Hochstein et al. v. Microsoft et al.
United States District Court for E.D. Mich.
Case No. 04-cv-73071, Filed August 11, 2004
After 6 long years of litigation, Hochstein’s case against Microsoft alleging patent infringement by the Xbox game was dismissed on July 20, 2010. To recap, Hochstein alleged that Microsoft’s Xbox infringed on his patent (link to U.S. Patent No. 5,292,125) for a device that allows two or more people play video games together without being in the same location (such as over a telephone line.) Hochstein argued that this patent should be construed to cover all systems that can have multiple players, like the Xbox, and sought royalties on Xbox sales, plus an order barring further use of his invention.
When last we checked in (June 2009) the court had dealt Microsoft a blow by accepting the Special Master’s construction of “video game communication circuit” to mean “a circuit operatively associated with a local video game and at least one remote video game without limitation as to the circuit's physical location or attachment to the local video game.” Microsoft objected to the master’s recommendations as too broad, but the court granted plaintiffs’ motion to adopt the recommendation anyway.
Ultimately the judge ruled that Hochstein’s patent only covered "game systems that are electrically connected" and that such a connection doesn’t include the type of link among players used by the Xbox. The issue of whether Microsoft infringed Hochstein’s patent turned on the definition of “electrically connected” and whether Hochstein’s use of this term in his patent application included the phenomenon of electromagnetic induction—the technology used in the Xbox.
In the Special Master’s report of June 2009 he recommended that “electromagnetic induction” be excluded from the scope of “electrically connected” but reversed in his December 2009 report to conclude that the term “electrically connected,” as used in the ‘125 patent did include the phenomenon of “electromagnetic induction” after all.
The court rejected these conclusions in a detailed analysis, ruling:
1) that the Special Master erred in considering extrinsic evidence in making this decision;
2) because in this case the ordinary meaning of term could be deduced using the intrinsic evidence contained in the patent application itself absolving the need to look elsewhere, and;
3) that the term “electrically connected” as contemplated by the 125 patent did not include the phenomenon of electromagnetic induction, rather it is only used to describe connections by means of electrically conductive wires.
The court also considered whether Microsoft’s litigation conduct—namely the fact that they hadn’t raised the non-infringement defense several years earlier—was properly determined by the Special Master to be an admission by Microsoft that they too believed that “electrically connected” encompassed electromagnetic induction. The court determined that patent cases are unlike contracts cases where “silence is acceptance.” Rather silence in this regard could not be considered as evidence and Microsoft’s failure to present the non-infringement defense earlier could not count as proper extrinsic evidence against its case.
On June 22, 2009, the day before trial began, the judge in this patent infringement case made a key decision by opting to use the special master’s construction of a disputed claim.
In 1991, Peter Hochstein and Jeffrey Tenenbaum came up with the idea of communicating live while playing the same video game in separate locations. They patented the technology for doing so in 1994. In 2002, Microsoft released Xbox Live, a gaming service that also allows users to communicate while playing the same game. Sony also released similar capabilities for PlayStation 2. In 2004, Hochstein, Tenenbaum and Harold Milton, Jr. (an assignee of the patent) brought a patent infringement suit against Microsoft and Sony alleging that the voice and data communications technology used in the gaming systems infringed on the patent claims. For relief they sought a permanent injunction and treble damages. Sony settled its suit in April 2009, leaving Microsoft as the only remaining defendant.
While U.S. Patent No. RE36,574 is also asserted, the primary patent at issue is U.S. Patent No. 5,292,125, which is for an “apparatus and method for electrically connecting remotely located video games.” See representative claim 1:
1. A video game communication assembly (100) for communicating command signals between a local video game (28) having at least two player ports (A, B), at least one set of player controls (20), and at least two operating modes, and at least one remote video game (30) through a medium (110) capable of transmitting a plurality of data signals and voice signals, said assembly (100) comprising:
control means (106) for controlling command signals received from a set of player controls (20) of the local video game (28) and for creating communication signals;
modem means (114) for bilaterally transmitting said communication signals between said control means (106) and at least one remote video game (30);
first port means (112) for bilaterally transmitting said communication signals between said control means (106) and said modem means (114), said assembly (100) characterized by
said control means (106) including transit time means (126) for determining the amount of time required for said communication signals to travel between said first port means (112) and the remote video game (30).
