2009.


• Zynga Game Network, Inc. v. Nadir Erkan, Case No. 3:09-cv-03264-EDL, filed in N.D. Cal. on July 16, 2009.


• Zynga Game Network, Inc. v. Carmi Solak, Case No. 3:09-cv-03206-WHA, filed in N.D. Cal. on July 14, 2009.


• Zynga Game Network, Inc. v. Jason McCann, Case No. 3:09-cv-03209-SI, filed in N.D. Cal. on July 14, 2009.

Click here for an interesting article regarding Zynga’s online poker game and how its plethora of lawsuits may prove it isn’t trying to profit from the secondary market for chips.

Penny Arcade Expo (PAX) is a three-day game festival for tabletop, videogame, and PC gamers. They call it a festival because in addition to dedicated tournaments and freeplay areas They've got nerdcore concerts, panel discussions, the weekend-long Omegathon event, and an exhibitor hall filled with booths displaying the latest from top game publishers and developers.

I will be speaking on a panel with Seth Krauss (GC of Take Two Interactive), Greg Boyd (attorney), and Thomas Buscaglia (the self-proclaimed "Game Attorney"). It will be a lively discussion of hot legal issues, including events ripped from the headlines to intellectual property to anything else the audience wants to discuss.

Learn more about Penny Arcade Expo and Registration here: http://www.paxsite.com/registration.php.

Hey everyone, we just wanted to take a moment and give a big THANK YOU to rising 2L GWU law student Jackie Unger, who has been helping out over the summer. All those posts by "Patent Arcade Staff", well, that's Jackie. She's done a tremendous job and, I dare say, learned a thing or two in the process! I think we've even converted her as a gamer, because I loaned her an Xbox360 and haven't seen it since... ;)

Good luck next year!

-Ross & Steve

For those reading or who have a static link to our index page, we have updated the video game lawsuit index, and it is much more comprehensive and user friendly now. Be sure to check it out by clicking on the "Lawsuits" link from our home page!

Updated: May 29, 2011





To assist you in your research and review of the cases, this post will serve as a continuously updated index of the cases we're tracking. It provides a chronological listing of video game & related lawsuits broken down into the categories of patent, trademark and copyright with a few miscellaneous cases at the end. As far as we're aware, this is the most comprehensive and complete listing of video game cases and lawsuits. If you notice any that are missing, please let us know.

Table Key:
P= Patent
T= Trademark
C= Copyright
Pe= Pending
Cc= Concluded



Don't worry, we'll get to them all... eventually.

Hernandez v. Internet Gaming Entertainment, LTD.
United States District Court for S.D. Fla.
Case No. 1:07-CIV-21403-JIC, Filed May 31, 2007, Settled August 26, 2008

Much like Blizzard v. In Game Dollar, this case was about virtual property transfer in the MMORPG World of Warcraft (WoW) for real-world money. The main difference is that this suit was filed by an individual player rather than the owner/operator of the game, as was the case in Blizzard.

Hernandez, an avid player of WoW, filed suit on May 31, 2007 against Internet Gaming Entertainment, LTD. (a Hong Kong-based company) and IGE U.S. LLC., both of which were companies “engaged in the business of generating and selling virtual assets.” IGE, LTD. was later dropped because it couldn’t be served with the lawsuit in time, leaving IGE U.S. as the sole defendant. Hernandez filed a class action suit on the behalf of U.S. WoW subscribers, which he estimated could be as high as 2 million people, seeking an injunction and monetary damages.
The amended complaint alleged that "IGE’s calculated decision to reap substantial profits by knowingly interfering with and substantially impairing the intended use and enjoyment" of WoW through its gold-farming, camping spawns and spamming chat violated WoW’s Terms of Use and End User License Agreement and led to lost time, competitive disadvantage, and diminished experience for honest game subscribers. The complaint alleges that the plaintiffs were intended third party beneficiaries of the ToU and EULA between IGE U.S. and Blizzard and suffered harm as a result of IGE U.S.’s breach of these agreements.

