In its long awaited decision, the United States Supreme Court has ruled in the Bilski case. The Supreme Court affirmed the Federal Circuit's decision, but on different grounds, holding that Mr. Bilski's invention, a method of hedging investment risk, is unpatentable because he is trying to patent an "abstract idea."

Here is a comprehensive writeup by one of my colleagues, Brad Wright.

Download the full decision here.

• Trademark infringement and dilution & contributory trademark infringement and dilution by Linden and Vezina (included as a John Doe defendant). Minsky alleged that Vezina’s SLART Garden infringed on his SLART trademark. The complaint states that by denying the validity of Minsky’s trademark, allowing Vezina to maintain SLART Garden, and refusing to identify Vezina so that Minsky could include him in the lawsuit, Linden contributed to trademark infringement.


• Tortious Interference by Linden when it hid Vezina and refused to take down infringing materials, which Minsky claimed Linden did in order “to try to intimidate and coerce [Minsky] into giving up [his] lawful trademark and rename [his] publication and other activities in a manner that would give them control of the content.”


• Fraud by Mitch Kapor (former Chairman of Linden), Philip Rosedale (former CEO and current Chairman of Linden) and Linden Research. Minsky claims they enticed people (including Minsky) to join Second Life by promising protection of their IP rights in the virtual world but then failed to provide that protection.

It seems that Gibson’s efforts to enforce its musical concert participation patent (U.S. Patent No. 5,990,405) have officially ended. Previously we told you that Gibson’s Tennessee case against Harmonix (and its "Rock Band" game) was on its way back on track after being on hold for a while. While it was on hold, a California court ruled that the same patent did not cover Activision's "Guitar Hero" game, and it seemed likely that the Tennessee court would end up doing the same for "Rock Band."

On Friday, the Tennessee court dismissed the case in view of a settlement that the parties had reached. This dismissal would appear to end the battle over this patent.

Settlement terms are confidential, although we can speculate that the things that happened while the case was on hold did not make Gibson’s life easy. First, proceedings at the Patent Office suggested that the “musical instrument” required by the Gibson patent had to be capable of making music. This may have caused Gibson to drop its claims against the “Guitar Hero” and “Rock Band” guitars (I’ve never been able to make actual music with those things), and the holdout claims may have been leveled against the drums in the “Rock Band” game (on the theory that the drums could at least still make music).

Second, when the California court ruled that the Activision “Guitar Hero” game was not covered by the patent, the California court doubted whether the patent covered any interactive video game at all (the patent’s description focuses on letting a user simulate participation in a musical concert, which arguably is not an interactive game type of thing). Even if Gibson was now only focusing on the "Rock Band" drums as being “musical instruments” to get around the first issue, this finding by the California court would still have been thorny for Gibson to get around.

The vast majority of cases settle before the end of trial and appeals. Mounting evidence and court rulings developed during the case help resolve points of contention, and make the chances of success clearer for both parties to see, and eventually the parties are able to make the business decision to end it at terms they can live with. With the settlement in this case, here’s hoping Gibson, Activision, Harmonix and the others can move on and give us all the next generation in great musical games!

The Magnavox Co., et al. v. Chicago Dynamic Industries, et al.

201 U.S.P.Q. 25 (N.D. Ill. 1977)


For those of you who love home video games as much as we do, the following lawsuit will be of interest.


The case concerns the Magnavox Company (makers of the Odyssey) who released a ping-pong style game you may have heard of: Pong. The defendants in this case released similar ping-pong games and Magnavox sued for patent infringement.


At issue in the case were three similar patents that all dealt with a “Television Gaming Apparatus.” While there were several questions at issue in the case, the court focused on the issue of whether the patents were obvious or anticipated in light of one another, as either finding would lead to invalidity.


I. Background


On April 17, 1973, United States Patent 3,728,408 ("the '408 patent"), was issued to Ralph Baer. In his oral judgment of the case, District Judge Grady commented: “The ‘408 patent, I think, is the pioneer patent in this art . . . with the players participating in the game in an environment such as a home or some place where a large computer would clearly not be available.” After issuance of the ‘408 patent, for the first time, video games would be brought to the home.


