Legal Geek No. 85: Activision Blizzard wins some and loses some in Patent Law

Welcome back to Legal Geek. This week, we review some recent patent cases for one of our favorite game developers Activision Blizzard to see how the Warcraft is going in the patent world for them.

https://archive.org/details/LegalGeekEp85


At the beginning of this month, two decisions came down from judges in patent disputes involving Activision Blizzard.

In the first case, Activision is being sued along with other defendants for allegedly infringing 6 patents from a company called Acceleration Bay. The patents cover technology that interacts with broadcast channels to allow players to connect and communicate in certain ways for multiplayer gaming experiences.

Acceleration Bay initially filed their lawsuit in Delaware, where Activision and others are incorporated. During a break in that lawsuit given by the Delaware court to fix defects in the initial Complaint, Activision filed what is called a Declaratory Judgment action in California trying to move the dispute over the patents and their validity to their home jurisdiction courts. However, the California judge dismissed the case because Activision's incorporation in Delaware makes that a valid place for the company to have to defend against this lawsuit. In the words of the court, Activision cannot have its cake by incorporating there and eat it too by forcing litigation against them out of Delaware to a more convenient home jurisdiction of California.

These battles over where a case is litigated are typical, and it may not make a difference depending on how the merits of this patent infringement claim come out in the future. Still, it's a loss for Activision.

Better news came in the second case, where Blizzard is being sued with some other defendants for infringing a patent owned by Parallel Networks for game downloader software. Battle.net was specifically in the crosshairs as a possible infringement of patent claims covering a downloader program that reassigns which blocks of data the downloader receives based on demand.

However, this case did not even make it to a jury, as the Delaware judge in this case decided on summary judgment that no reasonable juror could find that Battle.net performs the claimed method of operation. Basically, the reallocation of blocks of data in the Parallel Networks patent cannot be equated with reordering how content is downloaded based on customer demand, which is how Battle.net works when multiple patches are available, according to the judge. It's a highly technical distinction, but it was sufficient to overcome this infringement case, at least until appeal.

The Bottom Line is, large companies like Activision Blizzard are inevitably tied up in IP litigation disputes at all times, and you inevitably win some and lose some in those battles. Even through these two decisions went opposite ways, a loss in a jurisdiction battle is much less important than the dismissal of the Parallel Networks infringement case. So, all in all, September was a good month for Activision Blizzard in the legal landscape.

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

Legal Geek No. 84: Print Cartridges and Controlling the Re-use of Commercial Goods

Welcome back to Legal Geek. This week, we take a look at the printer industry and the many ways it is battling for the right to control re-use of commercial goods, specifically the print cartridges which often must be replaced or refilled with more ink.

https://archive.org/details/LegalGeekEp84

A news story broke last week that HP used a firmware software update on their popular printer lines to enact a time bomb for remanufactured unauthorized cartridges. In short, as of September 13, the HP printers put up an error message which prevented further use of any unauthorized cartridge. In this regard, HP has taken a step beyond the typical of just displaying a warning by actually preventing use of remanufactured cartridges that do not come from HP itself.

Granted, cartridge remanufacturers can reprogram their control chips to avoid this error, but that will take time, and in the meantime, HP will hold their printer customers hostage to buying cartridges from them. It's a strong-handed play to protect HP's most lucrative revenue stream, and one which will probably find some consumer pushback despite being effective.

However, the HP approach is just one small part of a larger battle in this industry between these printer companies and their competitors in the cartridge industry. The most notable battle is in the courts is potentially heading to the Supreme Court between Lexmark and Impression Products, a company that recycles and re-sells print cartridges.

Here are the important facts: Lexmark sells regular cartridges at full prices with no restrictions on re-sale or re-use, and also "return program" cartridges at reduced prices in return for an agreement for the user to return the cartridges to Lexmark when empty. Impression buys used genuine cartridges that Lexmark sold to foreign customers and then refilled them for re-sale in the U.S.. Lexmark does not like this, so their legal team filed for patent infringement against Impression. These facts have led to some interesting patent law arguments.

First, Impression has argued that the original sale of the cartridges by Lexmark in foreign countries invokes the patent exhaustion doctrine and thus prevents Lexmark from preventing re-sale of those cartridges in the U.S. because they already benefitted from the first sale. This type of argument won a Supreme Court copyright case a couple years ago in the context of textbook re-sales, but it is contrary to prior patent case law. The Federal Circuit Court of Appeals declined to overrule that precedent, which means Lexmark can pursue Impression for patent infringement despite having sold these cartridges abroad already.

Second, Impression has argued that the sale of a patented cartridge with restrictions on re-sale also invokes the patent exhaustion doctrine. However, Impression is trying to overturn 25-year old patent case law on this point designed to protect the sale of licenses to use instead of complete sales, and the Federal Circuit also declined to overrule those old cases. Thus, Lexmark is not subject to patent exhaustion just because it puts restrictions on some of its "return program" sales of patented cartridges.

The differences between patent exhaustion law and copyright law may be enough for the Supreme Court to jump in and give the final word on this issue, even though Lexmark is winning for now.

The Bottom Line is, when companies need to protect a primary revenue stream like print cartridges for printer manufacturers, they will go to great legal and technical lengths to save that future money. While this may put product manufacturers and patent holders at odds with their consumers in some sense, consumers can help regulate any unfair business practices by doing business with those who follow more fair practices. That's the beauty of market competition, and we will see if it works in the case of HP, Lexmark, and this industry over time.

(Post-notes, not for audio) - Thanks to Brian Tobey and others on Twitter who have recommended the Lexmark case for this segment over the past few months. A shout out to code-wow on the Current Geek subreddit as well for bringing the HP news to our attention. 

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