The complaint named 7 causes of action:

1. Violation of Florida’s Deceptive and Unfair Trade Practices Act


2. Violation of Consumer Protection Statutes of Remaining 49 States, District of Columbia and Puerto Rico


3. Unfair Trade Practices Act Conspiracy


4. Breach of Third-Party Beneficiary Contract


5. Breach of Third-Party Beneficiary Conspiracy


6. Tortuous Interference with Business Relationship


7. Tortuous Interference with Business Relationship Conspiracy

Hernandez filed for class certification on May 19, 2008, but the parties settled before certification occurred. On August 26, 2008, Hernandez and IGE U.S. filed a joint stipulation of settlement in which IGE U.S. denied any wrongdoing but agreed to refrain from selling WoW virtual property for five years. It's unlikely that this agreement will impact IGE.com’s business (WoW gold is still being sold on the site) because IGE U.S. doesn’t actually operate IGE.com. Apparently IGE U.S. had sold all its assets to Atlas Technology Group six days before the lawsuit was first filed, so IGE U.S. was probably the wrong party to sue in the first place, but since IGE, LTD. was dropped early on and the changes to IGE U.S.’s corporate structure weren’t clear at the time, this outcome was probably the best possible based on the factual background they were faced with.

In a previous motion, Hernandez had asked the settlement to be filed under seal. In the order enforcing the settlement, the court denied the seal, saying the public interest must be considered. Courts are cautious about allowing a settlement under seal when class certification is still pending because courts don’t want one party to settle for a high amount that leaves the rest of the injured potential parties without remedy/damages. This court stated the settlement should be under seal only under extraordinary circumstances and said the parties could submit briefs to attempt to prove such circumstances.

As a last note, the class was never certified so the agreement – and the case being dismissed with prejudice – only holds for IGE U.S. and Hernandez. Any other WoW subscriber can file a suit against IGE (or perhaps Atlas or whoever is the operator of IGE.com) and attempt to take the case further than Hernandez did. Although both this case and Blizzard ended with settlements, it seems the door is still wide open for future litigation on illicit virtual property sales in WoW.

For more analysis over the life of the case, see Virtually Blind.

Well everyone, after four years and hundreds of posts on case updates, legal commentary, gaming news, virtual world IP, and video game patents, The Patent Arcade is proud to relaunch with our new, updated look, and a more user-friendly interface. If you're an RSS reader, please stop by www.PatentArcade.com and take a look at the new site and features. You'll also see new contributors to the site, so keep an eye out for differing perspectives when updates come out.

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From Law360:

An entertainment licensing company has begun legal combat with bankrupt video game producer Midway Games Inc. over the licenses for movies, television shows, live action productions and other properties based on the blockbuster game "Mortal Kombat."

Threshold Entertainment Inc. filed an adversary complaint Wednesday in the U.S. Bankruptcy Court for the District of Delaware challenging Midway's proposed $33 million sale of substantially all of its assets, including all previously released titles and games based on the hit Mortal Kombat series, to Warner Bros. Entertainment Inc. That deal was announced in late May.

Threshold claims that it holds perpetual exclusive rights to develop derivative works in film and television based on Mortal Kombat as well as rights to licenses on certain characters that appear in both the video games and the films and TV series based on them.

Its a peripheral issue, so I doubt we'll track it closely, but will let you know if anything significant comes of it...

Here's the complaint.

1. Violation of the Computer Fraud & Abuse Act



2. Violation of the California Computer Data Access & Fraud Act



3. Intentional Interference with Contract



4. Trespass to Chattels



5. Unjust Enrichment



6. Unfair Competition

Fenner Investments, Ltd. v. Microsoft et al.
United States District Court for E.D. Tex.
Filed 1/5/07, Decided 3/16/09 (Opinion issued 6/3/09)

Background

This case revolved around Fenner Investment’s U.S. Patent No. 6,297,751, which describes a low-voltage joystick port interface.

Prior art joysticks used resistor-like devices called potentiometers to produce analog signals. These analog signals had to be transformed into digital signals to be read by a computer. An interface circuit interpreted the joystick’s analog signal to produce a responsive digital pulse which had a pulse width that corresponded to the joystick position. The computer would measure the width of the digital pulse to figure out the position.

