Posts filed under "Business"

July 8, 2009

Online Gambling Patent: Another One Bites the Dust

For regular readers of Habitat Chronicles, it comes as no surprise that Lucasfilm’s Habitat, the first graphical virtual world with the first avatars, was the source of much innovation in the field. And this was back in the mid- to late-1980’s before people tried to patent software. As a result, those who created products like these are in some demand when later related patents were filed in the 1990s and now lawsuits a cropping up in an attempt to enforce them.

Another product during that period was called Rabbit Jack’s Casino, which allowed Quantum-Link users to play online gambling games such as Bingo, Poker, Slots, and Blackjack against each other for Q-Pons, chips that were not backed by real dollars, other than the $3.60 to $4.80 an hour people were paying for premium service access.

Rabbit Jack’s played an important role in getting an EU patent on online gambling [EP 0625760B1] declared invalid yesterday. Though I provided three sworn statements about Habitat, in the end the Honourable Lord Lewison did not need to site them in the decision. No matter – I was glad to be of help and to see the process in action.

Another one bites the dust!

December 29, 2008

The Demise of the Word Balloon Patent

or How IMVU, Bruce Damer and I Saved Blizzard a Million Dollars and They Don’t Even Know It

Patent Trolls Piss Me Off

The latest news about Worlds.com, Inc. joining a long line of virtual world patent trolls has pissed me off.

You can always tell a patent troll because they are not actively developing or marketing the supposed “protected” technology and the patents are a decade old and they had previously turned a blind-eye to possible infringing use, then sold them to lawyers (or just retained a trolling firm) to generate cash to keep a portion of their anemic business on life-support by shaking down the gaming and virtual world industry. In the U.S. the big money target is Blizzard’s and their global monster hit: World of Warcraft. These lawyers don’t go after Blizzard straight away. That’d be stupid, since that company has the deep enough pockets to tell them to pound sand, and on the chance they might even become inspired take active countermeasures [as happened with the case I am going to share with you today]. Instead, they’ll first go after a few little guys who can’t really defend themselves; get them to roll over and pay just to establish a precedent. Then, armed with the claim that the industry has obviously accepted the validity of their patent – start the proceedings against the larger worlds, and eventually hit up the big guys – Linden Lab/Second Life and Blizzard/World of Warcraft.

I know about this particular pattern first hand, as Bruce Damer and I helped IMVU ‘s founder Will Harvey (et al.) defend against one of these terrible patent suits, and all the parties involved ended up limping away with limited victories.

Software Patents are Newer than Virtual Worlds

For the last several years, I’ve been doing a lot of patent consulting since I was one of the principle developers of Lucasfilm’s Habitat /QLink’s Club Caribe (the first graphical virtual world), which existed in the mid-1980s, before people even thought they could make money patenting software. This means that the stuff invented for Habitat is NOT PATENTED and is PRIOR ART to be used to defend against many early and bogus virtual world-related patents. Seriously folks, there are patents out there with claims like generating a random number on a server that is authoritative for chance events when received by clients. Really? “You can’t trust the client” was novel as late as 1996? I don’t think so! And I have the software, documentation, and widely cited white papers to prove it.

The Word Balloon Lawsuit

Three years ago, on November 3rd, 2005 Forterra Systems, the company formerly known as There.com, filed suit against Avatar Factory and William “Will” D. Harvey in US District court for Patent Infringement. The suit was all about US patent number 6,784,901 Method, system and computer program product for the delivery of a chat message in a 3D multi-user environment

Abstract

A chat system, method and computer program product for delivering a message between a sender and a recipient in a three-dimensional (3D) multi-user environment, wherein the 3D multi-user environment maintains respective digital representations of the sender and the recipient, uses a recipient interface to receive a message, map the message to a texture to generate a textured message, and render the textured message in the 3D multi-user environment so as to permit the recipient to visually ascertain the location of the digital representation of the sender in the 3D world. Received messages are mantained as two-dimensional elements on a recipient viewport.

  • Inventors: Harvey; William D. (Palo Alto, CA), McHugh; Jason G. (East Palo Alto, CA); Paiz; Fernando J. (Millbrae, CA), Ventrella; Jeffrey J. (San Francisco, CA)
  • Assignee: There (Menlo Park, CA)
  • Filed: August 31, 2000
  • Granted: August 31, 2004

You can find all the details about this case online by entering the case number 95000155 here – there are thousands of pages of documents. I am not a lawyer, I’m a storyteller, and was just one of many people who played a non-trivial role in determining the primary outcome.

