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Death Knight [Paltalk lawyer] casts [litigation] for xxx hundred million in damages.  (Source: Tenton Hammer)
Paltalk Holdings Inc. is taking on the MMO industry's biggest players in court

In online games, one crucial aspect of gameplay is to synchronize the scene across a wide array of players' computers.  Events like explosions or special effects must be transferred to and played simultaneously on a broad variety of internet connect machines which is not always an easy task.  In 2002, Paltalk Holdings Inc. of Jericho, N.Y. purchased two patents from a company called HearMe.  The patents cover sharing data among many connected computers so that all users see the same digital environment.

Now Paltalk, a reputed patent monger, has taken many of the massively multiplayer online (MMO) gaming industry's biggest players to court in Marshall, Texas, claiming they violate its patents.  Paltalk hand picked the east Texas court for its long history of favoring plaintiffs (patent holders) in lawsuits.  States Christopher Donnelly, a partner at Donnelly Conroy & Gelhaar LLP in Boston, "The eastern district of Texas is considered a plaintiff-friendly jurisdiction."

Paltalk is suing Turbine Inc. of Westwood makers of the Lord of the Rings Online MMORPG, a popular $15 per month entry; Japan’s Sony Corp., maker of the online game Everquest; Activision Blizzard Inc., whose World of Warcraft is the world’s most popular subscription-based online game; NCSoft Corp. of South Korea, maker of the game Guild Wars; and the British firm Jagex Ltd., which produces the free online game Runescape. 

Noticeably absent in the suit are CCP Games, makers of EVE Online; Square Enix makers of the popular Final Fantasy X11; Linden Lab, which produces the popular Second Life game; and GRAVITY Co., Ltd., which produces Ragnarock online, a game popular for its free servers.  It is unclear why Paltalk singled out the companies it did, while ignoring others, which likely use similar technologies.

Paltalk has a strong legal track record.  In 2006 it took Microsoft, the world's largest software maker, to court over technology in Halo.  The case went to a trial in Marshall, Texas, in March.  Mid-trial Microsoft gave in, conceding the validity of Paltalk's clients and paying it a reportedly massive undisclosed licensing fee.

The firm, like others, looks to continue to milk the patent system -- and the U.S. software industry -- for all its worth in the friendly Texas courts.  Last month a Texas court ordered Microsoft to stop selling Microsoft Word within 60 days, as well as paying $200M USD in damages to another patent monger firm.  The ban has been temporarily lifted, but the damages remain, unless Microsoft can win an appeal.



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Patents in General
By choadenstein on 9/18/2009 11:35:20 AM , Rating: 5
BTW. I am a patent attorney, so I wanted to let you guys in on some misconceptions regarding patents that seem to abound in here:

1) Patents give an inventor the right to exclude others from practicing their invention. Nothing requires that the inventor actually practice what they have invented.

Article I, Section 8 of the constitution

The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries ;

Even in the constitution it is stated that what we are going to do is give the inventor a limited time where he/she is the exclusive right holder. No limitations on him/her producing or practicing the invention.

2) There is a defense companies can use against trolls that lie-in-wait until someone is practicing their invention, and sues only when it becomes valuable. It's called Laches.

http://www.patentlyo.com/patent/2008/10/laches-and...

(basically)After 6 years, there is a rebuttable presumption that the assignee of a patent has given his/her permission to the infringer, if the assignee knew of the infringement.

3) The Eastern District of Texas (and the Eastern District of Virginia) are not selected only for being plaintiff friendly (may jurisdictions are plaintiff friendly, especially when it comes to patent infringement). Plaintiffs primarily choose these districts because they are known as "Rocket Dockets". They hear a lot of patent cases and are known for processing them quickly. Quick trials are a good thing for cost sensitive plaintiffs and for scaring defendants into quicker settlements.




RE: Patents in General
By ZachDontScare on 9/18/2009 3:23:22 PM , Rating: 2
quote:
Even in the constitution it is stated that what we are going to do is give the inventor a limited time where he/she is the exclusive right holder. No limitations on him/her producing or practicing the invention.


Last I checked, this paltalk outfit isnt the inventor of this patented technology.

You can try to defend the status quo, but the purpose of patents is to protect ideas to facilitate innovation. Right now its doing exactly the opposite. Especially in software patents where it seems a large majority are 'common sense' applications of software.


RE: Patents in General
By choadenstein on 9/18/2009 5:30:36 PM , Rating: 2
quote:
where it seems a large majority are 'common sense' applications of software.


That, in my opinion, is a bit of a misconception. While there are a ton of bad software patent applications out there, the 'common sense' argument is mostly made by people who do not understand how the patent process works.

It's happened on here a million times. A patent will issue today for something... Lets say Touchscreen Thingamajig. And then everyone goes, WTF... WTF.. I have one of those in my iPhone, how can they give a patent on that.

People need to realize is that what is important is the filing date, not the issue date of a patent. Patent applications are examined by what was available as of their filing date. This is especially true in software patent applications which can take 4-7+ years to issue. Sure, something that issues today might be 'common sense', but 7 years ago, it was completely novel.

