Rhode Island Gets Into the Videogame Business

Published on May 18, 2012 in Patents.

38 Studios, the videogame company behind the success of Kingdoms of Amalur: Reckoning, is said to have missed payroll earlier this week and recent reports indicate the company’s financial condition has only deteriorated further. It was just announced that the company defaulted on a $1.125 million loan guarantee payment that was due on May 1st to the State of Rhode Island.

Joystiq reported on the terms of the deal, which put a $75 million loan guarantee in the owner’s, former Major League pitcher Curt Schilling’s, hands in exchange for moving the studio to Rhode Island. The goal was to create 450 jobs for the economically battered state. The company put up its existing and in-production intellectual property as collateral. Given the odd terms of the agreement this means that if 38 Studios doesn’t quickly rectify its financial problems Rhode Island will soon be the proud owners of a series of popular role-playing games.

38 Studios’ intellectual property rights and other collateral were pledged to the Rhode Island Economic Development Corporation (RIEDC) and assigned to a trustee. Any proceeds made from the sale of the collateral would go back to the holders of the $75 million in bonds issued by the state. The agreement covers “all rights, title and interest in any projects, including video game projects,” such as Kingdoms of Amalur: Reckoning and “Project Copernicus” – the latest title in development at the studio.

While the state could sell off the intellectual property of 38 Studios to recoup some its investment, it’s unlikely that a sale will cover the $50 million already pumped into the studio. Given Rhode Island’s lack of experience developing successful video games it will likely move for an expedient end, taking a lower than market value payment to close the matter quickly. Practically speaking, assets sold after repossession are usually a fire sale situation and rarely break even.

The unraveling of the deal represents a failure not only for the company but also for the state’s attempt at economic development. Reports indicate that only 288 of the 450 promised jobs were ever created in Providence. The big question on many Rhode Islanders minds is what happened to all the money?

Breaking down the numbers, the studio not only blew through the almost $50 million it’s drawn down from the loan to date, but also any revenues from the sales of Kingdoms of Amalur: Reckoning which has thus far sold some 410,000 units in the U.S. alone. The startup costs, not to mention the ongoing maintenance, server needs and marketing to make a game succeed evidently burned through tons of cash.

The Rhode Island Economic Development Corporation held an emergency meeting yesterday to determine the fate of 38 Studios. At Schilling’s request, the meeting was held in private, a decision which irritated many taxpayers in the state. The loan to the studio was already a hotly contested issue with residents worried about being left on the hook should the company go belly-up, a prescient worry given the current state of affairs. No decision was made at the meeting and no comment has been issued so far by 38 Studios.

Source: “Rhode Island owns Amalur, all other 38 Studios intellectual property if studio defaults,” by Alexander Sliwinski, published at Joystiq.com.

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New Patent Exchange For Exchanging Patent Rights

Who owns ideas in the “Cloud”?

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New Patent Exchange For Exchanging Patent Rights

Published on May 11, 2012 in Patents.

The Intellectual Property Exchange International (IPXI) is a new financial exchange that allows companies to buy, sell and hedge patent rights. The idea behind the new approach is to commoditize intellectual property and trade it as if it were any other asset.

The idea is to offer a patent or collection of patents which will be sold as “unit license rights” (ULRs), which can be bought and sold like shares of stock. The purchase of a ULR will entitle a one-time right to use a certain technology in a single product.

The hope is that the marketplace allowing buyers and sellers to interact directly with one another will make things easier, faster and cheaper than the current process which involves drawn out negotiations between teams of highly paid attorneys. The current process makes it difficult if not impossible for medium companies to participate given the high cost, something the IPXI market intends to remedy. The approach is not a panacea and will not work for all varietiesof intellectual property, for example, exclusive licensing situations.

IPXI has already signed up 30 members including electronics powerhouse Philips. Ruud Peters, chief intellectual-property officer at Philips, said that IPXI’s novel approach is ideal for the open, non-exclusive licensing of smartphone-related patents and is excited by the prospect. The exchange is set to open later this year. Though it may bring good news for technology companies,the plan could spell trouble for the legal industry.

Source: “Marketplace of ideas,” published at Economist.com.

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Who owns ideas in the “Cloud”?

Anti-Software Patent Rhetoric Heats Up After Yahoo v. Facebook

Who owns ideas in the “Cloud”?

Published on May 4, 2012 in Copyright, Patents and Trade Secrets.

