Global Game Industry News Blog

Tuesday, June 26, 2007

Gamasutra Publishes Adverarticle on Patents

Well, typically I expect more from Gamasutra on this front. Rather than labeling it "Opinion:", they perhaps ought to have labeled it "Advert:".

The punch-line of the article: "The video game industry is at a point where patents and other intellectual property are becoming vital to determining who the future winners will be." Is dead on. That isn't to say that there perhaps should have been a counter opinion piece about the effect that this kind of patent arms proliferation could have to stifle the industry to the point of collapse.

If you read carefully the argument, I'm not left feeling, "Yeah, patents are a good idea to think about." Rather, I'm left feeling as if I'm envisioning an arms standoff much like that forming between Open Source Software and Commercial Software (like Microsoft). They are beginning a dance that may result in the criminalization of human inquisitiveness and innovation.

It's precisely this kind of environment that I suspect the creators of patents were hoping to not have emerge. It is this kind of article and environment that points to a call for massive overhaul of the U.S. Patent system.

Gamasutra - Opinion: Is Your Invention Worth Patenting?
Video games are big business. In 2005, the world wide market for video games was estimated at $28 billion, and is expected to grow to $46.5 billion by 2010. And the video game market is still growing fast; the latest estimates show an 11.4% compound annual growth rate.
Nonetheless, the pace of patent filings by video game developers is on the rise, and, more importantly, lawsuits involving video game patents are also on the rise. One need look no further than the recently settled “force feedback” suit, in which Immersion managed to extract over $110 million from Sony.
For purposes of this article, the costs of obtaining a patent in the United States can be estimated at $10,000 to $20,000, depending on the complexity of the underlying invention, and not accounting for the inventor’s time. Weighed against these costs are the benefits provided by patent protection. Estimating the benefits of patent protection is a more involved process, which is explored below.
In such a situation, maintaining such an invention as a trade secret is the most prudent course of action. A trade secret is any economically valuable information that is not publicly known, and for which steps have been taken to maintain secrecy. Unlike patents, no formalities, such as filing with a government agency, are required to maintain a trade secret.

Also unlike patents, trade secrets endure for as long as secrecy is maintained. If a trade secret is “stolen,” the holder of the trade secret may sue for misappropriation. For inventions that, if implemented by others, would be undiscoverable, the advantage of trade secret protection is readily apparent.

In fact, since an application for patent must include a clear description of the invention, applying for a patent directed to an invention that is not discoverable when incorporated within a product may do little but share the developer’s technology with the developer’s competitors.

Unfortunately, a trade secret will not prevent a competitor from reverse engineering the developer’s technology. Therefore, if an invention is valuable, and is capable of being detected in the product, patent protection is almost always more appropriate.
If a particular invention has sufficient financial value, but the video game developer has no intention of practicing it, the developer should look at the possibility of licensing the invention to others in exchange for licensing fees. To obtain licensing fees the developer does not need to practice the invention or have even built the invention. Practically, the amount of a reasonable royalty is tied to the additional profit enabled by the invention.

Patents also have defensive value, especially in hotly contested new markets. Often, a larger, established company can prevent a smaller video game developer from pursuing a business opportunity by threatening a patent suit.
The video game industry is at a point where patents and other intellectual property are becoming vital to determining who the future winners will be. Decision makers at video game companies need to be informed of the different types of protection that can be sought for inventions, as well as the advantages of each. Armed with proper information, video game developers can use intellectual property to establish competitive advantage over their rivals.

Konrad Sherinian is an attorney with Cook & Alex, with his offices in Chicago. His practice focuses on counseling small to mid-size companies, including video game developers, on the strategic use of intellectual property. In addition, Mr. Sherinian maintains a commercial litigation practice, and presently represents a number of patent holders on a contingent-fee basis seeking to obtain compensation for patent infringement. Prior to becoming an attorney, Konrad, who has an electrical engineering degree, worked for various high-tech companies and start-ups, and lead the development of many hardware and software technologies. Notably, from 1998-2000, Konrad worked at Bungie Software, and contributed to the development of Myth II and Halo, as well as Bungie’s game matching platform,

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