I like to call this action the Word Balloon Lawsuit since the claims in question are primarily about displaying chat messages in word balloons that float over an avatar’s head in a virtual world. Forterra was claiming they had a patent on them and IMVU was infringing and should stop or pay up.

You probably noticed in the patent office excerpt above that the primary inventor on the Patent is the same name as the primary individual defendant – Will Harvey. Will filed the patent while he was still a founder and member of the virtual world and company There (which was later renamed Forterra Systems). After leaving There, Will founded IMVU – another 3D avatar chat system – dropping the virtual world from the original idea altogether and just keeping the best lessons about avatars and user-created clothing, objects, and environments.

The Word Balloon Suit against IMVU seemed shrewd on Forterra’s part for several reasons:

  1. IMVU, on the surface, had features that looked in many ways similar to those in There.
  2. IMVU was small and not cash-rich and unlikely to put up a protracted fight, or any fight at all.
  3. By being an Inventor on the patent in question, Will’s options to defend himself would be limited because of the legal principle of Estoppel. For example, he couldn’t claim that the patent was invalid, since he signed the application saying that it was valid when it was filed.

Archivists To the Rescue!

January 9th, 2006 I received an email from Will that started:

“Thought you might be able to help me on something and simultaneously help stop some bad people from blatantly abusing the patent system by egregiously
asserting intellectual property rights that they don’t own.”

He was looking for support in the form of screen shots, articles, and even physical media that proved prior art to break the patent. He continued:

“… of course I know that we at There.com did not invent the idea of chat balloons, but There.com is trying to give the patent a broader interpretation than was intended and claim that they own idea of chat balloons […] something they didn’t even invent!”

He also contacted virtual worlds pioneer, author and archivist Bruce Damer. I was probably the most vocal co-creator of the first two or three generations of graphical virtual worlds and Bruce had a broad, almost ecumenical view of the entire field. Bruce’s book Avatars, is a catalog of the state of virtual worlds as of 1997 and would also play a key role in the final decision.

After reviewing the patent, it was obvious to me that Will’s interpretation was right – the patent was not meant to cover all 3D word balloons, it was something he called “Chat Wads” – to me a ho-hum idea of little indicators that the user is typing flying through the virtual world to the balloon. That interpretation might be innovative, but certainly no one had copied it. Stretching it to cover all word balloons? No way!

IMVU was based in Palo Alto, where I live, so Will and I had a face to face chat at a coffee shop downtown. He seemed understandably preoccupied with the personal ramifications. I said something like “Dude! I’m not just doing this for you – they aren’t just after you! If you cave or lose, they’re going after bigger fish. You aren’t the real target. They’re after Blizzard! They figure you’re easy pick’ns given that you have to defend yourself with one-hand tied behind your back and a limited legal budget.”

Bruce and I independently agreed to help with Will’s defense of this case not only for him or IMVU, but for virtual righteousness.

Bruce and I produced piles of prior art – for products such as Lucasfilm’s Habitat (1986), Club Caribe (1988), Fujitsu Habitat (1990), Sony’s Community Place (1995), WorldsAway (1996), The Palace (1996), ECHabitats/Microcosm (1997), and more. We provided screen shots, videos, white papers, published articles, and other patents. I even remember demonstrating ECHabitat’s 3D word balloon system to Will Harvey at Bruce Damer’s Avatars97 conference. I was even able to point to online conference photos that included myself and clearly EC Habitat with visible balloons.

The best defense is…

On July 17th, 2006 – IMVU requested a Patent Reexamination for the patent claims in question. If the request was granted this would allow the USPTO to review the patent more closely and potentially throw out invalid claims. This was a risky move, because if the PTO refused to reexamine, or even worse, reviewed and upheld the patent, it would be a disaster for IMVU. But, at this point the examiner’s research would now include all of the court record to date, including the comprehensive submissions of prior art that Bruce and I provided.

The Decision

On October 17th, 2007, after almost two years and 137 separate legal filings the lawsuit was Dismissed With Prejudice.

Bruce Damer wrote me:

I was told that the presiding federal judge [The Honorable Patricia V. Trumbull] upon denying all the claims of Forterra held up a copy of my 1997 book “Avatars” and said something like “not only are all of your claims predated by the prior art but that prior art is all contained in this one book which was published two years before the patent was filed…”. I like to think that she then slammed the book down on the bench, gavel-like, but wasn’t there to witness this.

The lawsuit was dead, but the patent reexamination was still underway.

The Danger of Suing with Bad Patents: Reexamination

Losing the suit wasn’t the end of the bad results for Forterra.

