Guest post written by Ahsan A. Shaikh
Ahsan A. Shaikh is a partner in the law firm of McDermott Will & Emery LLP, where he focuses on??the video game and interactive entertainment software industry.
Ahsan Shaikh
The video game industry is bigger than you think. With 67% of U.S. households playing video games and annual revenues of over $10.5 billion, the video game industry is in many ways bigger than either the movie industry or the music industry. As a niche of the overall video game market, social network gaming has become a major moneymaker. Social network games can be particularly profitable, due to shorter development cycles and incredibly broad pre-existing distribution channels (e.g., social networks and mobile devices). Inevitably, such financial success begets lawsuits. Game developers, and more so entities not even involved with games, are increasingly asserting their intellectual property either as a shield or sword in what has become a battlefield of infringement lawsuits. And much like a video game, gaming companies need to have a strategy for navigating the battlefield.
IP is asserted in the video gaming industry by the threat of lawsuit, most commonly by a copyright infringement or patent infringement lawsuit. Generally speaking, a patent protects an idea, and a copyright protects an expression of an idea. Copyrights protect areas of gaming such as source code (e.g., from software piracy), game boards, game screens and a character?s appearance. Patents, which can be a much more powerful form of IP protection, provide a monopoly right for potentially any aspect of a video game, from the console to the controller to the game mechanics to the game?s subject matter.
Having set out the weapons of choice, how does a development company for a social networking game protect itself on the IP battleground? For copyright concerns, the best strategy is to be creative. Companies should not use pre-existing games as templates for games they are developing. Considering an idea from a pre-existing game is acceptable as long as that idea is expressed in a different way. A developer of a new game should keep in mind both the extrinsic features (e.g., artwork, settings, and characters, to name a few) and intrinsic features (how an ordinary person would compare the two games without necessarily depending on the extrinsic features) of pre-existing games to avoid having a substantially similar total concept and feel.
For patents, there are several strategies, none mutually exclusive. In fact, as a gaming company becomes more successful, the company becomes a more likely target of patent infringement lawsuits. Such companies are well advised to consider adopting all of the following patent strategies. For example, in just the past three years, major gaming companies like Zynga and Blizzard have been sued by patent trolls (i.e., companies that don?t make patented products but still assert patent rights to make money) over a wide array of patented features ranging from allowing users to grant each other enhanced access to their personal profiles to controlling targeted advertising. Considering the cost of patent litigation, which averages around several million dollars, the cost of implementing all of these strategies is insignificant.
- Gaming companies should keep an eye on what competitors are doing.
The chances are that if there?s some game play or technical feature of a game that is responsible for its success, then that feature may be claimed by an issued patent or a pending patent application. If a game in development has a similar feature, or is otherwise very similar to the other game, then the company developing the game should conduct a patent search to assess what patents may be relevant to the developing game.
- Also, gaming companies should begin building their own arsenal of patents.
Patents can give a company leverage when an opponent asserts their own patents. Like nuclear warfare, companies are deterred from ?launching? patents against other companies if the other companies have their own patents to launch in return. And even if the opponent asserts, having an arsenal of patents facilitates settlement and cross-licensing to quickly end litigation before it gets too expensive. Additionally, if a small development company?s goal is to be acquired, then patents are usually one of the first items an acquirer will check when considering acquisition. In an industry based on IP, having patents is integral to acquisition.
- If a developer is concerned about a particular patent, they should consider having the patent re-examined by the U.S. Patent and Trademark Office.
Re-examination of a patent opens up the validity of the patent to analysis in view of any new issues that may be raised to the USPTO. The result can be narrower patent claims that avoid a developer?s game, or the invalidity of the patent as a whole.
- Developers should consider obtaining patent infringement insurance.
Infringement insurance is offered by several insurance companies to cover legal costs in case a developer is sued for patent infringement, and the legal costs of suing an infringer to enforce a patent.
Patent infringement insurance can be expensive, so a developer should consider the gaming space they target and the competitors in that target space when determining whether to obtain patent infringement insurance.
With two out of every five social network users regularly playing games on social networks, and the size of social networks growing, social network gaming will be around for awhile. Developers planning on taking advantage of this growth are well advised to have a strategy to prepare for being a target of IP lawsuits that may arise. Whether a developer takes strategic action or not, when it comes to IP infringement lawsuits, they?re fair game.
Source: Forbes
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