Worlds.com CEO Thom Kidrin claims that every MMO on the market today owes Worlds.com patent infringement damages. We take a deeper look at these frivolous lawsuits.
You might remember reading about a seemingly obscure company called Worlds.com filing a patent infringement lawsuit against MMO developer NCSoft (Aion, City of Heroes, Guild Wars) last spring. It was widely covered in the video games press, and widely criticized by most community members. The suit revolves around a set of patents filed by Worlds.com back in the late-90s for its Starbright World project; a "social network" for sick and terminally-ill children.
Around the same time, Worlds.com CEO Thom Kidrin announced he planned to go after other major MMO publishers like Activision-Blizzard (World of Warcraft) and Linden Labs (Second Life), essentially claiming that every MMO on the market today owes Worlds.com patent infringement damages. In addition, MMO developers and publishers would have to pay Worlds.com a licensing fee to use its"interactive virtual world system" technology (more on that later).
Meanwhile, another patent troll stepped up to the plate last week, hoping to make a quick buck at the MMO industry's expense, à la Worlds.com. As we reported a few days ago, Paltalk Holdings Inc. filed suit against a handful of developers, including Turbine Inc., Activision-Blizzard and NCSoft, among others. The suit claims the MMO companies are violating its patents for its HearMe technology (an inconsequential, business-oriented "online meeting service"), which Paltalk bought the rights to in 2002. Will the MMO industry collectively stave off these lawsuits, or is this just the beginning of a multi-million dollar litigious gang bang?
Most of this began last December, when General Patent Corporation (an intellectual property enforcement team, described on its website as "helping cash-strapped independent inventors pursue their patent claims against the big guys") announced it had retained the law firm Lerner David Littenberg Krumholz & Mentlik LLP to represent Worlds.com. VirtualJudgement.com reported the announcement:
According to statements by Alexander Poltorak, General Patent Corporation's Chairman and CEO, "[t]he Worlds patents represent exceptionally valuable intellectual property," and "[w]e welcome licensing inquiries from the on-line game industry. Non-exclusive licenses are available on favorable and non-discriminatory terms."
Worlds.com holds U.S. Patent Nos. 6,219,045 entitled "Scalable Virtual World Chat Client-Server System" and 7,181,690 titled "System and Method for Enabling Users to Interact in a Virtual Space". Thom Kidrin, the CEO of Worlds.com, stated that "[w]e are pleased to have the expertise and IP experience of General Patent and Lerner David to enforce Worlds' patent portfolio," and that "[a]s the number of virtual worlds and MMORG's (sic) continues to grow, Worlds has seen the space we pioneered in 1995 validated in techniques and methodologies we believe are defined in our patents."
At the time, Worlds.com hadn't actually filed suit against anyone yet, but as the reporting website pointed out, "the potential impact of this announcement will definitely be worth watching for."
Later that month, Worlds.com filed suit against NCSoft for patent infringement in an East Texas court, an area reported as notorious for siding with plaintiffs in these types of lawsuits (ironically, Paltalk recently filed its suit in the same area, a practice known as forum shopping). The story received even more attention later, in March, when Worlds.com CEO Thom Kidrin announced his intent to sue MMO developers that wouldn't submit to license negotiations with his company, including industry leaders such as Blizzard Entertainment and Linden Labs.
The source of his claims originates from a series of patents filed by Worlds.com that define "a highly scalable architecture for a three-dimensional graphical, multi-user, interactive virtual world system," the first of which—patent 6219045—was filed with the U.S. Patent Office in 1996. Originally used by the Starlight Starbright Foundation to develop its Starbright World project, a 3D virtual chat room in which sick or terminally ill children could socialize from their hospital beds. It's similar to a modern-day game like Habbo Hotel or Club Penguin geared specifically for hospitalized children, funded by charity.
Worlds.com later filed two more patents, 7181690 in 2000 and 7493558 in 2006, both of which appear similar to the original, but add more definition or refine the definitions and terminology to reflect today's technology more accurately. (For a quick chuckle, be sure to check out the pictures illustrating the patent definitions.) So as not to bore you to tears with technical jargon, I'll simply quote the abstract of the original patent in 1996, which defines a "Scalable virtual world chat client-server system":
The present invention provides a highly scalable architecture for a three-dimensional graphical, multi-user, interactive virtual world system. A plurality of users can interact in the three-dimensional, computer-generated graphical space where each user executes a client process to view a virtual world from the perspective of that user. The virtual world shows avatars representing the other users who are neighbors of the user viewing the virtual world. In order that the view can be updated to reflect the motion of the remote user's avatars, motion information is transmitted to a central server which provides position updates to client processes for neighbors of the user at that client process. The client process also uses an environment database to determine which background objects to render as well as to limit the movement of the user's avatar.
