We posted Tuesday about the McRO case, and here is some more commentary for consideration, which we posted on our firm's web site, too. One very notable point is that different from prior Federal Circuit decisions since Alice, here the claims were found patent eligible even where the claimed improvement was incorporated in software processed by a general purpose computer and did not result in an improvement in the technological performance of a computer, computer functionality, or computer network. Rather, even when the claimed improvement is not to the computer itself, a claim may still be patent eligible when the improvement allows computers to produce an outcome that previously only could be produced by an intuitive human process.

Our full analysis is here by Banner & Witcoff attorneys Ross A. Dannenberg, Aseet Patel and Peter Nigrelli.

If you are unable to access the hyperlink above, you may read the article on our website by pasting the following URL into your browser:

United States Court of Appeals for the Federal Circuit
Cases 2015-1080, -1081, -1082, -1083, -1084, -1085, -1086, -1087, -1088, -1089, -1090, -1092, -1093, -1094, -1095, -1096, -1097, -1098, -1099, -1100, -1101
Decided September 13, 2016

On September 13, 2016, Judges Reyna, Taranto, and Stoll reversed the District Court's grant of judgment on the pleadings under Fed. R. Civ. P. 12(c) that the asserted claims of U.S. Patent Nos. 6,307,576 (‘‘the ’576 patent’’) and 6,611,278 (‘‘the ’278 patent’’) are invalid, and remanded to the Central District of California for further proceedings.  (Read full decision here)

As previously reported, the patents in suit describe technology for automatically animating lip synchronization and facial expressions of animated characters, a technique commonly used in video game development.  Judge Wu of the Central District of California held the patents invalid as lacking patent eligible subject matter under 35 U.S.C. 101 in the wake of the Supreme Court's Alice v. CLS Bank decision.  McRo appealed, and the Federal Circuit now reverses that holding.

Claim 1, which is dispositive for purposes of this appeal, reads:
1.  A method for automatically animating lip synchronization and facial expression of three-dimensional characters comprising:
   obtaining a first set of rules that define output morph weight set stream as a function of phoneme sequence and time of said phoneme sequence;
   obtaining a timed data file of phonemes having a plurality of sub-sequences;
   generating an intermediate stream of output morph weight sets and a plurality of transition parameters between two adjacent morph weight sets by evaluating said plurality of sub-sequences against said first set of rules;
   generating a final stream of output morph weight sets at a desired frame rate from said intermediate stream of output morph weight sets and said plurality of transition parameters; and
   applying said final stream of output morph weight sets to a sequence of animated characters to produce lip synchronization and facial expression control of said animated characters.
To begin its analysis, the Court first performed some initial claim construction to help resolve the question of patentability under section 101, stating that the claims are limited to rules that evaluate subsequences consisting of multiple sequential phonemes.  Slip op. @ 19.  With this in mind, the Court then went on to analyze section 101 in more detail.

As stated by the Court, the abstract idea exception prevents patenting a result where it matters not by what process or machinery the result is accomplished.  Id. (citing O’Reilly v. Morse, 56 U.S. 62, 113 (1854)).  One should not assume that such claims are directed to patent ineligible subject matter, however, because all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.  Id. (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012) (“Mayo”)).  Lastly, the Court compares and contrasts the Flook and Diehr decisions in the run up to its substantive analysis of the claims at hand.

Initially, the Court found that the District Court too broadly oversimplified the claims when stating the "idea" embodied by the claims.  Courts must be careful to avoid oversimplifying the claims by looking at them generally and failing to account for the specific requirements of the claims.  Id. @ 21.  Instead of being drawn to the abstract idea of "automated rules-based use of morph targets and delta sets for lipsynchronized three-dimensional animation” as alleged by the District Court, the Federal Circuit found the claims instead to be limited to rules with specific characteristics.  The claims themselves set out meaningful requirements that must be taken into account.  Id.  Interestingly, the Court further relied on the specification to confirm the idea of the claim.  Id. @ 22.  Because the claims are directed to rules with certain common characteristics, they are directed to a genus, and claims directed to the genus of an invention, rather than a particular species, have long been acknowledged as patentable.  See, e.g., Diamond v. Chakrabarty, 447 U.S. 303, 305 (1980).  

