Legal Geek No. 18: Supreme Court Clarifies More Limits on Software Patents

Welcome back to Legal Geek. This week, we continue our review of recent Supreme Court decisions affecting the tech world by analyzing the decision in Alice Corp. v. CLS Bank.

https://archive.org/details/LegalGeekEp18

Like many Supreme Court cases, including the copyright case covered last week, a primary issue is whether the resulting ruling will affect more than just the narrow facts at hand in the case. For the Alice case, the simple question was whether a patent claiming a computerized trading platform for eliminating settlement risk in financial transactions was patentable subject matter. The broader question was whether software patents are actually patentable subject matter.

As is typical in the decisions, the Supreme Court answered the facts at hand and did not address the broader issue, likely leaving the big question of software patents to be decided by Congress rather than the courts. Thus, the reports that software patents were greatly curtailed by this decision are simply false.

The use of a third party in financial transactions to eliminate settlement risk was deemed by a unanimous court to be what is called merely an Abstract idea, in other words a well known principle or building block of economic practice. Moreover, the claims that add generic computer system elements to perform the methods were ruled to not be patentable subject matter either.

Put simply, a patent attorney cannot merely wordsmith claims and add simple elements to make a non-patentable Abstract Idea into a valid patent claim. Again, from a common sense perspective, the Supreme Court has acted logically in stopping gamesmanship based solely on wording of claims rather than substance.

However, the Court made it abundantly clear by comparisons to previous Abstract Idea cases that this analysis has not changed, it was merely applied to the facts in this case. Thus, software patents in the broad sense are still as patentable as they have always been, and that legal field will continue to thrive.

Bottom Line: If software is to be deemed non-patentable subject matter, that decision will clearly not come from the Supreme Court. The standards will remain fuzzy as a result of the nature of software, but there is good innovation there and the courts and Congress are not likely to take away the patent rights to this entire field.

Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy or in the comments below.

Legal Geek No. 17: Supreme Court Deals Death Blow to Cordcutting Option Aereo

Welcome back to Legal Geek. This week, we review the impact of this week's Supreme Court decision that killed one cord cutting option called Aereo.

https://archive.org/details/LegalGeekEp17

The Supreme Court always releases a high number of decisions in June at the end of their annual term, and the complex intellectual property cases always seem to be left to this time period. One of the most notable decisions came down this week, as the Aereo service was confirmed to be copyright infringement by the Supreme Court.

For those unfamiliar with Aereo, this was a subscription service that allowed users to watch over-the-air television broadcasts by intercepting the signals with miniature antennae. Basically, a user decided what program he wanted to watch and Aereo opened access to the channel by sending the intercepted antennae signal to the user's device. Effectively, this was a cord-cutting system because it allowed for live and cable programming to be viewed without a cable or satellite TV subscription.

The 6-3 majority opinion held that the transmission of these intercepted programs to user devices was enough to qualify as a public performance of those programs, which is one of the rights that copyright protection includes. Just because the programs were individually transmitted in a passive manner on an individual by individual basis, this was deemed by the court to be analogous to a performance of the program through an individual conduit to many users (which would more clearly be improper under copyright precedents). On this point, I think that common sense won the day.

Thus, Aereo will be shut down, which all 9 justices agreed should happen, even though the dissent disagreed on the grounds for shutting this down. The Court explicitly stated that this case does not decide whether copyright infringement occurs with cloud computing or remote storage DVR's, so this really just shuts down the most illegitimate of the cordcutting services. And of course, this decision has no effect on the more popular services like Netflix and Amazon Prime, which pay royalties to stream the programs delivered to subscribers. Indeed, Aereo could make the same negotiations and stay in business, should it choose to continue on the right side of the law.

Bottom Line: Cordcutting and cloud computing live on, while Aereo will not in its current form. Much like the aftermath of the Napster decisions in the music industry, we still appear to be headed toward a great place for consumers of live and recorded television and films.

Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy or in the comments below.

Legal Geek No. 16: Evaluating the Copyright and Trade Dress Claims in Hex vs. Magic Litigation Battle

Welcome back to Legal Geek. This week, we finish our review of the legal battle brewing between Wizards of the Coast and Cryptozoic by looking at the merits of Wizards' copyright and trade dress claims.

https://archive.org/details/LegalGeekEp16

The trade dress claimed by Wizards is the overall product appearance of Magic and its computer counterparts, alleged to include the packaging and 15-card contents of booster packs, the overall visual aspects of the cards, and the like. However, Wizards likely shot this claim in the foot by admitting all of this alleged trade dress has some functionality.