Two years later, on August 5, 1975, William Rusch received a similar television patent. This patent, United States Patent RE28,507 ("the '507 patent'), “discloses a movable hitting spot which is controlled by the player and which, by striking a hit spot, can change the direction of that hit spot.” The ‘507 patent used the term “distinct motion,” which Judge Grady interpreted as referring not to “a predictable motion,” but rather to motion that is different from the motion that characterized the hit spot immediately prior to the striking of the hit spot. This idea of changing the direction of the hit spot was not present in the development of games at this time. Before this patent, a player would simply turn a knob which set in motion a series of events that he had no further control over. After the ‘507 patent, however, players could now control the movement of the ball based upon the area of the hit spot the ball struck!


II. Analysis


One question presented to the court was whether the feature of patent ‘507 was obvious at the time of its production. Others had imitated the ‘507 patent in similar ping-pong style games, but Judge Grady found that the novel feature of ‘507 was not obvious. In particular, the judge relied on the testimony by people from RCA who admitted that they had the mechanical capability to create this feature, but were going in a different direction of development at the time.


The next issue concerned what knowledge, if any, the patent examiner had when the ‘507 patent was examined for re-issue. The ‘408 patent, awarded before the ‘507 patent, should have been mentioned in the application, but it was not. The court sought to determine if the patent examiner had knowledge of the ‘408 patent and was actively trying to cover it up in his issuance of the ‘507 patent. Judge Grady determined that since the ‘507 patent was neither anticipated by nor obvious in light of the ‘408 patent, the patent examiner would have reached the same conclusion and awarded the ‘507 patent.


The next issue involved another television gaming apparatus patent, United States Patent RE28,598 ("the '598 patent") which was issued on October 28, 1975. This patent made improvements to the visual reproduction in ‘507. Judge Grady found that ‘507 anticipated the ‘598 patent and also that ‘598 patent was obvious in the light of ‘507. The court determined that the ‘598 patent rectified some of the visual reproduction in ‘507 which, while an improvement, was not patentable. The ‘598 patent simply used the same type of circuitry in a more efficient way to achieve better results. As a result, 28,’598 patent was found invalid by Judge Grady as being anticipated by and obvious in view of the ‘507 patent.


Finally, Judge Grady turned to the question of whether the defendant’s Pong-like games infringed the ‘507 patent. The court found that the games did infringe the claims of the ‘507 patent “to the extent that they contain or use a player-controlled movable hitting symbol which, when it coincides with a hit symbol, causes a change in direction of that hit symbol.” Because all of the defendant’s games featured this characteristic, they were all held to infringe on ‘507.
The defendants made several arguments to provide that their games differed from the ‘507 patent. The judge, however, found these arguments to be immaterial and ruled against them on all counts. The first attempt by the defendant was focused on the influence of the direction of the ball by the place on the paddle where the ball strikes. In the ‘507 patent, when a ball in the game comes into contact with a hit symbol it changes the direction of that hit symbol in a distinct way. The defendants argued that the games do not meet this claim because the direction of the ball cannot be predicted after it strikes the paddle. Judge Grady disagreed, however, ruling that “distinct” meant “simply a motion that is different from the motion characterizing the ball immediately before the coincidence.”


III. Conclusion


This early lawsuit showed that courts were prepared to handle video game patent law, and also was a testament to the strength of patents in the video game industry. For more information on Mr. Baer's early products, check out Ralph Baer's web site, which has many more details about his inventions and his trials and tribulations getting them produced!

There's an interesting article on Law360 today:

Virtual-World Conflicts Lead To Real-World Suits.

Here's an excerpt from the article:

Law360, New York (June 08, 2010) -- As the market for online games expands and the debate over who has the right to control the virtual content heats up, website operators, their users and third parties could find themselves locked in real-world legal battles.

Disputes stemming from ownership of virtual property and operators’ terms of service agreements are starting to pop up more often, leading intellectual property experts to speculate that they may become the next hot-button issues to be played out in the courts.

The complete article can be found here.