The Court next turns to the preemption issue, and looks to whether the claims in these patents focus on a specific means or method that improves the relevant technology or are instead directed to a result or effect that itself is the abstract idea and merely invoke generic processes and machinery.  Id.  @ 23.   

This is where we take a turn to the muddy.  In its attempt to articulate what the claims are actually directed to, the Court states "While the rules are embodied in computer software that is processed by general-purpose computers, Defendants provided no evidence that the process previously used by animators is the same as the process required by the claims."  Uh-oh.  Did you see it?  The Court conflates 101 with a prior art analysis that typically takes place under 35 USC 102-103, which hasn't happened yet in this case.  This is not the first time this has happened.  To be fair, the Supreme Court did it first, and the Federal Circuit appears ready to throw in the towel and follow suit.  Patent practitioners beware, it seems this technique of 101 analysis is here to stay.  If something is REALLY old, it's an abstract idea, but if it's instead just more recent than your own invention, it is just prior art.  In any event, the Court ultimately found that it is the incorporation of the claimed rules, not the use of the computer, that “improved [the] existing technological process” by allowing the automation of further tasks.  This is unlike Flook, Bilski, and Alice, the Court stated, where the claimed computer-automated process and the prior method were carried out in the same way (another conflation of 101 with 102 and 103).  Id. @ 24-25.  

Despite the fact that the court found that the claims do NOT preempt all processes for achieving automated lip-synchronization of 3-D characters, the Court takes it a step further.  The absence of preemption does not demonstrate patent eligibility.  Id. @ 25.  Rather, the Court confirms that the claims do not preempt all techniques for automating 3-D animation that rely on rules, because the claimed rules must be rendered in a specific way.  This is one point that the Defendants will be sure to hone in on when it comes time for the trier of fact to assess infringement in the first instance, as the Court goes into some detail on alternative types of rules that could, in theory, exist or be used and not infringement the claims.  Id. @ 26-27.  

Ultimately, the Court states that, when looked at as a whole, claim 1 is directed to a patentable, technological improvement over the existing, manual 3-D animation techniques. Id. @ 27.  The claim uses the limited rules in a process specifically designed to achieve an improved technological result in conventional industry practice. Id.  Claim 1 of the ’576 patent, therefore, is not directed to an abstract idea, and the Court need not address Alice step two.  Id.

The takeaway: SOFTWARE PATENTS LIVE ON!  Had these claims been struck down under 101, then thousands of other software patents would be of little more value than the paper they're printed on.


As you may recall, when we previously reported on this case after oral arguments, we stated: view of the overall tone of the questions, the panel seems more likely than not to reverse the district court’s holding of invalidity under Section 101, and remand this case for further proceedings to reassess 101 eligibility using the correct standard, and/or also to determine infringement and validity under 35 U.S.C. §§102-103 (novelty and obviousness).
We were mostly right.  The 101 issue appears to be resolved.
This just in.  McRO was reversed on appeal.  Decision is here.  More to follow.
From Konstantin Ewald & Felix Hilgert of Osborne Clarke:

Another year, another gamescom… This time, one of the hot topics we discussed a lot in individual meetings and at the VGBA European Summit was publishers' fight against "key selling", so we thought we would share some additional resources on the legal aspects of this practice that has German publishers up in arms.

Current press reports: Key selling illegal

The debate was fuelled in part by a publication in Handelsblatt, one of Germany's leading business dailies. One of their correspondents, specialized in white collar crime, reported extensively on the many ways in which key sellers like MMOGA are violating the law. You can find the article in English here and in German (behind a paywall) here.