For instance, at least one of the patents in question in the lawsuit between Paltalk and Sony et al. was filed in 1996. I have read the claims and I for one cannot say that what they claimed was obvious or not novel in 1996. That's for the litigators to find out.

Finally, believe it or not, the trolls that buy up random patents may actually be helping facilitate innovation. There are some great articles on the subject.

Basically, it costs around $20k to get a patent application through the system on average... Give or take several thousand depending on the technology, number of rejections by the Examiner, etc... Then there are the maintenance fees that are required to keep a patent alive.

On average, patents loose inventors money. However, when patent trolls come and buy up patents, they inject money back into the research and development community. It's a secondary market for the owners may believe are useless patents.

For instance, the patents purchased by Paltalk were purchased for ~$200,000. That's a profit of ~$180,000. Not a bad ROI for a company/inventor who would otherwise be out the patent prosecution fees. Moreover, the company/inventor gets ~$180,000 without the risk or costs associated with litigation. Not Bad.

After all, these companies (Sony, Blizzard, etc.) will be bringing the big guns to defend against the litigation. If it's not a good patent(s), lord knows these guys would knock it out of the water. But since Microsoft already anted up and paid to license them rather than continue with litigation... It's safe to reason that these patents are pretty solid.


RE: Patents in General
By ZenGeekDad on 9/19/2009 11:56:47 PM , Rating: 2
Thank-you for sharing expert perspective in this forum. I sympathize deeply with the unanimous venting expressed here, but frankly, your comments weigh about as heavily as the rest combined. But their inexpert collective opinions still count about equally, because they help shape public opinion, and the public decides who gets to make and change the laws in play here.

I'm no stranger the patent system myself these last 22 years. Every hardcore player I know in the patent game knows it's a game -- that is, the rules do not always follow logic, but if you don't try to win within the bounds set (logical or not), you often wind up losing, and losing big.

So, at a minimum, most technology-based corporations play this game at least defensively. That's one major emergent phenomenon from the way our system is built: we patent things to prevent our competitors from blocking our practice of the invention. We do this even when the patented technology routinely seems to be "obvious to anyone trained in the discipline" ... because if we don't then a competitor will. And then we have the cost and uncertainty of trying to overturn their patent.

It is also routine for a technology-based company to have their patent lawyers make invalidity determinations on competitors' patents once the patents are made public. When those lawyers decide the issued patent is invalid, the corporation often decides to knowingly infringe, on the knowledge that the odds are good they can prove it invalid in patent court. For bigger stakes, the invalidity opinion is usually backed by (financially) disinterested third-party law firms. It will be interesting to see if this work was done by named plaintiffs. If so, this could be as short a case as many here hope.

But I do want to point out one logical fallacy you've employed. You say that by creating a secondary market for these inventions, the patent mongers stimulate invention. I see problems with that claim:

(1) The solo inventor is a very small minority of the patent holders in the last couple-few decades. So to argue that significant invention is driven by that source, we would have to claim that those individual patents are disproportionately influential. Proponents of such a claim would cite its numerous "poster children" inventions that have attained mythic stature in our culture. Yet it would be close-minded to discount them as mere popular mythological distortions. But let's move on ...

(2) There is already a healthy market for the solo or small company inventor to sell to larger firms that actually intend to use the technology. I suspect the overnight loss of all patent trolls would cause no measurable contraction of that economy.

(3) Even if (1) & (2) were incorrect, we would still have to ask if stimulating the publishing of small inventor patents -- only to be roll up by patent mongers -- actually drives economic or social benefit. I would say it does not. Consider the extreme: if the patent mongers stimulated ALL new ideas to be patented solely by brilliant individuals and small companies (forget the reasons we both know against that being possible), and the patent mongers then bought all their patents at a nice profit to the inventor, but never practiced the patents, then no increases in GDP would result, and no new utility would be added to the social fabric.

No, I do not accept the argument that patent mongers stimulate innovation.

The point of patents (as you know very well, of course) is to encourage the inventor to (A) invent, and practice that invention in the open economy to our collective benefit, and (B) to trade temporary exclusivity to practice (or license) in exchange for public disclosure. That latter trade made great sense in the 19th century, when the pace of innovation allowed almost all ~20-year-old technology to still have at least some economic life. But there are clearly segments of the modern technology economy where this is hardly true.

This is just one of many areas where the patent system is in desperate need of modernization and improvement based on the lessons learned so far. Like so much of modern life, though, the political complexities of accomplishing patent reform seem to guarantee against it happening. Vested interests with deep pockets abound. And not as some lurking venal cabal, but as a deadlock of differing opinions, of the type certain to logjam progress in Congress. And way too few people have any grasp of the way it should/could work, and how it does work -- too often dysfunctionally -- today.

Patent reform is way overdue. But I seriously doubt we'll see anything meaningful happen in my lifetime. Like so many large and complex socioeconomic systems, I fear we must instead take comfort in the fact that we somehow muddle through (for the most part) despite all the failures and workarounds to the workaround as infinitum.


"My sex life is pretty good" -- Steve Jobs' random musings during the 2010 D8 conference

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