Nintendo’s business has been soaring high with the successful launch of the game. But a question that is still popping up is whether Pokémon GO’s profit engine will be derailed by challenges that software patents underlying the game are posed with? iRunway blogger Subhasri Das tries to understand this in the concluding series on Pokemon Go.
On June 19, 2014, the U.S. Supreme Court passed a landmark decision in the Alice Corp v. CLS Bank case, which hashed a dramatic impact on the US software patent system. The ruling stated that merely requiring generic computer implementation fails to transform an abstract idea into a patent-eligible invention. Enforcing and obtaining computer-implemented software patents became difficult in view of this judgment.
Since Alice, every week numerous software patents have been crushed, killing innovation and sending a warning to anyone who considers patenting software or plans to sue use of software patents. Further, the courts have declared hundreds of already-issued patents invalid. Post the ruling, federal district courts in the U.S have invalidated 66% of all software patent applications. The U.S. Court of Appeals for the Federal Circuit, the main court that handles patent appeals, invalidated an astonishing 95% of software patents during review. The Patent Trial and Appeal Board (PTAB) has invalidated close to 90% of patents in post-grant reviews.
Nintendo owns more than 200 U.S. and international patents and patent applications, including many covering virtual and augmented reality and related software innovations. The fact that many of Nintendo’s patents (and also of Niantic’s) were filed prior to June 19, 2014, exposes them to high legal and financial risks. Any software patent filed before Alice is vulnerable to challenges by competitors. What is sad is not just the prospect of losing profits to free-riding infringers, but the lack of motivation behind the humongous costs involved in innovations, if companies cannot be assured that they will recover their investment in R&D and profit from it. Lack of profitability might significantly affect innovation and research in AR, location-based or any other software-enabled innovation areas. Software innovations can still be protected in the age of Alice by diligently developing the claim drafting and commercialization strategies.
Pokémon Go has been grabbing all the attention and Nintendo has revitalized its gaming efforts, demonstrating a shift from its traditional hardware focus to software. Based on a research by Envison IP, by July 2016 Nintendo owned over 70 US patents and 37 pending, published US patent applications related to augmented, mixed, and virtual reality hardware and software. Globally, Nintendo owns over 180 patents and published applications in these technology domains, including three-dimensional data processing, displaying immersive scenes, creating virtual spaces, motion and movement sensors for portable devices, eye-tracking, and visual data overlays. For example, patent US 8,922,588 entitled “Information processing program, information processing system, information processing apparatus, and information processing method, utilizing augmented reality technique” relates to creating a virtual image superimposed in a real world scene. Nintendo began filing patents in this space in 2006, with a peak in 2011. Since then the company has steadily filed many new patent applications related to augmented and virtual reality (VR) technologies. But does that form an ample shield from litigation sharks?
Nintendo’s prosperity now depends upon protecting the innovations in Pokémon GO from competitors who, sans patent protection, might simply copy the product or elements of it, thereby avoiding R&D costs. As of now, we need to wait and watch if Nintendo’s AR patents become the subject of incredibly valuable licensing agreements or will the AR games and devices from competing companies involve clever design-arounds to Nintendo’s innovation.
(Featured image source: https://pxhere.com/en/photo/570377)