Courts have been saying it since 2014

In the first landmark case in Germany to deal with key selling back in 2014, we were able to convince the Regional Court of Berlin that the common practice of buying boxed products, discarding the DVD and reselling the key only was in violation of copyright and trademark law. This decision, which has since been confirmed by other courts, is still the cornerstone of any legal strategy against key selling in Germany and beyond: Judgments are possible also against entities domiciled elsewhere, and enforcing them from within Germany, while not trivial, has proven a viable option. You can find a summary of the Berlin case in English here and in German here.

Only a myth: German Federal Court of Justice did NOT just authorize key selling

Finally, a recent decision by the German Federal Court of Justice has been flaunted by some as saying key selling is permitted after all. However, these commentators fail to take into account the very specific nature of video games, which are protected as "hybrid works" according to the case law of the CJEU, and that "usedSoft" principles do not apply to them. We dispel the myth in detail in a note available here.

In short, if key selling gives you a headache, remedies are available. Feel free to get in touch, and we would be happy to help.
There's an interesting article in Law360 today about a potential patent dispute surrounding No Man's Sky and the so-call Superformula.  From the article, and of interest to our readers:

Many video games have focused on space exploration; this premise is hardly unique. The novelty with "No Man’s Sky", and the reason for so much excitement and anticipation over its imminent release, lies primarily in the ambitious size of the universe available for exploration in the game. In traditional video game programming, objects that make up the in-game environments must be created individually by writing numerous lines of code into the game for each asset or piece of art — a labor-intensive and time-consuming process limiting the number of objects that can be included in one game.
Hello Games ostensibly avoids these issues by using a programming technique known as procedural generation. Rather than drafting unique lines of code to create each game asset, procedural generation provides a computer with a system of rules and parameters for the game universe, and then relies upon the computer to create in-game assets in accordance with those rules. In other words, each object in "No Man’s Sky" is created not by individual lines of code written specifically for that asset by a programmer, but instead is created by the computer applying algorithms created by the programming team. These procedural rules could cover everything from the way interstellar and spaceship physics work, to the way vegetation looks on planets with particular climates, to the types and behaviors of wildlife. Using this technique, Hello Games has created an in-game universe of unprecedented size and scope, containing 18,446,744,073,709,551,616 accessible planets.[5]
In late July, the media began to report that a company called Genicap had raised the possibility that "No Man’s Sky" might be running afoul of Genicap’s patent rights in the Superformula. The Superformula is a modified version of the equation that describes a circle, and it was discovered by Johan Gielis around the turn of the 21st Century. Changing particular variables within the Superformula causes the equation to describe all manner of geometric shapes and natural forms.[6] Genicap (Gielis’ employer) received U.S. patent No. 9,317,627 (the “‘627 patent”) on April 19, 2016. The ‘627 patent’s primary claim describes the Superformula as “a method for creating timewise display of widely variable naturalistic scenery ... on an amusement device with minimized data storage and processing requirements ... ”
Click the link above for the entire article.  We'll keep you posted of any developments in this area.
As previously reported, Ed Sheeran was sued back in June for copyright infringement.  Well either the sharks smell blood, or perhaps there's something in the water, but be's been sued again based on another of his songs, as reported by CNN.

This time Ed Sheeran has been sued by the estate of Marvin Gaye, the same folks who sued (and won, pending appeal) Robin Thicke in the Blurred Lines case.  The allegation?  That Ed Sheeran's Thinking Out Loud infringes the copyright in Marvin Gaye's "Let's Get It On."  First, listen for yourself:

Ed Sheeran, Thinking Out Loud:

Marvin Gaye, Let's Get It On:

What do you think?  Does this case have legs?
Activision Publishing, Inc. v. xTV Networks LTD., et al.
Central District of California
CV 16-00737
Order dated July 25, 2016

On Monday, another patent fell to the great patent slayer - 35 USC 101. Activision was but the latest patentee to see their claimed invention deemed nothing more than an abstract idea. However, this case may have been ripe for a ruling under 101 as the claims appear directed to "Informative Things" and "Thing IDs" that can be used to retrieve information associated with the informative things.

