Video Game Patents

Video game patents are controversial, with some in the sector favoring them and some not. Patents nonetheless are an important part of the video game industry, and it is worthwhile to understand what they exactly do and what rights and protections they offer.

Patents provide a variety of legal protections, although their protections may not necessarily be as great as their owners try to make them seem. Video game patents in particular have evolved dramatically over the decades as the industry, and the entire technology sector, has rapidly morphed.

Patent law is constantly evolving as technology's fundamentals change. Video game patents, being a subset of overall patents, change with that trend as well.

Keeping a Lid on Damages - How Much Is Too Much?

Patents are part of the general legal and policy structure that protects creative inventions and promotes technological development.

Recent patent law cases have seen particularly strong patent protections implemented and decided, with even royalty payments from an entire technology set being provided to the patent owner.

However, that initial extremely strong patent reward has receded, as now patent cases provide payments that are proportional to how valuable a patented item is within the entire product set. Video games are particularly sensitive to patent law and policy developments given how they often build on past engines, systems, and software.

Current patent law has significantly lowered the potential damages from being found to be infringing on video games. Juries have even been limited in how much damages they are allowed to give to the patent owner.

In one case, Lucent Technologies sued Gateway over patent infringement in Microsoft's Outlook program and received over $350 million in damages. However, on appeal, this award was reversed because of the small importance the infringed patent had on Outlook's overall system. The specific aspect in dispute, a date-picker option, was considered a tiny aspect to Outlook's commercial success and functionality.

Microsoft itself is a major patent owner, but not the biggest. Compare 2017’s companies with the most patents awarded:

• IBM: 9,043

• Samsung: 5,837

• Canon: 3,285

• Intel: 3,023

• LG: 2,701

• Qualcomm: 2,628

• Google: 2,457

• Microsoft: 2,441

In many other recent cases, courts have also determined that patent royalty awards cannot be excessive and must be proportional to how essential the technology is to the product that infringes on it. The video game industry has been particularly affected by this new set of rulings, as video game patents usually concern only a tiny part of a console or game.

However, some video game patents are essential for systems or games, meaning that if the patent is infringed upon, then the owner may still be able to get a substantial award. In contrast, if the video game patent that is infringed on is only a tiny aspect of the system or game, then the damages are likely to be small or nominal.

Can’t Stop This -- When Is Injunctive Relief Available?

In the past, when a patent owner saw that their patent was being infringed on, they could easily have a court order the patent infringing to stop through an injunction.

The injunction would essentially prevent the infringer from using the infringed patent, whether at all or while the case was proceeding. However, this injunction would often be extremely disruptive and cause the infringer to dramatically slow down and modify their products, resulting even in them possibly going bankrupt.

In recent years, courts have been much more hesitant on injunctions. The lack of an injunction still may mean that the infringer will owe the patent owner payments, although the infringer may continue infringing.

The damages award or regular royalty payment can also be extremely disruptive to the patent infringer. The damages award may be enough to wipe out the infringer's entire profit margin and can also lead to the infringer's bankruptcy.

In one example, courts in a dispute between Paice and Toyota ordered a substantial royalty of $98 per vehicle for the rest of the vehicle's production in the future.

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