After years of discovery, last fall Microsoft alerted the court that some claims still needed to be construed before trial began. Microsoft submitted its motion for construction of claim 39 in February 2009. See claim 39:
39. A video game communications circuit for communicating command signals between a local video game having at least two player ports (A, B), at least one set of player controls (20), and at least one remote video game (30) in a medium capable of transmitting plurality of data signals and voice signals, said circuit comprising:
a first microprocessor (140) electrically connected to one set of player controls (20), two player ports (A, B) and an oscillating circuit (Y1, C2, C3, R2);
two player port logic circuits (108, 124) electrically connected between said first microprocessor (140) and the two player ports (A, B);
a switch (150) connected to said first microprocessor (140) having at least two positions;
a modem circuit (114) electrically connected to said first microprocessor (140) for bilaterally transmitting communication signals to and from said first microprocessor (140);
a voice over data circuit (134) for filtering voice signals from communication signals and for transmitting both to said modem circuit (114); and
communication couplers (L1, L2) for connecting said voice over data circuit (134) to the medium of communication.
Microsoft wanted the claim to be construed to mean that the “video game communications circuit” and its associated components were separate and distinct from the video game computer to which the circuit is attached.
Microsoft argued that a distinction between the claimed apparatus and its video game computer was expressly reflected in claim 39, which asserts that the video game communications circuit is not the local video game, but instead, a separate circuit that connects to the local video game. ‘Plaintiffs want to collapse this distinction and ignore the claim's clear direction as to where particular components must be located — i.e., in a separate apparatus, and not in the video game computer itself,’ Microsoft argued in its motion.
In May, the special master to whom the matter was referred issued his report and recommendations, denying Microsoft's proposed limiting construction. Instead, he construed “video game communication circuit” to mean “a circuit operatively associated with a local video game and at least one remote video game without limitation as to such circuit's physical location or attachment to the local video game.” Microsoft objected to the master’s recommendations, but the court granted plaintiffs’ motion to adopt the recommendation anyway, dealing Microsoft a blow right before trial.
Read the court's claim construction order here.
A couple side notes:
This is the same case where Microsoft got in trouble for wasting the court’s time by filing an objection to discovery because of a typo Hochstein made in the discovery request. In February 2009, Hochstein deposed a Microsoft employee, Ms. Mason, about Xbox marketing and then filed a formal request for all marketing documents related to Xbox “including but not limited to all such documents identified by Ms. Mason at her February 12, 2008 [sic] deposition.” Microsoft responded five weeks later with general objections, including “Microsoft objects to this request as vague in that Ms. Mason’s deposition took place in 2009, not in 2008.” Over the next week, Microsoft proceeded to provide over 140,000 documents to Hochstein without any index.
The court, upset by Microsoft playing dumb in its written response, said the frivolous objection to an obvious, harmless typo was a waste of time for all the parties involved. The court issued a separate order directing Microsoft to explain why its counsel shouldn’t be sanctioned “for unreasonably and vexatiously multiplying the proceedings.”
Microsoft’s five week delay and “document dump” less than two months before trial also annoyed the court. The court ordered Microsoft to provide an index of the marketing documents within one week and barred Microsoft from introducing the marketing documents against Hochstein or contesting the admissibility of the marketing documents at trial.
Read the court’s discovery order here.
Also, in January 2009, Hochstein filed an almost identical suit as the one discussed here (dubbed Hochstein I), again brought against Microsoft and Sony. According to the complaint, during a Hochstein I pretrial conference in January 2008, the parties discussed whether the defendants’ new game consoles (Xbox 360 and PlayStation 3) should be litigated in Hochstein I or a separate lawsuit. Hochstein filed this complaint to adjudicate the possible infringement of the new products separately.
Read the Hochman II complaint here.