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Patents And The Video Game Industry: What You Don't Know Could Hurt You
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Patents And The Video Game Industry: What You Don't Know Could Hurt You

January 13, 2011 Article Start Previous Page 2 of 3 Next

Game Over -- Are Method Claims Still Patentable?

One of the hottest topics in patent law during the last year was whether so-called "business methods" can ever be patented. The Supreme Court decided this issue in the Bilski case, and said "yes."

That case is important to the video game industry because many patents relating to video games include claims directed to methods. The Supreme Court held that methods (including business methods) can be patented so long as certain conditions are met, and left it to the lower courts to apply those conditions to specific method claims. The Bilski decision is significant to the video game industry because many method patents relating to video games issued before the Bilski decision.

Those patents may not satisfy the Bilski test, and therefore may not be valid. Perhaps more significantly, inventors who are currently seeking patents covering methods should understand these standards to maximize their chances of obtaining valid patents.

The Bilski decision was recently applied to online networks by a California trial court in Ultramercial v. Hulu. Ultramercial's patent claimed a method for viewing copyrighted material online for free in exchange for requiring the viewer to watch advertisements.

The court found Ultramercial's patent to be invalid because it was directed to the "abstract idea" of exchanging advertisements for free copyrighted media.

As part of that analysis, the court considered whether the method involved a "machine or transformation" (which the Supreme Court said was an informative but non-exclusive test for patentability in its Bilski decision) and determined that it did not satisfy that test.

The patent claimed a method for distribution of products over the internet via a "facilitator." There was no "machine" because the claimed facilitator was not limited to any machine. The court further found that the internet could not be considered to be a machine because it was not like a computer or network cable that can be physically touched. There was no "transformation" because the mere transfer of copyrighted information from one computer to another did not change the nature of what is stored in memory. The court ultimately found that the patent claimed an abstract idea.

That does not mean it is impossible to obtain method patents for software inventions, like those used in the video game industry. For example, in Research Corporation Technologies v. Microsoft, the appeals court held that patents relating to digital half-toning technology were patentable. The court reasoned that the process for rendering a half-tone image of a digital image was not abstract because it allows for functional applications in computer technology.

Since the Supreme Court decided Bilski, the U.S. Patent and Trademark Office has considered, numerous times, whether pending applications relating to software technology are patentable. Some claims, including examples relating to authenticating web sessions, communication through messaging systems, and communicating with digital signatures, have been rejected because they cover abstract ideas. As part of its "abstract idea" analysis, the Patent Office typically considers whether the claimed method involves a "machine or transformation."

To increase the odds of obtaining a patent, video game developers seeking to patent methods used in their software may wish to consider drafting claims directed to (1) a particular machine that implements and meaningfully limits the claimed method, (2) transformation of data (transferring data between servers may not be sufficient, as in the Ultramercial case), and (3) a tangible concept that solves a specific problem (not just an abstract idea).

Not In My Back Yard -- What Happens If Method Steps Are Performed Outside The United States?

Although participants in the video game industry are located across the globe, and many have facilities in different countries, United States patents do not cover all activities conducted anywhere in the world.

For example, if a method having several steps is patented, courts have held that there is no infringement if any one of those steps is performed outside the United States. This creates opportunities to avoid infringement, particularly in sectors like the video game industry where important functions are often performed on remote servers, which can be located anywhere -- including outside the United States.

A key case that addresses the limits on infringement for activities performed in different countries is NTP v. Research In Motion. That case involved RIM's BlackBerry system, in which messages sent and received by BlackBerry users in the United States are routed through RIM's servers in Canada

NTP's asserted patents included some claims directed to a system, and other claims directed to steps practiced using a system. NTP's "system" claims were infringed because the control and beneficial use of RIM's system occurred in the United States.

In other words, there was infringement because BlackBerry users in the United States used and controlled their devices and RIM's BlackBerry network for their benefit in the United States, and the court found that it made no difference that part of RIM's network was located in Canada. However, the court found NTP's "method" claims were not infringed because RIM's servers in Canada performed some of the steps of the method.

Video game developers should be aware of the territorial limits of United States patents, whether they are seeking to protect their own inventions or to avoid others' patents. For example, an inventor should consider seeking "system" claims, and not just "method" claims, if it is likely that some of the steps of the method can be performed outside of the United States. Conversely, when faced with a patent having "method" claims, a participant should consider whether that patent can be avoided by locating servers outside the United States to perform some steps.

Article Start Previous Page 2 of 3 Next

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