Patent Wars About to Begin in the Video Gaming Arena

Electronic Gaming Business, May 5, 2004

Speculation spun out of control earlier this month when the U.S. Patent office awarded Microsoft patent #6,716,102, which included mention of a game console that includes a hard drive. This sparked press presumptions that despite earlier rumors, Microsoft was indeed planning on including a hard drive in the next-gen Xbox 2.

Not so fast, says Boston patent attorney Bruce Sunstein. Microsoft actually applied for this much discussed patent back in 2001. "This is something that was described in 2001, so we see an artifact of history," says Sunstein. "This may not apply at all to the Xbox 2 but it may simply be a patent on the Xbox."

The video game world should get used to the thorny world of patenting. Gaming is entering a technology race where Microsoft and Sony use patents and licensing as weapons. "Competitive intelligence is part of what goes on in patent portfolio development," says Sunstein. Sony is not known for its patent strategy, but "It has relied on superior engineering and innovation as much as on patent protection." Nevertheless, "patents will loom even more importantly in this space," he predicts. "It will require everyone to pay more attention."

Portfolio development is precisely what Microsoft is doing. Microsoft recently found patenting religion and now files applications for much of its technology. As a competitive tool, companies often apply for patents on technologies they do not intend to use themselves. "It's a negative right," says Sunstein. There's no guarantee they will do anything with it except prevent others from using it." In fact, it is not altogether clear what Microsoft is patenting here, because some of its more than 20 "claims" in the patent are quite broad, including the presence of an internal hard drive on a gaming machine.

As game machines become more sophisticated, their reliance on crosslicensing becomes deeper. "These are incremental gains," says Sunstein. Microsoft cannot patent a hard drive in a computer environment, but it may be able to patent an incremental usage that gives them a leg up. By assembling a patent portfolio, hardware companies often gain bargaining chips, rights they can exchange with competitors for access to some of their technologies. "For anyone to compete in this space, they are going to have to move into the direction of patenting."

Contact: Bruce Sunstein, 617/443-9292

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