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T5 Labs LLC, v. Gaikai, Inc.
United States District Court for the District of Delaware 
Case No.: 1:12-cv-01281-MPT. Filed on October 5, 2012 

At first blush, this patent infringement case does not seem as though it would fall within the scope of videogame law, but it does. T5 Labs brought suit against Gaikai for infringement of U.S. Patent No. 8,203,568 ("the 568 patent"). This patent involves using a centralized server within a bank of servers that allows remote access by a user. The server runs a plurality of programs which share a graphical processing unit (GPU) which can store frames generated by different programs at different memory locations. For example, using this technology, a player at home could essentially stream the graphical processing of a game from the remote server to their home. The patent is meant to address, among other things, the speed with which GPUs become obsolete for the average consumer as well as allowing the development of programs over different platforms without having to actually create new code for each platform. Specifically, the patent attempts to address the problems of compressing video data signals over a broadband connection while also decreasing the latency in hosted interactive graphics systems.

T5 alleges that Gaikai is directly infringing by, "virtualizing multiple instances of game programs on a server with one or more shared GPUs through [its] cloud-based gaming applications and service." Furthermore, T5 alleges that by offering for sale and selling the use of its GPU cloud, Gaikai is committing contributory infringement as well as inducing the direct infringement of others. Prior to filing its complaint, T5 claims to have provided written notice to Gaikai that the patent in question was being infringed upon. T5 seeks a declaratory judgment stating infringement has occurred and that the patent is valid and enforceable as well damages and a permanent injunction against Gaikai.

Gaikai filed a motion to dismiss for failure to state a claim, but the magistrate court denied the motion stating that T5 had alleged sufficient facts to allow for the inference that infringement exists. After its motion was denied, Gaikai filed an answer to the complaint along with counterclaims that sought declaratory judgment stating that Gaikai has not infringed upon the 568 patent and that the patent is invalid.

This patent dispute is even more relevant with the advent of the next generation of consoles later this year. Both the Xbox One and the PS4 tout cloud-based computing and streaming as one of their main features. Sony's PS4, in particular, is of note because of its acquisition of Gaikai last July. The console-maker has said that it will be utilizing the streaming service in order to provide backwards compatibility with its PS3 game library. Due to the broad nature of the patent, a favorable ruling for T5 could lead to console manufacturers having to rethink cloud computing and its implementation, or will otherwise lead to increased costs to cover the patent license(s).

We will monitor this case and inform you of any new developments.
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