The long awaited decision in Microsoft v. i4i is out. In short, on June 9, 2011, the United States Supreme Court did a surprising thing: it affirmed! The Supreme Court did not change existing patent law or reverse the Federal Circuit. Recent patent case decisions of the Court have sometimes done both, but routinely at least one.
As we last reported here, Motiva LLC has previously accused Nintendo Co., Ltd of infringing U.S. Patent No. 7,292,151 (‘151 Patent). The ‘151 Patent, entitled “Human Movement Measurement System,” is generally directed to a system for measuring human body movements for exercise and physical rehabilitation, and Motiva alleged that Nintendo’s Wii Fit product was an infringement. Its previous efforts at enforcement stalled when the patent underwent reexamination at the PTO, but Motiva has just added a new chapter to the story. Last week, Motiva filed a complaint with the International Trade Commission (ITC), accusing Nintendo of infringing both the ‘151 Patent and a continuation application (U.S. Patent No. 7,492,268). The essential claims remain the same. Motiva claims that its patents cover the human movement tracking employed by the Wii Fit.
The alternative venue is not an uncommon one for asserting patents, and does not rule out or obviate parallel district court proceedings (although one can be stayed for the other).
In an ITC action such as this, a complainant alleges that some other person (a respondent) is importing goods that is otherwise harming an existing U.S. (domestic) industry. If the ITC concludes that such harm is being done, the ITC can issue an Exclusion Order, instructing U.S. Customs to block the future importation of goods that do the harm. To a company whose manufacturing facilities are located outside the U.S. (true for many consumer products companies these days), such an Exclusion Order can be every bit as painful as a district court injunction.
An ITC action is similar to a district court action in many ways. There is a complaint, there will be discovery (the Federal Rules of Civil Procedure are adopted at the ITC for many aspects of case management), there are motions, and there will be a hearing that is conducted much like a trial.
There are differences as well. Most notably, an ITC action is much faster than a typical district court action. In the ITC, a typical proceeding is scheduled for completion in just over a year (can be a bit longer for “complex” cases). The compressed schedule puts pressure on everyone, but the pressure usually affects the accused infringer more, since they do not control the timing of when the complaint is filed.
Another difference is the presence of a third party in the case. Unlike a district court action, an ITC investigation will also have an Investigative Staff Attorney, who is there to represent the interests of the citizens of the U.S. The Investigative Staff can participate in the case much like a party, reviewing discovery, asking questions, and filing responses to motions and objections.
Another difference is at the outcome of the case. The ITC cannot award monetary damages, and cannot redress past infringement. Instead, the remedy is the Exclusion Order, which will only affect attempted importations after the Order takes effect. Additionally, when an Exclusion Order is issued, the President of the United States has a period of time in which to review the case and reject it. Such a rejection is not common, but it can be made, for example, if the President deems that excluding the importation would unduly harm international relations.
We’ll keep you posted as to further developments, and in the meantime, please drop us a line if you have any questions about the case or the ITC.
In the beginning of June, Patent Arcade reported that Harmonix Music Systems, Inc. and Viacom Inc. were close to settlement in the Harmonix v. Konami case (one of two Harmonix/Konami cases). At that time, it was unclear whether the progress toward settlement in the Harmonix v. Konami case would affect sister case Konami v. Harmonix. It appears now that the two sides have reached an agreement in Konami v. Harmonix and filed a Motion to Dismiss in the Eastern District of Texas on September 15, 2010. The following day Harmonix filed a motion to dismiss a similar and concurrent case in Massachusetts.
The Motion to Dismiss indicates that:
Pursuant to the terms of a separate agreement, Plaintiffs Konami Digital Entertainment Co., Ltd. and Konami Digital Entertainment, Inc. (“Plaintiffs”) and Defendants Harmonix Music Systems Inc., MTV Networks Co., Viacom International Inc. and Viacom Inc. (“Defendants”), have agreed to settle, release, adjust and compromise all claims and counterclaims in the above-captioned action. The parties, therefore, move this Court under Rule 41(a) of the Federal Rules of Civil Procedure to dismiss the above-entitled cause and all claims by Plaintiffs against Defendants and all claims by Defendants against Plaintiffs made therein with prejudice.
Terms of the settlement have not been disclosed.
