Articles Posted in Patents

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There has been much buzz about Zynga’s attempt to patent virtual currency. As is often the case with patents, there is much hype, many misconceptions and little focus on the actual facts. Here are the facts.

1. Zynga does not have a patent on virtual currency. It has applied for a patent, the application has been published but has not yet been examined. It will be some time, if ever, before a patent will issue. The published application is 2010-0227675. Here is a copy of the Zynga Application.

2. Zynga is seeking protection for various aspects of virtual currency, particularly in the context of “gambling” games. The following is an example of one of the claims:

A method, comprising:receiving, at a server, a purchase order for virtual currency from a player, wherein the purchase order was made with legal currency, and wherein the virtual currency is usable within the context of a computer-implemented game;crediting an account of the player with virtual currency, wherein the virtual currency is not redeemable for legal currency;receiving a second purchase order for a virtual object within the context of the computer-implemented game from the player,
wherein the second purchase order was made with virtual currency;
and debiting the account of the player based on the second purchase order.

3. This claim appears to be seeking protection using real money to buy virtual currency, precluding redemption of the virtual currency for real money but enabling it to be used to buy virtual objects in the game.

4. The patent application was filed

03-03-2010 and claims priority to a provisional application 61/158,246 filed March 6, 2009.

5. We will monitor the status of this application as it is examined and any rejections are made.

While many believe that this patent application will be rejected due to prior art, the most important take always are these:

  • MANY ASPECTS OF SOCIAL GAMES ARE POTENTIALLY PATENTABLE
  • ZYNGA (AND OTHERS) ARE PURSUING MORE PATENTS IN THIS SPACE
  • IT IS WELL KNOWN THAT THERE IS A LOT OF “BORROWING” OF IDEAS FROM COMPETITORS IN THE SOCIAL GAME SPACE
  • THIS HAS BEEN FACILITATED BY LACK OF ATTENTION TO IP PROTECTION
  • IT IS CRITICAL FOR ANYONE OPERATING IN THE SOCIAL GAMING SPACE TO DEVELOP A COMPREHENSIVE IP PROTECTION STRATEGY,  INCLUDING PATENTS, COPYRIGHTS AND TRADEMARKS

E-mail us for a free guide on patent and other IP strategies in the social game space.

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A patent infringement suit targeting a multiplayer, networking feature of Microsoft’s Xbox video game console was dismissed because the court found that, based on how the patent claims were written, the Xbox’s network connectivity mechanism differed from that required in the patent. This case, like many patent infringement cases, turned on the Court’s interpretation of the patent claim language and highlights the importance of the patent attorney’s wording of the patent claims. It is one thing to get a patent. It is another to get one that is commercially significant and can be viably enforced. A patent attorney who understands a range of alternatives can add significant value to a patent.

Interestingly, Sony previously settled a patent infringement suit involving the same patent relating to its PlayStation video game console.

The case, which was filed in the Eastern District of Michigan, alleged infringement by Microsoft of  U.S. Patent No. 5,292,195, entitled “Apparatus and method for electrically connecting remotely located video games” (“the ‘195 Patent”). The ‘195 Patent issued way back in March 8, 1994.  The court stated:

The ‘125 Patent involves an invention that allows “for two or more players playing the same video game to compete with each other without using the same physical video game which alleviates the necessity of proximity of the players.” ‘125 Patent col. 2 ll. 39-43. The ‘125 Patent describes a system where a video game player can talk and play with a remote opponent at the same time over a telephone line.

The Court ruled that Microsoft did not infringe the asserted claims because micro-processor to modem coupling in the Microsoft Xbox was accomplished via inductive coupling, while the court found that the claims require that the components be electrically
connected.  A Special Master had recommended that the claims should be interpreted to include inductive coupling.  However, the Court did not follow the Special Master’s recommendation, holding that the Special Master had improperly relied on extrinsic evidence, rather than relying on “the ordinary meaning of [the] claim language” which, as the Court indicated “may be readily apparent even to lay judges” [quoting Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed. Cir. 2005)].  Along with the plain meaning of the term “electrically connected”, the Court relied on the fact that the term “electrically connected” was used in the ‘195 Patent description to refer only to connections accomplished via conductive electrical wires.