I. Background

Some of you may remember twin martial artists Billy Lee or Jimmy (who also went by Hammer and Spike). For those not familiar with the duo, they can be found in the 1987 beat ‘em up game “Double Dragon.” Hammer and Spike were the subject of this 1989 lawsuit. Taito is a Japanese corporation that sells video games and electronic printed circuit boards used in coin-operated video game units. Taito is the owner of United States Copyright Registration No. PA-327-710, issued June 26, 1987, for the video game audiovisual work Double Dragon.

Red Baron operated arcades where it allowed the public to play games. Red Baron, without license from Taito or Taito America, purchased circuits of Double Dragon from Japan and fitted them into their already existing game units, making the game playable to the customers. Taito took offense, arguing that they had intended the Double Dragon game to be sold in the United States as a complete video game unit, not just its circuit board.

Taito claimed that each of the boards displayed the following restrictive note: “This game is for use in Japan only. Sales, exports, or operation outside this territory may violate international copyright and trademark law and the violator subject to severe penalties.”

The question in the case was whether Red Baron infringed Taito’s copyright in “Double Dragon,” when Red Baron imported the game from Japan and installed it in its video arcades for public enjoyment. The district court ruled that Red Baron did not infringe upon Taito’s copyright. This, of course, led to an appeal to the Fourth Circuit . . .

II. Argument

On appeal, Taito argued that it had a separate and distinct right to “perform” Double Dragon, and that it had not conferred this right on Red Baron. As a result, Red Baron infringed Taito’s copyright by its activities in making use of the circuit boards available to the public for a fee.

The court had to determine the following: 1. whether Red Baron’s use of Double Dragon constituted a public performance within the meaning of § 106 (4) and if so to consider 2. whether the first sale doctrine has any application to the performance right as distinguished from actual ownership of the copyrighted work.

A Public Performance

To “perform” a work and to perform it “publicly” are defined by the Copyright Act, 17 U.S.C. § 101 et seq.

“Perform” is defined as: “to recite, render, play, dance, or act [a work], either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible.”

“Public” performance is defined as: “To perform . . . a work ‘publicly’ means- (1) to perform . . . it at a place open to the public . . . .”

The court concluded that Red Baron publicly performed Double Dragon because once a coin was inserted into the machine the television monitor displayed a series of images while the speakers made audible accompanying sounds. Also, because Red Baron’s video arcade was open to public and it was Red Baron’s aim to attract members of the public to its establishment, Red Baron’s arcade was considered a public place.

B. The First Sale Doctrine and the Performance Right

The second issue the court ruled on was Red Baron’s assertion that by selling the circuit boards, Taito intended to transfer the performance right. The court concluded that the first sale doctrine did not apply to the performance right and that Taito America possessed and retained a valid copyright in the public performance of Double Dragon in the United States. They also concluded that since Taito had not granted a performance license to Red Baron, the latter was guilty of copyright infringement.

III. Conclusion

In this early gray-market goods case, the United States Court of Appeals for the Fourth Circuit reversed the judgment of the district court and remanded the case for further proceedings.

Well it looks like one of the two Harmonix/Konami cases might be settling. In Harmonix Music Systems, Inc. v Konami Digital Entertainment Co, Ltd., civil action 1:09-cv-10206 (D.Mass), the parties on June 1, 2010, jointly filed a status report with the court, indicating:

Plaintiffs Harmonix Music Systems, Inc. and Viacom Inc. (collectively, the "Plaintiffs") and Defendants Konami Digital Entertainment Co., Ltd. and Konami Digital Entertainment, Inc. (“Defendants”) respectfully inform the Court that they have executed a binding and enforceable Settlement Term Sheet. The parties are currently working to execute a formal settlement agreement. The parties thus respectfully inform the Court that they expect to be able to provide another status report in 90 days.

Looks like they have come to some agreement in this case. Still no word whether the sister case, Konami v. Harmonix, is affected or not.

Okor v. Atari Games Corp. et al

76 Fed. Appx. 327 (Fed. Cir. 2003).

I. Statement of Facts

This case is one in a series of attempts by Joseph Kwame Okor to enforce two patents against Sony and other companies. The patents at issue, U.S. Patent Nos. 4,126,851 (“851 Patent”) and 4,127,849 (“849 Patent”) both name Okor as the sole inventor. The ‘851 Patent’ involves a programmable television game system and the ‘849 Patent’ involves a system for converting coded data into display data.