In an interesting turn of events, on July 22, 2010, Worlds.com requested that the court reopen its case against NCSoft. The dismissal of the case on April 23, 2010, was conditional on settlement, and the court explicitly stated:
IT IS HEREBY ORDERED that this action is dismissed with prejudice; provided,
however, that if any party hereto shall certify to this Court, with a proof of service of a copy on opposing counsel, within 90 days from the date hereof, that the agreed consideration for the settlement has not been delivered over, this Order shall stand vacated, and the action shall be restored to the calendar to be set for trial.
So it appears that Worlds.com, at least, believes that the settlement conditions haven’t been satisfied. Still waiting to get a copy of Worlds.com’s request to reopen the case, and will update accordingly.
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!
On Tuesday, April 13, 2010, the U.S. Court of Appeals for the Federal Circuit ruled in favor of Nintendo in Anascape, Ltd. v. Nintendo of America Inc. (Docket No. 2008-1500), a patent infringement case appealed to the Federal Circuit from the U.S. District Court for the Eastern District of Texas (Case No. 9:06-CV-158).
In 2008, the District Court ruled that certain Nintendo video game controllers infringed U.S. Patent No. 6,906,700 (“the ‘700 patent”), which was owned by Anascape. Nintendo subsequently appealed the District Court’s ruling to the Federal Circuit, resulting in this decision.
Writing for a three-judge panel of the Federal Circuit, Judge Newman explained that the controlling issue on appeal was whether the ‘700 patent could claim priority to an earlier Anascape patent, namely, U.S. Patent No. 6,222,525 (“the ‘525 patent”).
In particular, the ‘525 patent had a filing date of July 5, 1996, while the ‘700 patent had a filing date of November 16, 2000. Both patents deal with video game controllers that receive user input in six degrees of freedom (“DOF”), but the ‘525 patent describes a controller with a “single input member” (e.g., a single trackball), while the ‘700 patent concerns itself with a control with multiple input members (e.g., two trackballs).
The question of priority was at the core of the Federal Circuit’s decision in this case, however, because after the filing date of Anascape’s ‘525 patent but before the filing date of Anascape’s ‘700 patent, Sony released its DualShock (and DualShock 2) controller in the U.S. And as Anascape conceded, if the ‘700 patent could not claim priority to the ‘525 patent, then Sony’s DualShock controllers would be prior art to the ‘700 patent and render the ‘700 patent invalid.
Relying on established Federal Circuit precedent and a recent ruling concerning the “written description” requirement that U.S. patents must meet, Judge Newman explained that “[t]o obtain the benefit of the filing date of a parent application, the claims of the later-filed application must be supported by the written description in the parent ‘in sufficient detail that one skilled in the art can clearly conclude that the inventor invented the claimed invention as of the filing date sought.” Slip Op. at 3.
In deciding whether this requirement was met here, the court reviewed the claims, specification, and drawings of the ‘525 patent. In conducting this review, the court observed not only that the claims, specification, and drawings of the ‘525 patent focused solely on “single input member” controllers, but also that the specification of the ‘525 patent asserted that multiple input member controllers had “significant disadvantages.”
After discussing the differences between the ‘700 patent and the ‘525 patent in greater detail, the court ultimately decided that the Anascape’s ‘700 patent could not claim priority to its ‘525 patent. Based on this conclusion, the court ruled that Anascape’s ‘700 patent was invalid (as a result of Sony’s DualShock controllers counting as prior art) and accordingly reversed the lower court’s ruling that Nintendo infringed.
We will keep you posted of any further updates in this case.
Samuel Michael Keller v. Electronic Arts inc. et al.
case number 09-cv-1967
U.S. District Court for the Northern District of California
Law360, New York (May 06, 2009) — A former quarterback for Arizona State University has filed a putative class action against Electronic Arts Inc. and the National Collegiate Athletics Association for appropriating and using the images and attributes of college sports players in its popular line of interactive video games in violation of NCAA rules, which prohibit commercialization of college players.Sam Keller, once a starting quarterback for ASU’s and University of Nebraska’s football teams, filed the lawsuit Tuesday in the U.S. District Court for the Northern District of California, claiming that EA video games like NCAA March Madness, NCAA Football and NCAA Basketball violate NCAA rules prohibiting the use of college athletes’ names and images in commercial ventures.