Newly developed computer and video game systems require lower voltage (prior art joysticks and computers were electronically compatible, both operating at 5 volts), so they didn’t work with the interface circuits/joysticks anymore. Fenner’s patent solved that problem by creating an interface circuit that allowed the old, higher voltage joysticks to be used with the newer, lower voltage systems.

The “Pulse Width” Limitation
Fenner’s patent contains a limitation that requires an infringing product to produce ‘a single cycle of variation in the logical level of a signal, a width of the single cycle of variation, assessed in time or distance, represents a coordinate position of said joystick device.”

Fenner alleged that Microsoft’s Xbox controller and Nintendo’s Wii and GameCube controllers infringed on its patent. These controllers contain thumbsticks that operate by initial analog signals being translated into 8- or 10-bit digital signals (or “words”) that get sent to the console processor which interprets the digital word to calculate the corresponding thumbstick position.

Basically, Fenner’s invention works so that analog signals are represented by the width of a variation (pulse) in a digital signal, whereas defendants’ products require the full 8- or 10-bit digital word (made up of 1’s and 0’s) to give the joystick position. As an example of a digital word, “01100000” shows a two cycle “pulse” occurring toward the beginning of the 8-bit word.

Fenner argued that the defendants infringed simply because the accused products create a pulse with a width that can be measured and, based on the pulses, a joystick position can be determined. The defendants argued that the pulse widths alone are irrelevant and instead the entire digital word is necessary to determine the joystick position.

Claim Construction
The main issue here turned on the claim construction of the pulse width “representing” joystick position and whether that meant providing some information about the position (Fenner’s argument) or providing all information necessary to determine the position (Defendants’ argument). Relying on intrinsic evidence (i.e., the patent claims, specification, and its prosecution history before the United States Patent & Trademark Office), the court found that the claim required that the pulse must communicate all the necessary information to determine the specific joystick coordinate position.

Fenner also argued that “represent” meant that pulse width could be combined with other data, such as the position of the pulse in the 8- or 10-bit word, to indicate joystick position. The court rejected this argument based on the prosecution history and claim amendment language which indicated that only pulse width, not other data, was to be used to determine joystick position.

Summary Judgment – Direct Infringement
Using the above claim construction, the court found summary judgment appropriate because there was no genuine issue of material fact. Because Fenner’s patent relied on a pulse width alone to relate the joystick position, the defendants had not infringed on the patent. This is because, in the accused devices, the pulse widths alone are meaningless and say nothing about joystick position. The pulse widths simply describe the bits. It’s the 8 or 10 bits, read together, that actually give the position. A signal representing the series of two, three, or more “1's” in a row does express “a single variation of the logical level of a signal,” but it doesn’t give any position information without the accompanying “0's” that also make up the digital word.

Summary Judgment – Doctrine of Equivalents
Generally, patent protection is limited to what’s written in the patent claims. However, to ensure fair protection of patents, the doctrine of equivalents states that a patent may be protected even when another product or process does not literally infringe on the patent, as long as the infringing product or process is deemed to be equivalent. The doctrine of equivalents was formed so that copycats could not avoid patent infringement simply by making minor or trivial variations to the claims. For the doctrine to apply, the accused product must perform “substantially the same function in substantially the same way with substantially the same result” (referred to as the function-way-result, or FWR, test).

Fenner argued that the doctrine applied because the production of binary encoded numbers was equivalent to the production of pulse widths for determining joystick position. The court determined that Fenner’s interpretation wrongly wrote the “pulse limitation” out of the claim and disregarded the “way” part of the test by being so broad that it would include any digital signal no matter what “way” that it communicated position. The court further found that Fenner failed to show equivalence in the “way” the devices operate because in Fenner’s device, only the pulses, or “cycles of variation,” are used to determine joystick position whereas in the defendants’ devices the periods of no variation are just as necessary as the periods of variation (for creating an 8- or 10-bit digital word) to determine position.

The “Lower Source Voltage” Limitation
The court also faced a second issue of claim construction concerning the definition of the device parts, because certain parts of the accused products had to operate at a lower voltage in order to be infringing.