In the Information Age the definition of “property rights” has shifted to include things you might not have initially considered. Ideas are now more accessible than ever and it’s critical to understand who owns them.

The issue was raised recently when, as the Los Angeles Times reported, Google announced that its Google Drive came with the promise that users will “retain ownership of any intellectual property rights that you hold in that content.” However, when a user save files to Google’s hard-drive folder in the cloud, the terms of service you sign off on grant Google “a worldwide license to use, host, store, reproduce, modify, create derivative works, communicate, publish, publicly perform, publicly display and distribute [your] content.” No questions asked.

When questioned about the inconsistency and the IP problems the language presented Google responded by saying that the provision exists only to “enable us to give you the services you want – so if you decide to share a document with someone, or open it on a different device, you can.” Sounds simple enough, but is it?

Recently many companies have added language to their terms of use saying much the same thing, potentially granting intellectual property rights over vast troves of data. Email providers, photo-sharing services, social networks, and document hosting firms may all have authority to do as they please with the information you entrust to them. One shocking example occurred in 2009 when Facebook let advertisers distribute users’ photos to market products without ever asking permission.

The companies themselves make the case that intellectual property serves as a substitute for payment for their services. The argument is that the online services users turn to cost money to operate and since no one pays for the service with cash, you instead pay by allowing the companies to monetize the information they have about you.
While the practice isn’t all bad, it’s important that consumers realize that when they mindlessly hit “Agree” while opening an account they may have given away more than they bargained for.

Source: “Property rights in the cloud,” by David Sirota, published at SFGate.com.

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Anti-Software Patent Rhetoric Heats Up After Yahoo v. Facebook

NASA to Auction Patents

Supreme Court: No Deference to PTO in a Section 145 Action

Published on April 27, 2012 in Patents.

The Supreme Court has issued a unanimous opinion which opens a new avenue for applicants who have lost an appeal with the Patent Office’s Board of Appeals and Interferences (BPAI).  In Kappos v. Hyatt, 560 U.S. ___ (2012), after the  application was rejected by the examiner and an appeal to the BPAI failed to reverse the examiner, applicant filed a lawsuit against the Director of the PTO at the district court rather than an appeal directly to the Federal Circuit (which is the usual approach).

In arguing for patentability of the claimed subject matter, the applicant introduced additional evidence in the form of an affidavit that had not been previously submitted to the Patent Office. The district court refused to consider this newly presented evidence stating that evidence could not be submitted at this stage unless it had been presented to the BPAI (sans a showing of good cause as to why it was not earlier presented). Additionally, the district court took a deferential approach as to the evidence before it and to the Patent Office.  After the district court upheld the BPAI, the applicant appealed the case to the Federal Circuit, which vacated the district court’s grant of summary judgment.  The Federal Circuit held that applicants are “free to introduce new evidence in § 145 proceedings subject only to the rules applicable to all civil actions, the Federal Rules of Evidence and the Federal Rules of Civil Procedure” even in the case where the applicant was not justified in failing to present the evidence to the PTO.  The Patent Office appealed to the Supreme Court which, agreeing with the Federal Cirucuit’s reasoning, found for the applicant.

The takeaway for this case is that a section 145 action provides a powerful means for challenging an adverse decision by the BPAI.  Under this ruling,  courts must consider all of the evidence de novo (without deference to the Patent Office);  it may come to a different conclusion based on the evidence than the BPAI. Moreover, certain forms of evidence not allowed in a BPAI proceeding, such as oral testimony, can be presented in a section 145 action in a district court . This can include oral testimony from an expert witnesses, for example, who may be able to provide persuasive evidence as to technical issuea and issues such as whether the written description and enablement requirements have been met.

NASA to Auction Patents

Published on March 31, 2012 in Patents.

NASA has developed many technologies that have made their way to ordinary usage. But now NASA is auctioning off — rather that giving away for free — some of its patented technology.

As reported in the media, the NASA Goddard Space Flight Center is partnering with ICAP Ocean Tomo LLC of Chicago to sell portfolios. The portfolion includes 12 patents for technologies including software, robotics, and artificial intelligence.

ICAP Ocean Tomo has scheduled the auction for next Thursday. For additional information, see the company’s website.

Anti-Software Patent Rhetoric Heats Up After Yahoo v. Facebook

Published on March 14, 2012 in Patents.

Yahoo! is suing Facebook for patent infringement.