It looks like Mr. Keller is trying to get class action status, which could make this a huge case and a potential black eye for the NCAA and EA. Apparently EA has copied the appearance and likeness of players, down to their personal clothing choices and hairstyles, without actually using the players’ names. However, many of the games allow users to upload rosters that include the actual players’ names. This case just might have legs. We’ve added it to our tracking list and will keep you posted regarding substantive developments.
Harmonix and Viacom jointly filed suit in the District of Massachusetts against Konami for patent infringement. The lawsuit alleges Konami’s “ROCK REVOLUTION” video game infringes U.S. Pat. No., 7,459,624 entitled “Game controller simulating a musical instrument.” The patent issued December 2, 2008 and consists of two independent claims, both of which are methods “for providing [a] realistic interaction by a player with a music-based video game using a game controller simulating a guitar.” The claims appear to relate to music-based video games that simulate a hammer-on or pull-off technique of playing a musical instrument. Specifically, claims 1 recites:
1. A method for providing realistic interaction by a player with a music-based video game using a game controller simulating a guitar and having a strum bar and a plurality of fret buttons, the method comprising: a) displaying to a player first target musical data associated with a musical composition; b) receiving first music performance input from the player comprising activation of a first one of a plurality of fret buttons and a strum bar; c) displaying to a player second target musical data associated with the musical composition, the second target musical data visually indicating to a player that the musical event represented by the second target musical data is amenable to a hammer-on technique; [and] d) receiving second music performance input from the player consisting essentially of activation of a second one of a plurality of fret buttons.
Claim 15, the other independent claim, is similar to claim 1, however, differs in regards to elements (c) and (d), which recite:
c) displaying to a player second target musical data associated with the musical composition, the second target musical data visually indicating to a player that the musical event represented by the second target musical data is amenable to a pull-off technique; [and] d) receiving second music performance input from the player consisting essentially of deactivation of one of a plurality of fret buttons.
The lawsuit is Harmonix Music Systems, Inc. et al. v. Konami Digital Entertainment Co., Ltd et. al., Case No. 1:09-cv-10206-RWZ, U.S. District Court of Massachusetts. We will continue to monitor the lawsuit.
United States Court of Appeals for the Federal Circuit
Decided Sep. 22, 2008
At this stage, this case is more about an esoteric legal issue, rather than any substantive issue of infringement regarding slot machine games or video games, so I will keep it brief. Suffice it to say, the District Court (N.D. Cal.) held that Arisocrat’s patent was invalid because Aristocrat did not properly revive the patent after it accidentally went abandoned during prosecution at the USPTO. Specifically, Aristocrat, pursuant to USPTO rules, requested revival because the abandonment was unintentional. U.S. Laws, however, require that the delay be unavoidable. On appeal, the Federal Circuit held that “improper revival” is not a defense to patent infrginement, and that the District Court erred by holding the patent invalid on such grounds. So it’s back to the District Court for these two to now get into some substantive issues regarding patent infringements.
The re-performance of a song for use in a video game pursuant to a non-exclusive synchronization license does not, without more, violate the original artists’ right of publicity, even if the artists are referenced, the U.S. District Court for the Eastern District of Michigan held Jan. 22 (Romantics v. Activision Publishing Inc., E.D. Mich., No. 07-14969, 1/22/08).Activision recorded a new version of the song for use within Guitar Hero. When players encountered the song, it came with the subtitle “as made famous by the Romantics.” The Romantics said that this was a violated their right of publicity, was unfair competition under the Lanham Act, and constituted unfair competition. The court disagreed.Read more here.
We previously reported that Lucent sued Microsoft, alleging that the Xbox 360 infringes one of Lucent’s patents. Earlier this week Microsoft filed a counterclaim, accusing Lucent of infringing various Microsoft patents, as well as challenging the validity of the Lucent patent at issue. We will keep you posted as this case progresses.
Read more here.
United States Supreme Court
May 15, 2006
(Not exactly a video game case, but worth noting nonetheless, as it will apply to video game lawsuits.)
Today the United States Supreme Court reversed the Federal Circuit decision in Ebay Inc. v. Mercexchange LLC, holding that injunctive relief is to be granted in patent cases using the same traditional test as in any other case, i.e., by weighing the following four factors: (1) irreparable injury suffered by the plaintiff; (2) remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
The Court reversed the Federal Circuit’s previous “general rule” that permanent injunctions will issue once infringement and validity have been adjudged, indicating that “the decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with traditional principles of equity, in patent disputes no less than in other cases governed by such standards.”
