Virtual Worlds vs. NCSoft Patent Infringement Suit—Legal Theorycrafting

    On Christmas Eve 2008, Virtual Worlds filed a patent claim against NCSoft for infringing on patent no. 7,181,690. The claims included in the patent pertain to online 3D environments where "[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." In other words, the technology arguably applies to every MMO in existence. According to counsel for Virtual Worlds, the patent (granted in 2007 and filed in 2000) was continued from an earlier patent filed in 1996 (patent no. 6,219,045).

    This is an interesting case and it could create problems for MMO developers and publishers. The duration of a patent is 20 years from the date of filing, so provided that this is a "typical" case and no extensions apply, the patent is valid until 2020. If Virtual Worlds sees any success against NCSoft, there is little doubt that they will pursue other infringers, including Blizzard Activision's World of Warcraft, Linden Lab's Second Life, and others. Nothing in the current press suggests anyone has yet purchased a license from Virtual Worlds for this technology, and it seems as though this litigation may set the benchmark for price– provided the case survives preliminary motions.

    Virtual Worlds may try to avoid non-merit based arguments such as the doctrine of laches by relying on the fact that the patent wasn't granted until 2007. This is where things may get a bit tricky, because the 1996 patent upon which the 2000 patent is based was issued in 2001. This suggests that Virtual Worlds has had a valid patent in the relevant technology for almost eight years. The time is important here, because Virtual Worlds would have to rely at least in part on the '045 patent when arguing the validity of its patent. If the '045 patent is ignored, then the earliest Virtual Worlds can claim this technology is 2000. Under U.S. Patent Law, an invention cannot be patented if: "(a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent," or "(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country more than one year prior to the application for patent in the United States . . ." If the case goes to the merits, NCSoft may defend by asserting that the '690 patent is invalid because the patent failed to meet the novelty standard under the Patent law. NCSoft has been in business and making MMOs since 1997 and Everquest came into existence in 1999, which means that prior arts using the technology were already in existence and likely generally known and described at the time the Virtual Worlds '690 patent was filed. This isn't a simple issue and the Court could rule to validate the '690 patent, but relying solely on the '690 patent certainly makes it harder for Virtual Worlds to meet the novelty and non-obvious standards.

    If Virtual Worlds relies on the 2001 patent by introducing it as evidence in support of a valid patent claim, however, a new set of problems arise. While the statute of limitations argument can be avoided because, as is the case with most infringement cases, the infringement is ongoing, plaintiffs still have an obligation to file within a reasonable time period. The doctrine of laches states, in relevant part:

    "laches may be imputed to a plaintiff who, with knowledge of infringement, stands by for many years and permits the alleged infringer to build up, at great expense, a large business, which will be worthless if plaintiff's complaint shall succeed, and who by inaction permits many thousands of other persons to become liable as constructive infringers from the fact of the use of an infringing device. Of course, laches does not depend on mere lapse of time. It is probably true that mere failure to sue for any but the latest act of infringement, which took place, perhaps, only the day before the suit was filed, would not of itself bar an action, on the ground either of laches or because of any statute of limitations, provided the action be brought during the life of the patent."
Temco Mfg. Co. v. National Electric Ticket Register Co., 33 F.2d 777 (D. Mo. 1928)

     Virtual Worlds has had ample time to bring a lawsuit, provided they felt that they could safely rely on the '045 patent. If you're using a prior patent to argue that your new patent is valid and is only a continuation of the old patent, there is much to suggest that you have a lot of faith in that old patent. Why wait, except to allow companies like NCSoft and Blizzard to "build up, at great expense, a large business, which will be worthless if plaintiff's complaint shall succeed…"?

    From an academic standpoint it would be interesting to see where this could go if it proceeds through discovery and litigation. The expert testimony and legal breakdown of the Virtual Worlds patent would be fascinating, but it could also prove damaging to developers of future technology in light of the complexity of the issue. Practically speaking, if it survives preliminary motions there is little chance that it will escape settlement, thus setting Virtual Worlds up for a substantial payday from not only NCSoft, but from dozens of other major publishers in the MMO market. For another perspective, check out the Massively analysis. And for a quick laugh, head over to Penny Arcade.