US Patent 6,549,933 was asserted by Activision in an action filed in February 2016 against xTV's xTV Now, Digital Signage, and Compute Stick products. Potentially relevant to placing these claims in context is that this patent was originally assigned to IBM before being transferred to Activision. 

Claim 28 was among those asserted and recites (all language in original):
28. A method of information management in a network-based system, comprising the steps of:
(a) reading an ID (referred to as a Thing ID) from an independently portable physical object that is a data storage device (referred to as an Informative Thing), wherein:
   (i) the Thing ID represents an identity of the Informative Thing; and
   (ii) the Thing ID is associated with information stored at an information store separate from the Informative Thing;
(b) determining a location for where the information is stored based on the Thing ID; and
(c) retrieving the information associated with the Informative Thing from the network-based system using the Thing ID.

Defendant xTV argued that these claims were directed to the abstract concept of "information management," and more specifically to "organizing data to be able to locate information at a second location." Order at 3. Activision argued that the claims include features unique to computing which improve the functioning of the computer, and that "Informative Thing" and "Thing ID" had specific definitions in the specification. Id.

After reviewing the specification, the Court concluded that the claims were directed to the abstract idea of "using information stored in one place to determine the location of and retrieve information stored in a second place, i.e. a form of 'information management.'" Order at 8. The Court found this abstract idea similar to other ideas deemed abstract in other cases, and analogized the claims to an information desk or the Dewey Decimal system in a library. Id. 

Completing the Alice analysis, the Court found that the claims did not contain sufficient "additional features" that moved the claims beyond a drafting effort designed to monopolize the abstract idea. Order at 11. Central to this analysis was a discussion of how the specification defined and used "informative thing" and "thing ID", which Activision argued to be specialized physical elements. The Court noted that these could be, e.g., floppy diskettes but also noted they could be just about anything else. Order at 12-13. The Court found that the claims were directed to general computing hardware and concluded that the claims were unpatentable under 35 USC 101.

The reader may make their own judgment as to whether these claims appear abstract on their face. One potential take away for practitioners here may be to endeavor to include important limitations in the language of the claims themselves rather than expect a Court to import those limitations from the specification. Additionally, it may be useful to include an express discussion in the specification of how the claimed techniques may improve the functionality of a computer with an eye towards eventual 101 arguments.
As many of you know, we are working on the Second Edition of the American Bar Association's Legal Guide to Video Game Development.  It's scheduled for publication later this fall, and we are putting the final touches on the book text.  In the meantime, we are also looking for some cool ideas for cover art.  We have some stuff in the works, but does anyone out there have, or would be willing to let us use, something along the lines of the following, but using a video game level instead of a room in a house?  

We're open to other ideas, too.  This one comes close, but not "game-y" enough:

Please send suggestions to me.  If we use your image we will definitely comp you a couple copies of the book.