Interesting dicta indicates that the Court takes no position as to whether an injunction should issue in this case or any other case, and that there are circumstances where a patent owner who is not practicing his/her patent (patent troll?) may still be entitled to an injunction.
Read the full opinion.
“Major U.S. game publisher and developer Atari has released the paperwork surrounding its latest financials, and embedded within the document is significant news on the firm’s $300,000 settlement of the American Video Graphics video game patent lawsuit, a suit which all parties have now apparently settled.
“The American Video Graphics suit was originally filed against game software publishers Electronic Arts, Take-Two, Ubisoft, Activision, THQ, Vivendi Universal Games, Sega, Square Enix, Tecmo, Lucasarts, and Namco in August 2004, and alleged infringement of US Patent No. 4,734,690: method and apparatus for spherical panning.
“The patent in question was originally filed in 1987 by William G. Waller of company Tektronix, Inc., and covers the situation when “a graphics display terminal performs a pan operation with respect to a view motion center to effectuate spherical panning, thereby providing perspective and non-perspective views”, in addition to a zoom feature. Taken in the context of video games, this would seem to mean that any 3D game engine that uses camera movement or zooming of any kind relative to a specific object would be liable, a description that encompasses the vast majority of current video games. …”
From Form 10-Q, dated 5/10/05, as filed with the SEC.
International Gamco, Inc. v. Multimedia Games (PENDING) S.D. Cal.
International Gamco, Inc. International Gamco, Inc., or Gamco, claiming certain rights in United States Patent No. 5,324,035, or the ‘035 Patent, brought suit on May 25, 2004 against the Company in the United States District Court for the Southern District of California, claiming that the Company’s central determinant system, as operated in the New York State Lottery, infringes the ‘035 Patent. The Company currently sublicenses the right to practice the technology stated in the ‘035 Patent in Native American gaming jurisdictions in the United States, pursuant to an agreement between it and Bally Gaming, Inc. Bally obtained the right to sublicense those rights to the Company from Oasis Technologies, Inc., or Oasis, a previous owner of the ‘035 Patent.
As reported by the IP Law Bulletin, Sony and Immersion are back in court:
Sony has accused Immersion of fraud, alleging the company withheld statements from the inventor of the technology in question. Immersion fired back, saying Sony has initiated a smear campaign and accusing the company of misconduct.
In July, Sony Computer Entertainment filed a motion before Judge Wilken seeking relief from the final judgment on the grounds of alleged “fraud” and “newly discovered evidence” of purported prior art which Sony Computer Entertainment contends Immersion concealed and withheld.
“Immersion disputes and intends to vigorously defend itself against these allegations,” Immersion said in a recent Securities and Exchange Commission filing.
A hearing has been set for Nov. 4, at which time the various motions for discovery filed by both parties will be consolidated and heard by a California district court judge.
The misconduct allegations are the latest development in an extended legal battle that began over vibrating videogame controller technology.
In September 2004, a federal court awarded Immersion, a relatively unknown electronics developer, $84 million in damages after ruling that Sony infringed its patents for a technology that lets video game controllers vibrate in-sync with on-screen effects.
Sony appealed the decision, but the final judgment upheld both the infringement ruling and the monetary award. In addition, the court awarded Immersion $8.7 in prejudgment interest. The judge also ordered an injunction against Sony PlayStation controllers that used the infringing technology.
Sony appealed both the decision and the injunction in the U.S. District Court of Appeals for the Federal Circuit.
The lower court judge stayed the injunction while the federal appeals court processed Sony’s claim, ordering Sony to pay 1.37% in compulsory licensing fees for the duration of the stay.
Sony also appealed the compulsory licensing fee in federal appeals court.
Immersion had sued both Sony and Microsoft, claiming that Sony’s controllers for its PlayStation and PlayStation 2 console, as well as Microsoft’s Xbox controllers, infringe two of Immersion’s patents on its sensory feedback technology.
The Sony and Microsoft video game consoles have controllers that rumble and vibrate in conjunction with certain events, like explosions, in some of their video games.