II. Procedural History

In 2002, Okor filed three separate lawsuits:
1. Alleging infringement of the ‘851 Patent’ by a number of arcade-game manufacturers (Civil Action No. 00-11503)
2. Alleging infringement of the ‘849 Patent’ by the same manufacturers (Civil Action No. 00-11504), and
3. Alleging infringement of the ‘851 Patent’ by Sega, Nintendo, Sony, and nine companies who were connected to Sega’s and/or Nintendo’s products (Civil Action No. 01-10610)

The district court granted summary judgment of noninfringment of both the ‘851’ and ‘849 patents’ to the arcade-game manufacturers, and dismissed the claims against Sega, Nintendo, Sony, and the other nine defendants on the grounds of: 1. Claim Preclusion and 2. Issue Preclusion.

Okor appealed the decision of the United States District Court for the District of Massachusetts.

III. Argument

The United States Court of Appeals for the Federal Court analyzed the case using the district court’s case numbers:

A. Civil Action No. 00-11503

Against the arcade-game manufacturers, Okor asserted only claim 1 of the ‘851 Patent’, which states:

“A system for generating and controlling symbol-producing signals for display on the screen of a television receiver, comprising: (e) changeable memory means providing program instruction” 851 Patent, col. 8, II. 15-49.

The Federal Court held that the accused products did not included a “changeable memory means” required by limitation (e). The court found that all arcade-game manufacturers used fixed, “read-only” memory boards that could be changed by “taking the devices apart.” The court concluded that “no reasonable juror could find the fixed memory boards in defendants’ arcade-game machines to be equivalent to the “changeable memory means” in limitation (e).

B. Civil Action No. 00-11504

Okor asserted only claim 1 of the ‘849 Patent’ against the arcade-game manufacturers which reads:

“A system for converting coded data signals for presentation as display symbols on a display devise comprising:... (g) said dot generator including x and y comparators and x and y stacks operatively connected to one another and to said display computer, said x and y comparators receiving, respectively, x and y counts corresponding to the x and y addresses of said symbols.” ‘849 Patent’, col. 14, II. 58-68, col. 15, 11. 1-19.

The district court granted summary judgment of noninfringment because defendants’ machines failed to read on limitation (g). The court found that limitation (g) described a “stack” memory system which differed from other memory systems, including “frame-buffer, bit-map” systems. The court also held that all arcade games operate by means of frame buffers and that none of the accused devises literally read on limitation (g). Because Okor had added limitation (g) through amendment, the district court held Okor was estopped from asserting infringement by equivalents.

C. Civil Action No. 01-10610

Okor alleged that Sega’s and Nintendo’s home video-game systems infringed the ‘851 Patent’, and also alleged that Sony and nine other defendants were liable for being connected to Sega’s and/or Nintendo’s systems. The district court granted a motion to dismiss on two grounds:

1. Claim Preclusion

The First Circuit has established three required elements for claim preclusion:
“(1) a final judgment on the merits in an earlier suit, (2) sufficient identicality between the causes of action asserted in the earlier and later suits, and (3) sufficient identicality between the parties in the two suits.” Mass. Sch. of Law at Andover, Inc. v. American Bar Ass’n, 142 F.3d 26, 37 (1st Cir. 1998) (quoting Gonzalez v. Banco Cent. Corp., 27 F.3d 751, 755 (1st Cir. 1994).

Here, the district court found that all three of the factors for claim preclusion were met. Therefore, Okor’s new claims against Sega and Nintendo suing on the basis of the very same home video game consoles found not to infringe patent 851 in previous decision, are precluded.

2. Issue Preclusion

The First Circuit applies issue preclusion where “(1) an earlier decision involved ‘the same issue of law or fact’ as a later case, (2) ‘the parties actually litigated the issue’ in the earlier case, (3) the earlier court ‘actually resolved the issue in a final and binding judgment,’ and (4) the earlier court’s ‘resolution of that issue was essential to its judgment (i.e., necessary to its holding.)” Monarch Life Ins. Co. v. Ropes & Gray, 65 F.3d 973, 978 (1st Cir. 1995).