Yesterday, the U.S. Supreme Court ruled in Kirtsaeng v. John Wiley & Sons, Inc., No. 15-375, that it is appropriate for a court to give substantial weight to the reasonableness of a losing party’s position when deciding whether to award attorney’s fees in a case brought under the Copyright Act as long as “all other relevant factors” are taken into account. In delivering this opinion for a unanimous Court, Justice Kagan essentially adopted a more flexible and expansive version of the approach advocated for by Wiley (the copyright owner), which primarily turned on whether a losing party’s arguments were objectively reasonable.
This case began more than 10 years ago, when Kirtsaeng, a citizen of Thailand, developed a successful business in which he obtained foreign-edition copies of English-language textbooks abroad below their U.S. market prices and resold them in the U.S. at a profit. Wiley sued Kirtsaeng for copyright infringement in 2008, alleging that Kirtsaeng violated Wiley’s exclusive rights in distributing its copyrighted works and in preventing unauthorized importation of its copyrighted works.
After Kirtsaeng lost at trial, the case ultimately reached the Supreme Court, which ruled in a 6-3 decision that Kirtsaeng’s actions did not constitute copyright infringement because Wiley’s exclusive rights in the textbooks that Kirtsaeng obtained abroad were exhausted under the “first sale” doctrine.1 In the three years that have passed since the Supreme Court’s previous ruling, the case has returned to the district court, where Kirtsaeng is now seeking an award of attorney’s fees from Wiley.
Under U.S. copyright laws, a “court may [...] award a reasonable attorney’s fee to the prevailing party as part of the costs.”2 The Supreme Court previously addressed this section of the copyright laws in Fogerty v. Fantasy Inc., 510 U.S. 517, 29 USPQ2d 1881 (1994). In Fogerty, the Court held that “[p]revailing plaintiffs and prevailing defendants are to be treated alike, but attorney’s fees are to be awarded to prevailing parties only as a matter of the court’s discretion.”3 The Court also discussed in Fogerty several “nonexclusive” factors that “may be used to guide courts’ discretion” in deciding whether to award attorney’s fees, “so long as such factors are faithful to the purposes of the Copyright Act and are applied to prevailing plaintiffs and defendants in an evenhanded manner.”4
In the proceedings below, both the district court and the Second Circuit denied Kirtsaeng’s bid for attorney’s fees. In doing so, they followed Second Circuit precedent that places “substantial weight” on the “objective reasonableness” factor — which asks whether the non-prevailing party’s claims were “objectively reasonable” — relative to the other factors discussed in Fogerty.5
The question presented to the Supreme Court in the current Kirtsaeng case — and addressed by yesterday’s opinion — is whether the lower courts’ rulings run afoul of the statutory text of the Copyright Act and the Supreme Court’s prior ruling in Fogerty by emphasizing the “objective reasonableness” factor over others when deciding whether to award attorney’s fees in a copyright infringement action.
In yesterday’s opinion, the Court held that it is appropriate for a court to give substantial weight to the reasonableness of a losing party’s position when deciding whether to award attorney’s fees as long as “all other relevant factors” are taken into account.6 Because it was not clear here whether the lower courts “understood the full scope of that discretion” since their opinions primarily focused on the “objective reasonableness” factor, the Court vacated the lower courts’ rulings in this case and remanded the case back to the district court to ensure that these “other” factors — in addition to reasonableness — are also considered.7
In setting forth this more flexible framework that gives greater discretion to district courts in deciding whether to award attorney’s fees in copyright cases, the Court emphasized that its approach will further the aims of the Copyright Act insofar as it will encourage “useful copyright litigation” and will be “more administrable” than other alternatives it considered.8 The Court also reaffirmed several aspects of its previous ruling in Fogerty. For example, quoting portions of Fogerty, the Court noted that fee awards must be decided on a case-by-case basis and cannot be awarded “as a matter of course.” It further noted that prevailing plaintiffs and prevailing defendants should not be treated differently when it comes to awarding fees.9
Overall, the Court’s decision here is consistent with its approach to awards of attorney’s fees in other types of intellectual property cases, including Monday’s ruling in Halo Electronics, Inc. v. Pulse Electronics, Inc., No. 14-1513, which concerned fee awards in patent cases. In particular, as in Halo, the Court’s decision in Kirtsaeng elevates the discretion of a trial court over hard and fast rules that would otherwise limit discretion in deciding issues related to fee awards.
Going forward, it may be more difficult for litigants to predict whether fees will be awarded in a particular case, because courts will have more discretion in taking additional considerations into account. While the opinion suggests that under this reasonableness-based approach to awarding fees, “[t]he copyright holder with no reasonable infringement claim has good reason not to bring suit in the first instance [...] and the infringer with no reasonable defense has every reason to give in quickly, before each side’s litigation costs mount,” it might not always be clear how reasonable one’s position really is or what circumstances will matter most to the court in deciding whether to award fees until after the case has been decided on the merits. As a result of this decision, parties contemplating or involved in copyright litigation may wish to closely consider the reasonableness of their positions at each stage of litigation and particularly early on before significant fees have been incurred.
In addition, although yesterday’s Kirtsaeng decision represents perhaps only a moderate expansion of the analytical framework previously used by courts in deciding whether to award attorney’s fees in copyright cases, it is possible that the Court’s ruling in this case will lead to more fee awards than the Court may expect. In particular, while the Court seems satisfied that this reasonableness test is relatively easy to administer, since “[a] district court that has ruled on the merits of a copyright case can easily assess whether the losing party advanced an unreasonable claim or defense,”10 it seems likely that a losing party’s position often will look less reasonable after the court has ruled against it on the merits, which is typically the point at which the court then considers whether to award attorney’s fees. Although the Court suggests that the “the issue of liability” should be separated from “that of reasonableness” in considering whether the losing party’s position was reasonable,11 it may be difficult to do this in practice, since the arguments advanced by each party will inevitably be intertwined with the facts upon which liability is determined.
While it remains to be seen how yesterday’s decision will affect copyright litigation going forward, the probable outcome of the Kirtsaeng case itself seems clearer. In particular, the case will be heading back to the district court for further consideration in view of the Court’s new framework. And significantly, in concluding its opinion, the Court notes that in sending the case back to the district court to “take another look” at Kirtsaeng’s fee application, “we do not at all intimate that the District Court should reach a different conclusion,” instead “we merely ensure that the court will evaluate the motion consistent with the analysis we have set out — giving substantial weight to the reasonableness of Wiley’s litigating position, but also taking into account all other factors.”12 While the district court may of course rule either way after considering these other factors, it seems likely — given these remarks by the Court — that the outcome in this case will remain the same as before, with Kirtsaeng’s bid for attorney’s fees being denied.
Please click here to read the opinion.
Please click here to download a printable version of this article.