Microsoft later settled the case out of court, agreeing to pay $26 million to Immersion.
In July of last year, Microsoft said it would pay Immersion $20 million to obtain licensing rights to the touch-based technology and $6.million to buy a 10% stake in the small company.
In 2001, Immersion settled another lawsuit over similar technology against InterAct Accessories, the largest distributor of gaming accessories in the U.S.
Immersion is represented in this matter by attorneys for Irell & Manella LLP. Sony is represented by Weil Gotshal & Manges.
The case is Immersion Corporation v. Sony Computer Entertainment America Inc. et al, case no. 4:02-cv-00710, U.S. District Court for the Northern District of California.
__ F.3d __ (Fed. Cir. 2005)
Interact Accessories Inc., a major video game accessories maker in the U.S., suffered a setback Monday after a lower court decision for the company was partially reversed by the U.S. Court of Appeals for the Federal Circuit.
Rival company JVW Enterprises Inc. sued Interact in September 1999 in the U.S. District Court for Maryland, asserting its patent for a video game accessory that reduces physical stress on hands and wrists while operating a control device. The Federal Circuit found the district court erred in its claims construction and, as a result of the lower court’s erroneous construction, Interact’s V3 and V4 racing-wheel products were cleared of infringement in a May 2003 judgment. The products simulate driving in certain games. The Federal Circuit determined, using revised claims construction on the adjustability of the devices, that the V3 product infringes JVW’s patent, while the V4 product still does not infringe (for different reasons).
JVW’s patent covers a controller-holding device that extends from a small base between the player’s legs to support a platform over the player’s lap. The platform holds the controller in place. That allows the player to use both hands to operate the game controls, rather than having to hold the controller itself.
The claims construction at the heart of the decision related to the patented device’s “lockability” feature for adjusting the controller’s position and allowing interchangeability of controllers on the mounting device. The district court’s bench trial focused on that feature, finding that Interact’s accused products cannot lock and unlock because they are sealed in place. JVW sought to eliminate the word “lockably” from its patent claim to more effectively assert it against Interact’s non-locking device, but the district court rejected the argument.
With the Federal Circuit’s new interpretation of the claims construction, the accused products are found to be lockable, even though tools would be required to unlock the controller from the mount to adjust it or attach a different controller. As a result, the V3 product was found to infringe JVW’s patent. “Neither of Interact’s alternative arguments to support the [district court] judgment are persuasive. Both would require us to limit claim language to the specific embodiment disclosed in the written description. This would be improper. We do not import limitations into claims from examples or embodiments appearing only in a patent’s written description,” the court wrote. The V4 product fared better, despite the new claims construction. The court ruled that even though the district court’s finding of non-infringement for the V4 was based on an incorrect claim construction, the product’s locking ability and interchangeability with other controllers was still not similar enough to the claims in the patent.
The patent in question was issued in 1985 to an inventor for JVW in, entitled “Apparatus for playing home video games”. It was intended to solve the problem of fatigue in the wrists, experienced after holding an Atari joystick. The patent at issues is U.S. Patent Number 4,494,754.
869 F. Supp. 783 (N.D. Cal. 1994)
Atari brought a motion for a preliminarily injunction against the manufacture and distribution of Sega’s games on the basis of patent infringement regarding horizontal scrolling of a video game display. To obtain a preliminary injunction, the Atari had to show: (A) a reasonable likelihood that it would succeed on the merits, (B) that irreparable injury would result if the injunction was not granted, (C) that the balance of hardships weighed in Atari’s favor, and (D) that the granting of the injunction would not disserve the public interest. Hybritech Inc. v. Abbott Laboratories, 849 F.2d 1446 (Fed.Cir. 1987).