Almost one year later, on October 7th, 2008 the US Patent Office issued a Reexamination Certificate, numbered 95/000,155 that invalidates all of the claims in question – gutting the patent for use in future lawsuits against 3D chat systems.

Virtual worlds with chat balloons past, present, and future could rest a little easier, even if they didn’t know it. Blizzard dodged a bullet. You’re welcome guys. :-)

Epilog: Goliath’s Rage

Forterra was beaten, twice.

In a Hollywood-inspired universe, this would be the end of the story: Rationality and the little guy triumph, the free (virtual) world is saved, and the big bully goes home with his proverbial tail between his legs, right?

But this is the real world of angry losers.

Will Harvey had really pissed off someone with a lot of money. Forterra filed a new and unrelated lawsuit that seems to me to be attempting to make IMVU pay for the lost potential revenue as a result of defeating the chat-balloon patent suit. Unlike with British tort law, where losers pay much of the winner’s legal costs, in the US civil courts it often ends up that the one with the most cash can continue to sue the little guy over and over, making him spend dollar-for-dollar the same amount of money with no real recourse. Deepest pockets can force a financial draw.

This later suit was eventually settled for undisclosed terms to presumably just get the whole matter behind them. As a side effect of the settlement, if it weren’t for this post, you probably would have never heard about any of this. But, you see, I never signed anything. :-) And the patent (re)examiner pulled the entire court proceedings into the web-accessible public record!

So that’s a free tip for you: Civil court documents become a part of the USPTO’s Patent Reexamination process. Amazing what you can find on the web these days.

But, Word Balloons are Free!

So, IMVU and Will Harvey took one on the chin for the rest of us. I say Huzzah! to them! They did us all a big favor.

Too many companies just cave when stuff like this comes along. It takes real courage to stand up and say “Hey! That’s not right!” Especially to Patent Trolls. So, if you see Will at a conference somewhere, say “Thanks Man!” He can’t talk about any of it, but hopefully with this blog post and the story spreading through the social network, maybe he doesn’t have to.

Patents weren’t created so that people can sue each other into the ground, they were created specifically to allow an individual (and eventually a company) to have a limited exclusive period to develop and market their invention. They are meant for defense. Something has gone horribly wrong that people who aren’t developing or marketing an invention at all are just applying scatter-shot legal action on the hopes of a big payoff. This sets the wrong kind of incentives for the creation of patents – see or think of a clever idea – patent it quick, without actually understanding if it is novel or common or has prior art. Or, if you patent something you think is novel, wait years as others use a similar idea to build successful products and then spring from the trees shouting “Ah ha! I got you! We’ll just sort it all out in court.” After all, if you can patent a method of swinging on a (tree) swing, you can patent anything!

Disclosure

I do not categorically object to patents. I have several granted patents and about the same number pending approval – filing defensive patents is unfortunately required by the current business environment . There are two Fujitsu patents that are in my name that Chip and I refused to sign because of prior art, and I have copies the legal paper trail to prove it – so if Fujitsu shows up at your door claiming to have the patent on the virtual world, you know where to find us.

February 14, 2008

Anyone got a spare GDC badge-day?

Chip and I find ourselves without certain income and with the need to network for a day each at GDC next week. This seems like an excellent opportunity that shouldn’t be missed. Anyone that has a spare (even just an expo pass) they could lend on one day would be greatly appreciated. I won’t even wish for access to the Online Worlds summit – at $2000.00 the price is insane. Even if we don’t get a pass, we each would be happy to meet with folks near the conference.

Now, back to your regularly scheduled blog —

Randy

February 12, 2008

Chip and Randy cut loose!

Perhaps you heard that Yahoo! was laying some people off today?

It turns out that this force reduction included [me] Randy Farmer and Chip Morningstar – much to our mutual surprise as we each had strong contributor/leadership roles in the company. From here it looks like they might have gone after those with larger salaries given the number of top-quality people we saw get the axe today. Given what we were working on, it was doubly confusing.

This layoff should be a recruiters dream.

Don’t use farmer@yahoo-inc.com or chipm@yahoo-inc.com anymore – those don’t work and aren’t forwarding, as of now. I’m randy.farmer at pobox dot com, and Chip is chip at fudco dot com.

[update]My phone is back online so feel free to call or email or onlineY!IM frandallfarmer.

Apparently CNet thinks I was on the Yahoo A-List, at least as far as a MS/Y merger goes. Lets see if Microsoft thinks so too! [/update]

Randy and Chip

[update] Chip’s resume link above is better now.[/update 2/13]

September 18, 2007

Areae.net Announces Metaplace.com w/video

metaplace_logo_rgb_low_rez
As a proud member of Areae.net’s board of advisors, I’m proud to announce that their coming out party was today. Their product is named Metaplace, and they debuted at TechCrunch40.

