Hi, and welcome back to Legal Geek. This week, we review how Activision Bungie's Destiny video game has ended up on the cutting edge of U.S. patent law.
A few years ago, a company called Worlds Inc. obtained three patents on technology relating to computer-generated display of avatars in a virtual world. These patents have claims broad enough on their face to perhaps invoke infringement claims against some later-developed major video game titles. And indeed, Worlds has sued big game studios for such alleged patent infringement.
One such lawsuit was against Activision for the Call of Duty series in 2012. Later in that lawsuit in 2014, Worlds amended their lawsuit to add the Destiny game as another potential infringement. Destiny has been published by Activision but is developed by a different company Bungie, so Bungie was then brought into the patent infringement case as a co-defendant. In response, Bungie filed challenges to the validity of the Worlds patents in the then-new Patent Office review procedure called Inter Parties Review.
As a reminder, Inter Parties Review or "IPR" was created in 2013 to allow for validity challenges to patents to be brought in front of an appeals board at the Patent Office, in a much cheaper and quicker process than fighting over patent validity in federal courts. So this was one of the early cases to go to an IPR, and the IPR resulted in all three Worlds patents being invalidated. In other words, Bungie avoided the infringement lawsuit by proving the patents were improperly granted in the IPR process at the Patent Office.
However, that has not been the end of the story. One of the rules established for the IPR process is that a patent challenger must file for the IPR review within a year of the challenger or a related real-party-in-interest is served with a complaint alleging patent infringement of those patents. This time bar is put into place to avoid having patent litigants fight out validity in court and then go back at a late stage in the litigation to fight over the same issues in the IPR process. An alleged patent infringer must pick one or the other: challenge validity in the court case, or in an IPR.
The reason this rule is invoked here is because Activision and Bungie had a publishing and development agreement in place for Destiny back when Activision was originally sued for patent infringement by Worlds in 2012. That is more than 1 year before Bungie and Destiny were added to the lawsuit, and also more than 1 year before Bungie challenged the patents in the IPR process. So Worlds is arguing this business deal makes Bungie and Activision a related entity and the 1 year time limit had passed before this party filed the petition for IPR, making it time-barred.
This argument has made it all the way to the Federal Circuit Court of Appeals, which overruled a lower court's ruling against this argument from Worlds about the time bar earlier this month. While that doesn't mean Worlds will eventually prevail and eliminate the result of the IPR against their patents, it does mean the lower court will have a close call of facts to consider in this case.
While it seems a little unfair for Bungie to be added to a lawsuit so late and then told it cannot challenge the patents in an IPR because of the late addition to the lawsuit, the involvement of Activision in both games being alleged of infringement makes a good case for the patent owner. I don't envy the court in having to decide this gray area issue on what seemed like a simple and straightforward time bar rule for the IPR process.
The Bottom Line is, highly successful game developers are often targets for patent and other IP infringement actions. Thanks to software patents being on the cutting edge of current decisions of what is patentable in the U.S., this also means some of your favorite companies are setting the course for how new patent laws and procedures will be implemented going forward. We will keep you updated on what happens in this case, although the patents may very well be invalidated in court by Activision and Bungie even if the IPR result is thrown out in this process.
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