The analysis concerning a reasonable likelihood to succeed on the merits began with the scope of the patent, which hinged on the delay technology built within the horizontal scrolling. The delay means had to be positioned in the data stream between the memory and the display so as to operate on the data. On a motion for preliminary injunction, the alleged infringer had to come forward with clear and convincing evidence of defenses to the patent. If it did so, the burden then shifted to the patent owner to show that it was likely to overcome those defenses, that is, to show that the challenges to the patent lacked substantial merit. New England Braiding Co. v. AW Chesterson Co., 970 F.2d 878, 883 (Fed.Cir. 1992). Sega had only argued that the patent was not supported, but had not made a showing to overcome the presumption of validity, which was strengthened by the PTO’s consideration of all prior art. The presumption was sufficient at that stage to find that the Patent was likely to be found valid. Atari provided convincing expert testimony that Sega’s products performed the identical function claimed in the Patent, in that the Sega devices achieved fine scrolling by placing delay means in the data stream between the memory and the display. It was undisputed that Sega’s products implement fine scrolling with a structure that was different than that disclosed in the Patent. However, there was a disputed issue of fact as to whether the structures were equivalent. Given that the function was simply to impose a delay positioned between the memory and the display, there was no apparent reason why placement of the delay before rather than after the parallel-to-serial converter was a substantial change or added anything of significance. Sega raised the equitable defense of unenforceability of the Patent due to alleged inequitable conduct, but did not make a threshold showing of intent to deceive the PTO. For the reasons stated above, the Court found that Atari was likely to succeed on the merits in this action.
If both validity of the patent and its infringement were “clearly shown,” irreparable harm would be presumed. H.H. Robertson Co. v. United Steel Deck, Inc., 820 F.2d 384, 390 (Fed.Cir. 1987). However, Atari’s showing, particularly with respect to whether the accused structure was equivalent to that disclosed in the Patent was not strong enough to merit a finding that infringement had been “clearly shown.” Accordingly, the presumption could not be applied in this case. See Nutrition 21 v. United States, 930 F.2d 867 (Fed.Cir. 1991). Irreparable harm may be shown if failure to issue the injunction would erode the patent owner’s market share. Hybritech, 849 F.2d at 1456. There were several indications that no irreparable harm would result from the denial of a preliminary injunction. First, when negotiations failed, Atari delayed more than three years before filing the action. The second indication of lack of irreparable harm was the fact that Atari had licensed Nintendo under the Patent. The third was the fact that Atari itself no longer used the Patent. The fourth was that it appeared likely that Sega would be able to satisfy any award of damages against it. Atari argued irreparable harm in Sega’s dominance in the market prevented Atari from attracting independent software designers, but it made no showing that Sega’s absence from the market would enable it to attract them. Sega’s showing that Nintendo, rather than Atari, was Sega’s relevant competitor undermined Atari’s unsupported argument. Accordingly, Atari’s showing was too speculative to support a finding of the likelihood of irreparable harm, particularly in light of the factors discussed above that weigh against Atari.
Concerning the balance of hardships, the certainty of harm to Sega and the non-party retailers, software developers and peripheral manufacturers outweighed the speculative possibility of irreparable harm to Atari. Thus, the balance tipped against issuance of a preliminary injunction. Atari did not make a sufficient showing of irreparable harm, especially in light of the countervailing factors, and the balance of hardships did not favor issuance of the injunction. Therefore, the motion was denied.
1985 WL 9469 (N.D. Cal. 1985)
In a case of infringement involving one of the earliest video game patents, Magnavox asserted its exclusive licensing rights on television console “ball and paddle” games like the classic PONG.
Pong:(Photo courtesy of David Winter, Pong Story; (c) David Winter)
The patent-in-suit was U.S. Letters Patent Re. 28,507, a reissue patent originally issued on April 25, 1972. The ‘507 reissue patent was one of several related patents obtained by Sanders Associates, another Plaintiff in this case. In 1967, Sanders became the first to combine toys, games, and television, defining the brand new art of television video games. Sanders’ subsequent patents claimed exclusive rights on a large variety of television games. Two of the asserted claims in the ‘507 patent read as follows:
51. Apparatus for generating symbols upon the screen of a television receiver to be manipulated by at least one participant, comprising:
means for generating a hitting symbol; and
means for generating a hit symbol including means for ascertaining coincidence between said hitting symbol and said hit symbol and means for imparting a distinct motion to said hit symbol upon coincidence.
52. The combination of claim 51 wherein said means for generating a hitting symbol includes means for providing horizontal and vertical control signals for varying the horizontal and vertical positions of said hitting symbol.
Deciphering the above legalese, the ‘507 patent described a common gaming scenario: a player (the hitting symbol) moving around the screen and making contact with a ball (the hit symbol), sending the ball off in a different direction. Sanders, having become a TV console gaming pioneer, had now secured the rights to a set of actions that countless video game designers would want when creating sports games, combat games, and puzzle games, etc.