[Please leave any comments there…]

July 25, 2007

Second Life Bans L$ payouts for Random Number Generators

Recently, a SL-supporter asked me what the biggest business risk SecondLife/Linden Lab faces. I said “A major government determining that the L$ is a currency, in conflict with banking laws and/or fully taxable at conversion.”

It looks like they got one of those scary government letters indicating that L$ are a little too close to good-old American greenbacks, as Linden Lab has just banned gambling machines in Second Life.

We all saw it coming – admit it. What’s next? Hmm?

What do you think will happen if the Linden Exchange is closed for good?

Randy

December 19, 2006

Raph Koster Soars Without a Net: Areae.net

Raph Koster has his first startup: Areae.

Venture Capitalist (and Areae funding partner) Susan Wu has a great post that says many of the things about Areae that I wanted to, so rather than repeat them, I’ll just add a few things of my own.

Raph’s design pedigree is impeccable, but this is his first startup – and that introduces a whole new set of challenges. Dead (and dying) virtual world businesses abound. Worlds/Games with excellent design and technical execution can fail for lack of business focus, non-existent market research, decent marketing, competent management, financial prestidigitation, faulty timing, audience mismanagement, and more. It is a much larger mountain to climb, especially for the first time.

Yes, Raph will have more creative control than ever and no bureaucracy to slow him down. Huzzah! But, in exchange, he won’t have the same resources that he’s used to at his command. That’s why he’s got his board of directors and his advisors. I’m proud to be a member of that team. Though we are a much thinner safety net than, say, SOE, we do represent a broad set of industry experience. Some say I’m old and cranky and perhaps that is why Raph asked Richard and I to help: we grizzled veterans know where mayny dragons there be lurking in the wylds.

Thus girded
we head off
to discover
new worlds
together
once again.

Dusting off my questing clothes,
Randy

January 9, 2006

Declaring Plats as Income on your 1040? Come again?

From TerraNova

“IRS advisers specializing in the arcane field of barter income recently offered the opinion that any trade of one virtual item for another–gold pieces for thick leather, uber drops for plat–could very well constitute a taxable, income-generating exchange according to the IRS’s rules on barter. ” — Julian Dibbell

It was one thing when people asserted that you should claim ebay-sales of rare virtual items as taxable on their 1040s, but this new claim goes beyond the pale.

I’ve been trying to stop this meme for awhile, including creating the KidTrade design to demonstrate that a ebay-virtual-goods-market is a design choice, gutting the argument that virtual goods are somehow transformed into “real property” just because these markets involve real money.

This meme must die.

Bruce Boston is attempting to get the IRS to give an official opinion on the topic. I’ve joined Bruce’s effort to end this silliness. There’s no way the IRS is going to tax gold-pieces spent in world, and this project should put that question to rest, for good. If your company would benefit from this clarification, please consider participating, or at least adding your voice.

[Comments disabled here, please direct comments either to the Terranova thread (for discussion of original question) or Bruce’s Blog (to participate in the IRS clarification project).]

November 3, 2005

"Dude! We're gettin' the band back together."

Jeff (Vaz/Vaserius) Douglas has joined the Yahoo! communities team as the Product Manager for Chat. That makes two Habitat Lead Oracles, from two countries now on board: Vaserius in the US, and Layza in Japan.

As Cory Ondrejka said to me at a recent conference: “You think you might be concentrating a lot of the experience pool in one place?”

Damn straight!

September 9, 2005

Second Life Moves to Embrace Pure Consumers

Last year I wrote The Business of Social Avatar Virtual Worlds [Or, why I really like Second Life, even if their business is most likely doomed] in which I urged Linden Lab to consider that

Consumers want to be fed content, they may even pay for it and a good platform can enable many talented people to create content, it seems that the main missing components are a way to identify and promote the content the consumers want and a create way to deliver it to them with the least possible burden on the consumer’s part.

Well, today Linden Lab announced that Second Life membership is now free.

This bold move is the first step in allowing pure consumers in – those who will spend their participation-generated (and purchased for $) Linden dollars on the all that greated user-generated content. This reduces some of the skepticism I’ve had about their recent growth hype. Assuming they continue on this path, they may well reach 1m users in their timeframe.

Congratulations to those at Linden Lab!

Now they’re in for the next challenges: optimizing the interface for consumers (which has been incrementally underway for more than a year) and dealing with the new abuses (and abusers) that come with no-barrier-to-entry registration.

I hope they’re ready!

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