Claims 1, 9, and 14 of the ‘751 patent call for “[a]n interface between a joystick device having a first source voltage and a processor, comprising . . . an interface circuit having a second source voltage that is lower than the first source voltage. . .” The Court’s claim construction defined “interface circuit” as “a circuit that connects the joystick and the processor.”

The ‘751 patent claims required the interface circuit between the joystick and processor to operate at a lower voltage than the joystick. In the defendants’ accused products, only the processor core, or central processing unit (CPU), operates at a lower voltage than the joystick. Fenner argued that the periphery of the processor could be included in the interface circuit, while the defendants argued that the processor included the CPU and its peripherals, both separate from the interface circuit. The claim construction then turned on whether “processor” meant the entire processor chip or just the processor core. Using extrinsic definitions as well as the context of the claim, the court held that “processor” should be defined as “the CPU along with its peripheral circuitry.” Fenner had agreed that such a definition would preclude any issues of triable fact, so summary judgment was appropriate.

Read the full opinion here.

So we've noticed some buzz on the Internet lately about the backdrop to Conan O'Brien's Tonight Show set. The guys at Serious Lunch posted the backdrop, and what appears to be a doctored version of the backdrop, adding in various elements from the Mushroom Kingdom from Mario Bros. An animated GIF with the two images can be seen here.

Folks are speculating about the similarities, so we thought we'd take this opportunity to discuss what kinds of copyright issues might be present here. And because the issues are different, we'll treat two possible "defendants" - 1) Conan and 2) the folks who created the doctored version of Conan's backdrop.

In order to prove copyright infringement, a plaintiff must demonstrate two basic elements: 1) ownership of a valid copyright, and 2) copying of protected expression.

The first element, ownership of a valid copyright, is usually an easy element to prove. Copyright protection exists from the moment that an author fixes a work in a tangible medium of expression. So the moment an artist puts brush to canvas, or when a writer puts pen to paper (or hits the "save" button), a copyright exists. The result is the same when the "author" is a computer game artist. At some point the artist drew the Mario images, either on paper or on a computer, both of which are tangible media of express, and both of which would result in a copyright for those images. There might still be some issues of whether the artist that drew those images came up with the original concept himself or herself, as opposed to copying it from yet some other source, but let's assume the design is original to the author. The author worked for Nintendo (another assumption), and so Nintendo owns the copyright because that was created by an employee in the ordinary course of employment and is therefore a work made for hire under U.S. copyright laws (we're also assuming U.S. law applies, because we're not Japanese legal experts :)).

The second element, copying of protected expression, is a little more difficult to prove. Copying is proven by either direct proof of copying (e.g., offering testimony from someone who actually saw the alleged copier copy the protected work - this hardly ever happens), or with indirect proof of copying (which is more common) by demonstrating 1) access to the protected work + 2) substantial similarity between the copied work and the alleged infringing work. Access can even be inferred when the two works are strikingly similar such that no reasonable person would conclude they could be that similar absent some level of copying.

Access can be proven either by direct evidence, i.e., the alleged infringer admits that he or she had access to or otherwise reviewed the copyrighted work, or by circumstantial evidence, e.g., through widespread dissemination of the copyrighted work to the public. Nintendo has certainly sold its fair share of Mario games. Indeed, one web site estimates that Mario games have sold over 160 million copies starting with Super Mario Bros. on the Nintendo Entertainment System (NES). Widespread dissemination appears to be present. However, how many of those copies included the stuff in the images above? We're guessing the answer is still in the millions.

Ok, assuming there is access to Nintendo's stuff by both Conan (or his designers) and the folks who created the doctored image, is there also substantial similarity? What amounts to substantial similarity? Different courts have used different tests, but it boils down to a determination of whether there is a remarkable resemblance between the original and allegedly copied works. Here the analysis is a bit different between Conan and the doctorer. Does the Conan backdrop, without the stuff added in the doctored image, look like any Mario game screen or image? How about the version created by the doctorers?