In 1971, Sanders sold the exclusive licensing rights under the ‘507 patent to Magnavox, who shortly thereafter introduced the first of the ball and paddle, under the name “Odyssey.” It didn’t take long for other game designers to catch on. Atari released the television console classic “PONG” in 1975, after securing a license from Magnavox for the right to make and sell the ‘507-type ball-and-paddle game. More game designers flocked to this new market, and Activision was among the youngest and most ambitious of them.
Activision designed and manufactured television console games for the Atari 2600, the Commodore 64, and for IBM and Apple computers. It produced a Tennis, Hockey, and Grand Prix game, among others, which followed the general ‘ball and paddle’ format covered by the ‘507 patent. When Activision failed to obtain a license from Magnavox before developing these games, Magnavox and Sanders filed this infringement suit.
Magnavox had much at stake in this case; they had already made approximately $40 million in licensing royalties based on the ‘507 patent and had no desire to be cut out of the loop. The stakes were raised even higher when Activision responded to the infringement action by promptly challenging the validity of the ‘507 patent with 9 pieces of prior art brought before the court. If the court invalidated the ‘507 patent, Magnavox risked losing its entire royalty stream, and being left completely behind by Atari and its television gaming competitors.
Fortunately for Magnavox, the ‘507 patent had previously endured and survived validity challenges in two previous cases. In, The Magnavox Co. v. Chicago Dynamic Industries, 201 U.S.P.Q. 25 (N.D.Ill.1977) and The Magnavox Co. v. Mattel, Inc., 216 U.S.P.Q. 28 (N.D.Ill.1982), ‘507 patent had been challenged against many of the same pieces of prior art offered by Activision. However, since Activision was not a party to those cases, the judge in this case performed an exhaustive review of the technology and the cited prior art references before making an independent decision. In the end, as in the previous cases, the court found that ‘507 patent was valid over the prior art.
Activision now faced an uphill battle, proving that its games did not infringe the claims of the ‘507 patent. Activision’s main argument was that the “means-plus-function” language of the claims (i.e. the means ascertaining coincidence, the means for imparting a distinct motion to said hit symbol, etc.) should be narrowly construed to apply ONLY to the circuitry described in the language of the ‘507 patent. Game circuitry had, of course, changed significantly in the last 10 years, and Activision wanted Magnavox’s claims to apply only to “slicer circuits that make sawtooth waveforms,” the dominant circuit technology of 1970. Most modern games, including Activision’s, now used a microprocessor design. The court, however, declined to limit ‘507 patent, “The use of the microprocessor technology, which became available only after the invention of the ‘507 reissue patent … does not alter the basic nature of those games or avoid the ‘507 reissue patent.”
After holding that Activision’s games did literally infringe, the court further noted that the Doctrine of Equivalents would have also applied in favor of Magnavox. Magnavox had enjoyed wide licensing and much commercial success based on the ‘507 patent. These facts justified a wide range of equivalents, and support the conclusion that Activision’s games were substantially the same as those claimed in the ‘507 patent.
Activision next argued that since Atari had acquired a license from Magnavox to develop games under the ‘507 patent, all purchasers of the Atari 2600 console had either an explicit or implied license to buy and use other games falling under the same patent. The court quickly rejected the explicit license argument, holding that Atari 2600 purchasers only had a license to use that gaming console, not to buy and use other infringing games. Similarly, Atari console buyers did not acquire an implicit license to buy and use Activision games. No evidence had been shown that any game purchasers relied on this legal theory of implicit licensing while purchasing an Activision game. Further, any thoughts by purchasers concerning their freedom to use Activision games came from Activision itself and not from statements or actions of the Plaintiffs. The court similarly dismissed Activision’s argument that using its games in an Atari console constituted a “permitted adaptation” of the license given to every purchaser.
The only minor victory for Activision came when the court found that its infringement of the ‘507 patent had not been willful. Activision’s founders, before starting the company, had brought their business plan to a patent attorney to seek legal advice regarding their proposed games. Since their counsel had failed to mention the ‘507 patent, Activision had acted reasonably in believing that there was no such patent.