The district court determined that Okor’s claims against Sony and the other nine defendants failed because Okor was precluded from arguing that Sega’s and Nintendo’s products infringed the ‘851 Patent’, because Okor had failed to provide evidence that any of Sega’s and Nintendo’s video game consoles had been configured in a potentially infringing manner.

IV. Conclusion

The United States Court of Appeals for the Federal Circuit affirmed the district court’s judgments in all three cases.

Patent Rights Protection Group, LLC ("PRPG"), a patent-holding company, previously filed suits in the District of Nevada accusing various organizations of allegedly infringing U.S. Patents No. 6,475,087 (‘the ‘087 patent) and No. 6,860,814 (the ‘814 patent). The related patents disclose video gaming machines with a video display mounted to a door. Claim 1 of the ‘087 patent is provided below.

1. A gaming apparatus comprising
a cabinet, a door moveable between a first position and a second position, said door in said first position cooperating with said cabinet to define a generally closed interior space, said door in said second position permitting access to said interior space, said door having an opening therein;
at least one support mounted to said cabinet for configuring said gaming apparatus as a reel-type game when said support supports a reel mechanism in said open space, at least one mount for mounting a display element to said door for viewing through said opening, said display element comprising either reel-screening glass or a video display, said opening aligned with a reel mechanism when said reel mechanism is mounted to said at least one support and said reel-screening glass is mounted to said door, whereby reels of said reel mechanism are viewable through said reel-screening glass when said door is in said closed position, and
whereby said gaming apparatus is configured as a video type game when a video display is mounted to said door said video display is viewable through said opening.

PRPG accused the various organizations, including out-of-state companies SPEC and ("SPEC") and Video Gaming Technologies, Inc.'s ("VGT”), of infringing the patents by “displaying, using, and offering for sale cabinets that house gaming machines at trade shows in Nevada.” SPEC and VGT each separately filed motions to dismiss PRPG’s relevant suits in Nevada, arguing that their contacts with Nevada were insufficient for the court to exercise personal jurisdiction. Specifically, SPEC and VGT each argued that they:

were not registered to do business in Nevada;
did not manufacture any products in Nevada;
their websites were not specifically targeted to Nevada residents;
did not have sales agents, employees, manufacturing facilities, bank accounts, or telephone listings in Nevada.

VGT further asserted that it did not directly market or derive revenue from Nevada. Similarly, SPEC acknowledged mailing brochures to eight potential customers within Nevada, but only generated de minimis sales in the state. Dismissal was also sought on the grounds of improper venue and issue preclusion.

Applying 9th Circuit law, the court held that Nevada did not have personal jurisdiction over SPEC and VGT. The court also denied jurisdictional discovery, however, did not specifically address improper venue or issue preclusion, as dismissal of the suits rendered those issues moot.

PRPG appealed the dismissal of the suits and denial of jurisdictional venue to the Federal Circuit. Citing Supreme Court precedent, the Federal Circuit noted that the determination of whether personal jurisdiction may be exercised “remains whether the defendant purposefully established minimum contacts” in the relevant state and whether “personal jurisdiction would comport with 'fair play and substantial justice.’ i.e., whether exercising jurisdiction would be reasonable.” The court found that each SPEC and VGT had minimal contacts, specifically each attended trade shows in Nevada through the 1990s, 2000s, and even as recently as 2008. The court then focused on whether exercising personal jurisdictions over SPEC and VGT would be reasonable. In answering in the affirmative, the Federal Circuit held that SPEC’s and VGT’s “admitted presence at numerous trade shows in Nevada indicates that, despite their arguments to the contrary, neither company faces a particularly onerous burden in defending itself in Nevada.”

The court further addressed arguments relating to the economic hardship (or lack thereof) upon PRPG if forced to litigate the suits outside of Nevada. “Nevada has an interest in providing a convenient forum for all Nevada citizens, not just those who might face severe economic hardship if forced to litigate outside Nevada.” The decision continued to note that “[b]y providing a forum for [PRPG’s] claims against SPEC and VGT, Nevada spares [other states] the burden of providing a forum for [PRPG].” The decision also found that the district court abused its discretion when denying PRPG’s request for jurisdictional discovery. The case, therefore, was remanded back to the District of Nevada. Its case number is: 2:08-CV-00662 (D. NV).