Even if there is access + substantial similarly, designers over at NBC, or the creators of the doctored version, might still have some defenses they can rely on. First, independent creation is a complete defense to copyright infringement. If the designers or doctorers can prove that the similarities between their respective images and Mario's stuff are simply coincidence, then there is no infringement no matter how similar the two works are.

In addition, they might be able to demonstrate that their use is a fair use of the copyrighted work. A fair use of a copyrighted work is not infringement. Fair use includes "such use by reproduction in copies or phonorecords..., for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research." 17 U.S.C. sec. 107. Other uses might also be fair uses of the copyright work, based on an analysis of the following four factors:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes. NBC is a commercial entity whose primary purposes is to air entertaining television shows that draw an audience, allowing them to sell commercials to advertisers for financial gain. The Tonight Show, however, does have a news component to it, insofar as it discusses current events, interviews notable figures, etc. The folks who created the doctored image appear to have done it simply to make an editorial point.

(2) the nature of the copyrighted work. This factor is analyzed based on whether a copyrighted work is creative versus factual. Art, fiction, and sculpture are purely creative, and therefore receive stronger copyright protection than factual works such as compilations of historical facts, news articles merely providing factual content, and nonfiction books. The elements of Mario's games are artwork, and appear to be a creative work deserving strong copyright protection.

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole. This factor raises an interesting question: What is the copyrighted work that was allegedly copied? In the Conan backdrop, is there even any Mario game screen having an outline that looks like that backdrop? In the doctored image, if the individual elements were copied (e.g., the Oompa Loompa mushroom by itself) from a Nintendo work, then how much of that work was just the Oompa Loompa?

Some courts also look at what components the U.S. Copyright Office included within the registration certificate. We have no knowledge of whether Nintendo has registered its copyright in the elements of the Mushroom Kingdom or not, but Nintendo could register the copyright in the individual screenshots and elements (e.g., the Oompa Loompa mushroom) making up the panels allegedly copied for Conan's backdrop.

(4) the effect of the use upon the potential market for or value of the copyrighted work. This factor is often given more weight than the orthers, sort of under the theory "no harm, no foul" (that's not legalese; just an analogy). We doubt that Nintendo was making much business off of licensing its works for set backdrops, but you never know. Courts also look to potential markets for copyrighted works, so if there is a possible market in this area, that could be taken into account.

Another possible defense is to argue that the works are not substantially similar at all, but rather Conan's backdrop and/or the doctored image are so transformative from the original inspiration that they can only be said to contain a similar "idea" but that the "expression" is different. This is known as the idea/expression dichotomy of copyright law. Copyright does not protect ideas; copyright only protects the actual expression of an idea.

And as a final note, the U.S. Copyright laws include a separate provision for infringement by "derivative" works. A classic example of a derivative work would be when an artist cuts up a bunch of copyrighted images and makes a new collage out of it. The doctorers here may have arguably created a derivative work, if they copied snippets from various Mario games.

What do we think? Well, being that we are attorneys, and that we don't have all the facts, we will keep our opinions to ourselves. You never know what facts will come to light when two parties get in a dispute, and the game can change in an instant when there is a new development. Could it be a parody and therefore protected by the First Amendment? Could it be independent creation? Could it be de minimus copying? Could it be fair use? It could be any of the above given the right facts. Heck, this could be one giant publicity stunt: NBC or the doctorers might already have a license from Nintendo, and this could all be for the sake generating publicity when the cult of gaming elite inevitably notices the similarity.

As you may recall this case consisted of a claim by Fenner that defendants had infringed on its U.S. Patent No. 6,297,751 for a low voltage joystick port interface. Basically, the patented technology was a way to hook up old joysticks to new computers (see Bloomberg.com’s brief synopsis of the case). On 3/16/09, the day before the jury trial was to begin, the court entered an order granting summary judgment to defendants Microsoft and Nintendo (Sony, an original named defendant, was dropped from the suit 2/26/07), finding no patent infringement. For more information regarding the case conclusion, click here. The court issued its full opinion and final order of summary judgment on 6/3/09. Further analysis of the opinion is forthcoming once we obtain and review the final order.