975 F.2d 832 (Fed. Cir. 1992)
I. Statement of Facts
Nintendo designed a program, the 10NES, for its Nintendo Entertain System (NES) to prevent the NES from accepting unauthorized game cartridges. The 10NES was programmed onto chips located in the NES console and in each game cartridge. Thus, only 10NES-enabled cartridges could “unlock” access to the NES console.
After a failed attempt to replicate the 10NES program, Atari, in December 1987, licensed the technology from Nintendo under strict licensing terms. Nintendo themselves placed Atari’s games in 10NES-enabled cartridges, and limited Atari, as well as other licensees, to five new NES games per year.
In early 1988, Atari applied to the Copyright Office for a reproduction of the 10NES source code, which the Copyright Office provided to Atari based on a false allegation by Atari that Atari needed the copy for pending litigation. There in fact was no pending litigation.
Based on the acquired source code, Atari developed its own program, the Rabbit program, which generated signals indistinguishable from the 10NES program and gave Atari access to the NES without Nintendo’s license conditions. The line-by-line instructions of the programs vary because Atari used a different microprocessor and programming language.
Nintendo brought suit against Atari alleging copyright infringement (and patent infringement, among other allegations). Atari brought several claims against Nintendo and asserted a copyright misuse defense. The United States District Court for the Northern District of California granted Nintendo’s request for a preliminary injunction based on copyright infringement. Atari appealed.
The Federal Circuit observed that while it had jurisdiction based on patent infringement claims included in the action, the court applies the law of the regional circuits, the Ninth Circuit in this case, to resolve issues of copyright law.
The Federal Circuit stated that “[t]o prevail on its copyright infringement claim, Nintendo must show ownership of the 10NES program copyright and copying by Atari of protectable expression from the 10NES program.” Ownership of the 10NES program was not in dispute, and thus, Nintendo had to prove only the copying of protectable expression.
A. Copyright Protection Extends to Computer Programs
The court determined that computer programs fall under the statutory definition of “literary works,” and thus copyright protection extends to computer programs and to instructions encoded on computer chips. “The expression adopted by the programmer is copyrightable element of a computer program,” but “the actual processes or methods embodied in the program are not within the scope of copyright law.” Thus, “[a]t a minimum, Nintendo may protect under copyright the unique and creative arrangement of instructions in the 10NES program.”
B. Reproduction of an Unauthorized Copy from the Copyright Office Is Infringement
Next, the court held that “Nintendo is likely to show successfully that Atari infringed the 10NES copyright by obtaining and copying the source code from the Copyright Office.” Atari obtained a copy from the Copyright Office by providing false information about a pending litigation, therefore obtaining an unauthorized reproduction. Thus, Atari infringed Nintendo’s copyright based on the reproduction of an unauthorized copy from the Copyright Office.
C. Efforts to Reverse Engineer Alone Do Not Support Copyright Infringement
Next, the court determined that the “Copyright Act permits an individual in rightful possession of a copy of a work to undertake necessary efforts to understand the work’s ideas, processes, and methods of operations.” Thus, “reverse engineering object code to discern the unprotectable ideas in a computer program is fair use.” This fair use, however, does not extend to commercial exploitation of protectable expression, and in addition, requires an individual to possess an authorized copy. The court thus held that reverse engineering of an authorized copy of the 10NES program that is necessary to understand 10NES is fair use, however, “Atari could not use reverse engineering as an excuse to exploit commercially or otherwise misappropriated protected expression.”
D. Substantial Similarity Exists Between Atari’s Rabbit Program and Nintendo’s 10NES Program
The court then also held that “Nintendo is likely to prove substantial similarity between the Rabbit and 10NES programs sufficient to support its infringement claims.” The court primarily relied on the fact that Rabbit incorporated unnecessary features, including features that were deleted from the original 10NES program. Thus, the court concluded that “copying of fully extraneous instructions unnecessary to the 10NES program’s functionality” suggests copying, not independent creation.
E. Copyright Misuse
Atari argued as a defense to copyright infringement that Nintendo misused its copyright. Because there was no statutory basis for the copyright misuse defense, the court determined that the defense was solely an equitable doctrine. Therefore, while copyright misuse may be a viable defense, any party seeking the defense must have clean hands. Atari was ineligible to invoke the defense because of its lie to the Copyright Office to obtain a copy of the 10NES program.
The court therefore held that the district court did not err by granting the preliminary injunction against Atari.