Next up, we have the aforementioned Paltalk, which named Turbine, Blizzard, NCSoft and other developers in its recent patent lawsuit, claiming these MMO companies are infringing on its uninspired "HearMe" technology. The patents in question are 5822523, filed in 1996, and 6226686, filed in 1999. Both titled "Server-group messaging system for interactive applications," the first patent in 1996 defines the technology as (abridged for brevity):
A method for deploying interactive applications over a network containing host computers and group messaging servers is disclosed. […] In its most simple implementation, the method consists of the group server receiving a message from a host containing a destination group address. […] In an interactive application, many messages will be arriving at the group server close to one another in time. Rather than simply forward each message to its targeted hosts, the group messaging server aggregates the contents of each of messages received during a specified time period and then sends an aggregated message to the targeted hosts. The time period can be defined in a number of ways. This method reduces the message traffic between hosts in a networked interactive application and contributes to reducing the latency in the communications between the hosts.
Unlike Worlds.com, Paltalk has already successfully settled a previous lawsuit on the same grounds as the one currently filed against the aforementioned MMO companies. Back in September of 2006, Paltalk filed an infringement suit against Microsoft, claiming the communication technology used in Halo 2 and Halo 3 on Xbox Live violated its patents. Unfortunately for the rest of the gaming industry, Microsoft settled the case in court back in June for an undisclosed amount.
By doing so, Microsoft did what many opponents of these cases have feared; it set a legal precedent. Microsoft did what many wealthy companies do in civil court, which is to"bite the bullet" and settle the case for less money than the plaintiff originally requested in damages. Sure, it can save you millions of dollars in the long run—especially if you're in the wrong—but it also sends a message to courts trying similar cases in the future. As described in the previously-linked Boston Globe article:
[Boston attorney Christopher] Donnelly said that Paltalk's victory over the world's biggest software company "certainly gives them crowing rights.'' It also means that Microsoft has conceded the validity of Paltalk's patents, making it tougher for Turbine and the other defendants in the current lawsuit to challenge them.
It's not my intent to dissect the Worlds.com and Paltalk patents word-by-word, judging the merit of either patent. To that end, there are plenty of gamers in the community speaking up in forums and in blog comments. You can find some examples here, here and here.
These are classic cases of frivolous litigation, with no other justification than pure greed. It's about smaller companies thinking they won the lottery because they filed a patent sometime in the past for a vague idea or technology similar to one that's successful today. But instead of getting off their asses like they should have, and actually created something fantastic of their own, they would rather use the legal system to hedge their bets on settlements to make free money.
It didn't come as a surprise to me that most of the gaming community—fan and press alike—had never even heard of either of these companies before they filed their respective lawsuits. Neither did it surprise me when I learned that Worlds.com reported a net earnings loss of $242,441 at the end of March (the same quarter it announced its intention to sue every MMO within reach), or that the company's stock hasn't been faring too well.
I'm a firm believer in a free market economy, and some people don't realize that governmental oversight protecting the rights of that economy's citizens is part of a free market. It's not a socialist attitude to disagree with the motives of companies like Worlds.com and Paltalk though, especially when you consider the courts that cases like these are being tried in. Can you imagine a 65-year-old judge trying to issue a summary judgment, based on a defendant like Blizzard's deposition, in which it's trying to explain that the concept of "virtual worlds" was collectively introduced to the masses, just like social networking sites, or even multiplayer BBS games in the late 80s? You would think the mere existence of AOL's Neverwinter Nights—the first graphics-based MMORPG, from 1991 to 1997—would prove that Worlds.com didn't "invent" the virtual worlds found within thousands of websites and dozens of MMOs.
The Paltalk lawsuit is brand-new, so there probably won't be any new developments to speak of for quite a while. As it stands today, NCSoft is still tied up in the lawsuit with Worlds.com, although the case was recently moved to a California court, in the interest of thwarting the plaintiff's forum shopping.
It seems as if the only glimmer of hope for NCSoft and the MMO industry lies in establishing examples of "prior art." In patent law, the concept of prior art is defined as "all information that has been made available to the public in any form before a given date that might be relevant to a patent's claims of originality," according to Wikipedia's patent law section. "If an invention has been described in prior art, a patent on that invention is not valid."
Back in January, shortly after Worlds.com files suit against NCSoft, a "patent research company" called Article One Partners offered a $50,000 reward to anyone offering proof that Worlds.com's "virtual worlds" concept already existed before 1996. The group's primary goal may have been to boost community involvement and support, but it wasn't long before someone stepped up and claimed the bounty, offering a possible example of prior art. "With verification of outside counsel, Article One Partners has identified prior art that can show the Worlds.com patent to be invalid," according to the company's press release. The person who identified the prior art wished to remain anonymous, and the example itself is still undisclosed.
As AOP mentions in its press release, Worlds.com's patent can only be invalidated by the courts or the U.S. Patent Office. AOP has successfully validated prior art in past cases, but it's still up to the court to decide if this newfound evidence constitutes a valid example of prior art in the Worlds.com lawsuit.
Until then, the MMO industry is waiting with bated breath. Will major MMO publishers like NCSoft, Blizzard and Cryptic lose millions of dollars in legal battles, thereby costing consumers more money when they try to recoup their losses? Will every MMO run on a proprietary technology,"licensed by Worlds.com," driving the price of future MMO development up even more? I wish I had more faith in the notion that only the courts—and time—will tell.