Article One Partners is a company that offers rewards to people for finding prior art that can be used to try to invalidate patents, and Article One is willing to pay serious money to those who find that prior art. Most recently, Article One Partners paid out $50,000 to an anonymous individual for identifying prior art that, Article One Partners believes, invalidates at least one of the two Worlds.com patents. The Article One Partners press release indicates that they believe the prior art they found invalidates Worlds.com's earlier '690 patent. They do NOT indicate that they believe it also invalidates the latter '558 patent, but instead indicate that the prior art may also be "relevant" to the latter patent. Indeed, it may be "relevant", but only one claim needs to remain valid and infringed for NCSoft to be on the hook for damages and an injunction. Nonetheless, Article One clearly believes they have some good prior art, and is willing to license its findings to interested parties.

While this certainly appears to be good news for the virtual world community in general, NCSoft is not out of the woods yet. If anything, this might help distill the issues in the case and reduce the number of claims being litigated between the parties, but it doesn't appear that the case is going to go away any time soon. Stay tuned...

1. 
   
   Yahoo!’s actions in operating its fantasy football league did not violate any publicity rights owned or controlled by NFL players;



2. 
   
   If Yahoo!’s actions did violate those rights, the First Amendment supersedes that right of publicity; and



3. 
   
   If Yahoo!’s actions did violate those rights, federal copyright law preempts the trademark right or right of publicity by dedicating information used in a fantasy sports games business to the public.

This suit seems almost identical to CBS Interactive mentioned above, as well as C.B.C. Distribution and Marketing Inc. v. Major League Baseball Advanced Media, L.P., 505 F.3d 818 (8th Cir. 2007), which dealt with similar publicity issues in fantasy baseball. In both of these other declaratory judgments, the courts found that even if the plaintiff did violate defendants' publicity rights, the plaintiff enjoyed a First Amendment right to use the publicly available players' names and statistics that prevailed over any right of publicity. To escape this precedent set in the 8th Circuit, it seems possible that NFL Players may attempt to transfer venue to the Southern District of Florida as the defendants attempted in CBS Interactive (to no avail). Why Florida? In Gridiron.com, Inc. v. Nat'l Football League, Player's Ass'n, Inc., 106 F. Supp. 2d 1309, 1315 (S.D. Fla. 2000), which appears to be the only other case addressing publicity rights and the First Amendment as they relate to the fantasy sports industry, the court rejected the plaintiff's argument that a fantasy football provider had a First Amendment right to use players' names and statistics without a license. This kind of split among jurisdictions may result in a trip to the Supreme Court, so we'll keep an eye out ...

A full version of the complaint can be found here.

6. A method for generating a composite facial image, said method comprising the steps of:
a) providing a machine-readable storage medium for storing graphical representations of basic morphological elements, said graphical representations being proportionate to one another and having respective boundaries, the graphical representations of basic morphological elements including skin components around their respective boundaries, the skin components having skin tones substantially similar to one another;
b) receiving user data indicative of a set of data elements, each data element in said set of data elements being associated to a respective graphical representation of a basic morphological element in the machine-readable storage medium;
c) processing the set of data elements to locate in the machine-readable storage medium corresponding graphical representations of basic morphological elements;
d) combining the graphical representations of basic morphological elements located to generate a digital representation of a facial image, at least two graphical representations being combined such that their skin components having substantially similar skin tones meet at a boundary; and
e) displaying the digital representation of the facial image on display means.

16. A method for generating an electronic library of basic morphological elements suitable for usage in a composite picture system, said method comprising the steps of:
a) providing a plurality of facial images;
b) digitizing the facial images;
c) processing the digitized facial images to create a plurality of graphical representations of basic morphological elements of a certain facial image, said graphical representations of basic morphological elements including skin components having different skin tones;
d) applying a filtering process to said graphical representations of basic morphological elements to derive modified graphical representations, the modified graphical representations including skin components having skin tones substantially similar to one another;
e) processing said modified graphical representations to generate calibrated graphical representations, said calibrated graphical representations being substantially proportional to one another; and
f) storing the calibrated graphical representations on a computer-readable storage medium.