Because the Court’s interpretation is a legal determination, it is subject to review on appeal. Stay tuned to this blog for further developments should an appeal proceed.

Click here for a copy of the Decision.

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Th US Supreme Court issued a ruling today that overruled a relatively narrow test adopted by the Court of Appeals for the Federal Circuit, known as the machine-or-transformation test. The Supreme Court found:
i) The machine-or-transformation test is not the sole test for patent eligibility under §101. The Court’s precedents establish that although that test may be a useful and important clue or investigative tool, it is not the sole test for deciding whether an invention is a patent-eligible “process” under §101;
ii) Section 101 similarly precludes a reading of the term “process” that would categorically exclude business methods. The term “method” within §100(b)’s “process” definition, at least as a textual matter and before other consulting other Patent Act limitations and this Court’s precedents, may include at least some methods of doing business; and
iii) because petitioners’ patent application can be rejected under the Court’s precedents on the unpatentability of abstract ideas, the Court need not define further what constitutes a patentable “process,” beyond pointing to the definition of that term provided in §100(b) and looking to the guideposts in Benson, Flook, and Diehr. Nothing in today’s opinion should be read as endorsing the Federal Circuit’s past interpretations of §101. See, e.g., State Street, 49 F. 3d, at 1373. The appeals court may have thought it needed to make the machine-or-transformation test exclusive precisely because its case law had not adequately identified less extreme means of restricting business method patents. In disapproving an exclusive machine-or-transformation test, this Court by no means desires to preclude the Federal Circuit’s development of other limiting criteria that further the Patent Act’s purposes and are not inconsistent with its text.

This is relevant to virtual worlds in that it expands the scope of patentable subject matter that can be protected for software based processes and the many novel business models that are emerging in virtual worlds, mirror worlds, augmented reality and other social media applications.

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On June 15, 2010, Amazon was awarded U.S. Patent No. 7,739,139 entitled “Social Networking System.” Some have said this relates to fundamental aspects of “friending” and data sharing in social networks. If the patent is truly as broad as some say, what impact might this have on Facebook and other social networking sites?

Here is a copy of claim 1 to read for yourself:

1. A computer-implemented method, comprising:
receiving and storing personal data of a first user of a computer-based service, said computer-based service accessible to users over a network, said personal data specified by the first user;
providing a user interface for users to establish contact relationships with other users of the service such that each user can have one or more contacts, said user interface enabling a user to identify other users of the service, and to selectively initiate the generation of requests to establish contact relationships with the identified users;
receiving a request from a second user of the service to establish a contact relationship with the first user, said request submitted to the service over a network via said user interface;
sending a notification of the request to the first user over a network;
providing an option, in connection with said request, for the first user to grant permission for the second user to view at least some of the personal data of the first user; and
in response to the first user granting said permission, providing the second user access to at least some of the personal data of the first user via a contact information user interface of the service, such that the second user is provided access to data that would not otherwise be accessible to the second user via the service;
wherein the method, including receiving and storing the personal data, providing the user interface, receiving the request, sending the notification, providing said option, and providing the second user access, is performed by a server computer system.

As such, the ‘139 Patent appears to be related to invitations between users that establish a contact relationship in which an invitation also includes an option that is selectable by a receiving user to provide enhanced access to personal information of the receiving user for a requesting user.