Functional elements are not protectable trade dress under the Lanham Act, so this trade dress claim is likely dead on arrival. I expect the trade dress claim to be decided in favor of Hex on initial summary judgment.

Turning to copyright, Wizards has set forth a compelling story of all the elements of Magic that Hex has allegedly copied. These copied aspects include the major types of cards, ability names on creatures, the same five colors of cards, a list of functionally identical cards, the background game appearance on a computer display, the same general rules of deck construction and combat during play, and the use of tapping cards to show use.

The vast majority of these appear to be the underlying facts or ideas that are not protectable creative expressions under copyright law. Many knockoff video games were able to escape copyright infringement over the last two decades on similar grounds, but some courts (including one involving a Tetris clone in 2012) have recently taken to applying copyright infringement where the amount of total elements copied is significant and overwhelming. Based on Wizards' complaint, that could very well be the case here.

So the copyright claim may come down to whether the judge or jury is sympathetic to the idea that knocking off most of the major aspects of a computer game is wrong. That's incredibly hard to predict, so the copyright claim will be the most interesting going forward.

Bottom Line: Wizards will likely prevail on the patent claim but will lose on the trade dress claim, which means the unpredictable copyright claim will determine whether Hex will be allowed to continue in this market for the long term. It will be certainly fun to see how this plays out in court between two game company titans.

Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy or in the comments below.

Legal Geek No. 15: Evaluating the Patent Claims in Hex vs. Magic Litigation Battle

Welcome back to Legal Geek. This week, we continue our review of the legal battle brewing between Wizards of the Coast and Cryptozoic by looking at the merits of the patent claims against the game Hex.

https://archive.org/details/LegalGeekEp15

Let's begin with the basics: patents that are issued by the USPTO are effectively 20 year monopolies rewarded for innovation in the arts and sciences, but the monopoly is limited to just the specific numbered claims at the end of a patent. The difference between what is described in a patent and what is actually claimed can be very dramatic, as the claims are typically narrowed significantly during prosecution.

The urban legend is also true that Richard Garfield, the designer of Magic, did procure a patent in 1994 for various basic things like deckbuilding and tapping cards that are now a commonplace thing in trading card game designs. That patent of legend is what Wizards is claiming is infringed by Hex.

There are 57 claims in the Magic patent, but four of them stand to me as real problems for Hex. The first two recite a card game and a computer card game requiring only obtaining a hand of cards from a supply, playing a card, and designating a card by rotating it to a different orientation, AKA tapping. That's all, and Hex certainly seems to do those few steps.

Another of the broad claims recites obtaining a hand of energy/mana components and effect components, then using the energy components or mana to play the cards. Again, very basic TCG rule sets. The last of the broadest claims describes selecting a library of cards and displaying it on a computer screen to one user, then executing turns of a game and showing the cards played on multiple computer screens.

Claim construction is a process for deciding how to interpret these legalese claims, and that process plus discovery of documents and information from each party can be very complex and somewhat unpredictable. However, it seems likely that the close clone of rules and operations that Hex is compared to Magic will infringe at least those broad claims, if not more.

So Hex will likely need to fall back on the other defense to patent infringement, that being arguing that Wizard's claims are too broad or vague and therefore invalid. Of course, that will require finding prior art from before 1993 on these points, and the TCG market was not really in existence before Magic, so that could be difficult.

Although this patent will expire later this month, Wizards is still entitled to damages if this claim is successful for the large kickstarter profits and recent profits made by Hex. Plus, fighting over patents in court is ridiculously expensive, even by litigation standards. Unless Cryptozoic finds some invalidating prior art nobody else has located over the last 20 years, this infringement claim likely will go in favor of Wizards.

Bottom Line: At least on this claim, the makers of Hex should likely settle as soon as possible. The expected loss on the patent claim could be devastating, if not fatal to this game.

Next week, we will finish this subject for now by looking at the copyright and trade dress claims, which thankfully are a bit more straightforward.

Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy or in the comments below.