1Kirtsaeng v. John Wiley & Sons Inc., 133 S. Ct. 1351, 568 US __, 106 USPQ2d 1001 (2013).
217 U.S.C. 505.
3Fogerty, 29 USPQ2d at 1888.
4See Fogerty, 29 USPQ2d at 1889, fn. 19.
5Specifically, the rulings below follow the Second Circuit’s decision in Matthew Bender & Co. v. West Publishing Co., 57 USPQ2d 1708 (2d Cir. 2001), which held that “objective reasonableness is a factor that should be given substantial weight in determining whether an award of attorneys’ fees is warranted.” Id. at 1712.
6See Slip Op. at 12.
7See Slip Op. at 1.
8See Slip Op. at 6-9.
9See Slip Op. at 4.
10See Slip Op. at 9.
11See Slip Op. at 10.
12See Slip Op. at 12.

This isn't video game related, but music copyright cases always interest me.  First, the details, from Law360:

New York (June 8, 2016, 8:14 PM ET) -- British singer Ed Sheeran violated U.S. copyright laws by basing a portion of his hit song "Photograph" on a chorus from another song without first obtaining permission, according to a complaint by two songwriters who seek at least $20 million in damages.
   Martin Harrington, Thomas Leonard and HaloSongs Inc. — a publishing company owned by Harrington — allege that the chorus sections of their song "Amazing" are substantially similar to the chorus in Sheeran's song, according to the complaint filed Wednesday in California federal court.
   The songwriters claim that Sheeran and John McDaid, the co-writer of "Photograph," had access to "Amazing" because a version of it was covered by Matt Cardle, the 2010 winner of the music competition show "The X Factor." Cardle's version of "Amazing" peaked at No. 84 on the U.K. singles chart and was widely played on various forms of media, according to the complaint.
Now, decide for yourself.  Here are links to the official YouTube videos for each, with positions to start listening to the relevant sections.

Amazing (starting around the 1:45 mark):

Photograph (starting around the 2:27 mark):

I can hear some similarities, but there are also differences.  Will be interesting to see what happens with this one.
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