An obvious question that people ask whenever an apparently broad patent is issued is whether the patent is valid. The Amazon patent is part of a chain of applications and patents dating back to 1997. These patents include U.S. Patent No. 7,386,464 (“the ‘464 Patent”) entitled “Network-Based Crossing Paths Notification Service”, U.S. Patent No. 7,194,419 (“the ‘419 Patent”) entitled “Network-Based Personal Contact Manager And Associated Methods”, U.S. Patent No. 6,714,916 (“the ‘916 Patent”) entitled “Crossing Paths Notification Service”, and U.S. Patent No. 6,269,369 entitled “Networked Personal Contact Manager”. The chain also includes two pending U.S. patent applications that have not yet been examined substantively by the U.S. Patent and Trademark Office. These applications have been published as U.S. Patent Application Publication No. 2009/0282120 (“the ‘120 Publication”) entitled “Social Networking System”, and U.S. Patent Application Publication No. 2009/0282121 (“the ‘120 Publication”) entitled “Social Networking System”. The patents and applications in this chain generally describe many features of social interactive media that are now common. Some of these features include:automatically proposing meetings for contacts based on travel plans and/or home locations; presenting users with other users they may be interested in forming contact relationships (based, e.g., on contacts in common, affiliation with common organizations, and/or other parameters); and controlling the types of personal information to which individual contacts have access.

Many argue that “software patents” describing systems and methods such as the ones described in the Amazon family of patents are not practical because this technology moves too quickly. This family of Amazon patents demonstrates how timely filing of patent applications early on in the development of a technology can continue to bare fruit that is relevant to ongoing technological developments for over a decade after the original filing.

As yet, Amazon has not brought any law suits based on this family of patents. Pillsbury’s Virtual Worlds and Video Game team has previously prepared an article that discusses some of the reasons a portfolio like this one can be valuable to a company even if they are not used to bring law suits for patent infringement, a copy of which can be found here.

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In a recently filed complaint (Actus Complaint.pdf), a patent holding company has sued over a dozen major companies for alleged patent infringement. The suit alleges infringement of 4 patents that relate to virtual currency or “electronic tokens”. The patents include United States Patent No. 7,328,189; 7,249,099; 7,177,838; and 7,177,838.

The defendants in the case include Discover Financial Svcs.; Electronic Arts, Inc.; Home Depot, Inc.; Lowe’s Companies, Inc.; McDonald’s Corp.; Moneygram Int’l, Inc.; News Corp.; Recreational Equipment, Inc.; Sears Holding Corp.; Simon Property Group; Starbucks Corp.; Target Corp.; The Sports Authority, Inc.; The TJX Companies, Inc.; The Gap, Inc.; Yum! Brands, Inc.; Zynga Game Network, Inc.; ACE Cash Express, Inc.; Brinker Int’l, Inc.; and Darden Restaurants, Inc.

Given the rapidly increasing use of virtual currency and alternative forms of micropayments, it is not surprising to see more patent litigation. But patent infringement is but one legal concern when using virtual currency. A whole host of legal issues impact virtual currency. Pillsbury’s Virtual Worlds and Video Game team has prepared an advisory on legal issues with virtual currency. Virtual Currency.pdf

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Worlds.com has reportedly settled its patent infringement lawsuit with NCsoft. The terms remain confidential and as of this morning neither company has a press release on its website. Worlds.com filed the suit on Christmas eve in 2008 after rattling its patent saber months earlier. To some, it is surprising the case lasted this long, due to the extensive amount of prior art that surfaced after the suit was announced.

In March 2009, Worlds.com CEO Tom Kidrin also boldly proclaimed that if the litigation was successful it would also sue other industry leaders. If Kidrin remains true to his word, we will likely know soon if they deemed the litigation successful.

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In a growing trend, another patent infringement lawsuit was recently filed against nearly two dozen companies involved in virtual worlds, video games, social networks and other websites. The plaintiff, Balthaser Online, appears to provide a web application that enables users to create Adobe Flash animations and interfaces for inclusion in websites. The patent in suit is U.S. Patent Number 7,000,180, entitled “Methods, systems and processes for the design and creation of rich-media applications via the Internet.”

In September 2009 the court split Balthaser Online Inc.’s patent infringement lawsuit against Friendster Inc., Nike Inc. and two dozen other defendants by sending more than 20 of them to a California federal court and keeping just four in the Texas federal court where the case originated. Click here for more recent developments on the procedural motions in the Balthaser Patent Infringement Case.

This and other cases evidence a growing need for virtual worlds, video games, social network companies to take proactive steps to prevent or deter patent infringement suits. Click here for a prior alert on the Worlds.com patent infringement case and elements of a comprehensive IP strategy to prevent or deter patent infringement suits.