On March 27, 2018, Hybrid Audio, LLC (“Hybrid Audio”) sued Nintendo of America Inc. and Nintendo Co., Ltd. (“Nintendo”) for alleged infringement of RE 40,281, a reissue of U.S. 6,252,909.  The allegedly infringing products include the Nintendo Wii and the Nintendo DS.  RE 40,281 generally relates to signal processing and is part of technology used for MP3 technology, and Hybrid Audio’s argument is that Nintendo infringes via practicing various parts of the MP3 technical standard (ISO/IEC 11172-3:1993).


As part of Hybrid Audio’s complaint, it notes that Nintendo may enter a Reasonable and Non-Discriminatory (“RAND”) agreement to license RE 40,281 as part of the MP3 Standards. Hybrid Audio also indicates that products supplied by Microsoft Corporation are not part of the allegedly infringing products, suggesting that Microsoft has possibly already entered into such an agreement.

RAND agreements, sometimes called FRAND agreements (for “Fair, Reasonable, and Non-Discriminatory”), are commonly used in patent pools. In industries where standards (e.g., audio standards like MP3 and cellular communications standards like 3G or LTE) are important, patent owners often collectively pool “standards-essential” patents and mutually agree to license those patents on FRAND/RAND terms. For patent owners, this can be a good deal: once their patents become standards-essential, users of the standard must license their patent, albeit on RAND/FRAND terms. For licensees, this can also be a good deal: because all patent owners must license their standards-essential patents on RAND/FRAND terms, they can usually acquire licenses to the standard fairly easily and with reasonable terms.

Strangely, Hybrid Audio's complaint specifically identifies the Nintendo Wii and Nintendo DS as infringing products.  The Nintendo Wii was launched in 2006, whereas the Nintendo DS was launched in 2004.  35 U.S.C. § 286 limits damages to six years prior to the filing of a complaint, meaning that Hybrid Audio's recovery will be limited to the period from 2012 to 2018.  During that period, Nintendo was marketing different a next generation of game consoles (the Wii U and the 3DS), which are not referenced in Hybrid Audio's complaint.  Potential damages related to sales of the Wii and DS are likely to be extremely small.

Konami, no stranger to invalidity challenges against their video gaming patents, recently had four more patents directed to slot machines struck down as directed to abstract ideas.

On Feb. 21, 2018, the U.S. District Court for the District of Nevada granted summary judgment for defendant High 5 Games, LLC (“High 5”) against plaintiff Konami Gaming, Inc. (“Konami”).  The Court, dismissing Konami’s case, found all four of Konami’s asserted patents invalid as directed to unpatentable subject matter.



In the case, Konami alleged infringement of four patents: U.S. Patent Nos. 8,096,869, 8,366,540, 8,662,810, and 8,616,955. All asserted patents generally relate to slot machines, and High 5’s allegedly infringing products included various online and “land-based” slot machine games featuring a “Super Stack” feature (including, inter alia, “Bah, Humbug,” “Bollywood Bride,” “Dangerous Beauty,” “Diamonds of Athens The Dream,” “Shadow of the Panther,” and many others).
Claim 1 of the ’869 Patent reads:

1. A gaming machine comprising:
   a processor configured to execute a game displaying a matrix of symbol containing elements having a plurality of rows and a plurality columns;
   at least one column of said matrix comprising a portion of a simulated rotatable reel of a plurality of said symbol containing elements;
   said simulated rotatable reel comprising sections of symbol containing elements displaying a plurality of symbols that are fixed for each game played on said gaming machine;
   said simulated rotatable reel including at least one section in which a consecutive run of three or more of said symbol containing elements is populated by an identical symbol so that, as the simulated rotatable reel rotates, a consecutive string of said same identical symbol is sequentially displayed within said consecutive string of symbol containing elements; and
   said identical symbol is randomly selected anew for each play of said game, wherein said identical symbol is selected by virtually spinning a notional, non-visible, inner reel comprising a subset of said plurality of symbols.

After a lengthy discussion of claim construction, the Court found Konami’s patents’ claims “individually and collectively” invalid for abstractness.  Per the Court, the claims “perform the functions of what may be described as an aesthetic variation on a play of the game” because “the primary focus of the patents, as acknowledged even by Konami, is displaying a consecutive run of a randomly selected identical symbol in one reel of the simulated digital reels in each iteration of a game as a means of increasing interest in the game and ‘increasing probability of a winning outcome.’”  The Court was unpersuaded that the claims recited more than this idea: “[c]hanging how often a symbol appears and where it appears in a slot game without more is simply altering the manner of display of random symbols – i.e. changing the rules of the game.”

This decision underscores the continued impact of the Supreme Court’s 2014 decision in Alice v. CLS Bank.  In this case, the Court was clear: “changes to game rules of a generic slot machine using conventional technology are not patentable.”  Such a ruling may suggest that patents directed to game play rules may also be invalid as directed to abstract ideas.  Patentees may improve their likelihood of surviving similar challenges by, where possible, tying their claimed inventions to technology and technical problems.