Now, the predictable, sophomoric fear-mongering stuff is coming out again. For example, Andy Baio, whose name is on eight Yahoo! patents, opines:

“…Software patents should be abolished, plain and simple. Software is already covered by copyright, making patent protection unnecessary.

Ask any programmer — developing software is as creative and unique as writing poetry…”

Yes, Andy, software is “covered” by copyright… but it is incredibly easy to design around a copyright for a computer program.

And, just why should there be an exception in the patent law for software?

Cannot software inventions be innovative?

Then why not patent protection for them?

It is always difficult to try to quantify the quality of a company’s patent portfolio, but each year the IEEE Spectrum publishes their Patent Power Scorecard, which is a compilation of innovation scores of companies by industry category.

IEEE Spectrum uses a modeling system for determining “quality” based on variables such as “Pipeline Growth”, “Pipeline Impact”, “Pipeline Generality”, and “Pipeline Originality”. Without going into detail, these metrics are based on such things as how many other patents in the same field cite the patent, and the variety of technologies that build on the technology disclosed in the patent Companies with technology leadership will tend to have patents which others cite and build upon.

So the #1 company in the category of “Communication / Internet Services” is (drum roll) Yahoo!

‘World’s Youngest Inventor’ of 100 Patents Killed in Syria

Published on March 8, 2012 in Uncategorized.

Besides Steve Jobs, who was of Syrian extraction, one of the most notable Syrian inventor was Issa Abboud, 27, who was the recipient of a WIPO Gold Medal Award for “the world’s youngest inventor”, and who was issued over 100 patents. To put this in perspective, since the formation of the Syrian Patent Office in 1946, there have only been about 5,700 Syrian patents issued, and Mr. Abbound was issued about 5% of them. Unfortunately, it has been reported that Mr. Abboud was shot dead in his car by criminal armed gangs at al-Nozha neighborhood in Homs on Sunday.

Trademark Dilution

Published on February 29, 2012 in Trademarks.

An interesting trademark case was recently decided by the Federal Circuit.

In Coach Services v. Triumph Learning, Coach, Inc., the maker of luxury leather items, most notably leather bags, sued Triumph Learning, a provider of test preparation services under the Dilution Revision Act of 2006, for trademark dilution.

To make out a case for trademark infringement, the plaintiff must show that usage of the defendant’s mark would cause a likelihood of confusion for consumers. However, there is another cause of action available to some mark holders that does not require a showing of likelihood of confusion — one based on trademark dilution, the notion that the infringing mark blurs or tarnishes the plaintiff’s mark.

But one must show that the mark being diluted is “famous”.

In this case, the Federal Circuit threw the law suit out on the ground that “Coach” was not sufficiently “famous”.

While many people have heard of Coach-brand bags, many of us who are not fashion-conscious have not.

What are some examples of marks which may be famous?

Perhaps “Coca Cola”, “Tylonol”, “Microsoft”, “Chrysler”– all of which have acquired nearly universal brand awareness.

‘Linsanity’ Trademark Filed

Published on February 22, 2012 in Trademarks.

Basketball sensation Jeremy Lin has spawned several words: Linderella, Linsensation, and Linsanity. In fact, there is even a web site that randomly generates new Lin-related words, “The Jeremy Lin Word Generator”. Here is a sample of a few words it generated:

Linstitution (Lin + Institution)

Linpeccable (Lin + Impeccable)

Goblin (Lin + Goblin)

Linvent (Lin + Invent)

Fun aside, it seems that there is money to be made in the Linsensation. At least three people, including Jeremy Lin himself, have applied for a trademark for “Linsanity” (perhaps the most widely used Lin-associated word.

Of the three applicants, Lin applied last.However, it may be difficult for the others to assert ownership over this
trademark. That said, one of the applicants, Andrew Slayton, has reportedly owned and operated the “Linsanity.com” web site since 2010.

So Slayton may have a good legal argument to trademark the name since he has been using it in commerce for a few years.

It should be interesting to see how this plays out.

Walmart Launches “Get on the Shelf Contest”

Published on January 31, 2012 in Inventions and Patents.

It has always been difficult for inventors to get their products on store shelves. The decision of what to put on a store’s shelf was typically made by the store buyer who often went with the major brands.
However, Walmart has recently launched the “Get on the Shelf Contest” that allows anyone to submit video online pitching his or her invention. The three products receiving the  most votes will be sold on Walmart.com, and the grand prize winner will get shelf space in select Walmart stores.
The contest ends on February 22. Additional information can be found here.