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11.09

Federal Circuit Decision on Business Methods Hints at Possibility of “Virtual Worlds” Patents
By Robert Blasi and Andrew Baca

The Federal Circuit’s recent decision in In re Bilski has drawn much commentary from those who debate the patentability of “business methods.” However, many have overlooked a part of the Bilski decision that may unwittingly sanction the patentability of items and methods in virtual worlds.

What are Virtual Worlds?

Populated with buildings, objects and people, a virtual world is a computer-generated environment that can be an analog of the real world or completely fictional. People in the real world utilizing software running on their personal computers make imaginary “people” navigate and act in the virtual world. Some distinguish virtual worlds from “massively multiplayer online games” (MMOs) in that the former are more freeform than MMOs. Second LifeÒ is a popular virtual world, while World of WarCraftÒ and EverQuestÒ are well-known MMOs.

Patenting Virtual Worlds

The technology behind virtual worlds is similar to any client-server system that manages enormous amounts of data concerning millions of transactions from tens of thousands of people. In this sense, the underlying technology is much like a stock exchange or credit card network.

All of these technology components — network technologies, client-server applications, computer graphics — have long been patentable. It should come as no surprise that there are many patents theoretically applicable to virtual worlds that do not explicitly mention them.

Some of the first lawsuits filed in this space concern these types of patents. For example, Worlds.com recently sued NCSoft, the maker of such popular MMOs as City of HeroesÒ and LineageÒ, for infringing its patent on interacting in a “virtual space.” The claims of the patent are concerned with the display of “avatars” (visual representations of real people participating in the virtual world). Analogous problems are found through computer graphics applications. For example, in first-person shooter games like Doom and Call of DutyÒ, “clipping” algorithms determine which objects in a virtual world to display to a user.

But what about patents on items in the virtual world? Or things that avatars do in the virtual world? How about “real world” patents? Can a patent on a real gun apply to a virtual world representation of that gun? Should it? The Federal Circuit’s recent decision on the patentability of business methods suggests an unexpected answer to this question.

From Business Methods to Virtual Worlds

In In re Bilski, the question before the Federal Circuit was whether a “method for managing the consumption risk costs of a commodity” was patent-eligible subject matter under 35 U.S.C. § 101. The Patent Office rejected all of the claims as unpatentable because “the invention is not implemented on a specific apparatus and merely manipulates [an] abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts."

The Federal Circuit affirmed the Patent Office’s rejection for a different reason. The problem, according to the court, is that Bilski’s claims were drawn to a method of managing “consumption risk,” which is an abstract idea. So a method of managing consumption risk is also an abstract — and therefore unpatentable — idea. The result might be different only if Bilski’s patent claims were “narrowly tailored” to a particular application.

The Federal Circuit decided that Bilski’s claims were not tailored enough, stating that according to Supreme Court precedent, a process claim is at least patent eligible if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing. It is clear that the claims of the Bilski application are not tied to a particular machine or apparatus because no machine is recited. The more difficult question is whether the method of managing consumption risk transforms an article into a different state or thing. Although the method of managing consumption risk transforms “data,” the Federal Circuit held that to be patent-eligible, a method must transform an article to a different state or thing. “Purported transformations or manipulations simply of public or private legal obligations or relationships, business risks, or other such abstractions,” said the court, “cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances.”

This last phrase is particularly pertinent to the question of patents in virtual worlds. Many objects in virtual worlds are “representative of physical objects or substances.” According to the Bilski court, a claim that clearly recites data representing physical and tangible objects (e.g., X-rays of bones, organs, etc.) can be patentable subject matter. This reasoning seems applicable to virtual worlds, which are full of representations of physical objects or substances.

At this time, however, there are more questions than answers. First, what are “physical objects”? Data may “represent” an object in a virtual world that may or may not exist in the real world. In Bilski, the Federal Circuit sanctioned as patentable manipulations of data representing real human organs. Some virtual objects, like a virtual Eiffel Tower, definitely exist in the real world. Some virtual objects, like virtual organs, could exist in the real world. And some virtual objects, like a dragon, do not. Do these distinctions matter?

Also, what constitutes a “transformation”? Students of computer graphics know that any data representative of a physical object in a virtual world must go through several “transformations” to display a picture of that object. Those transformations include scaling, rotation, projection, etc. But how much transformation is enough? Would merely displaying a bitmap satisfy the Federal Circuit’s appetite for a transformation?

The answers to these legal questions will slowly coalesce as patent applicants, seeking to protect their gaming revenues, file patent applications that push the Bilski logic to its limits. And the resolution of these questions will doubtless spur new questions -- Who is the infringer? Where did infringement occur? How do we apply intellectual property rights to virtual worlds that are literally embodied across millions of computers around the world? Only time will tell.

Robert Blasi is a partner in Goodwin Procter’s Business Law Department and has been an IEEE member for 15 years. As a patent attorney, he assists high-technology clients with open source software issues, intellectual property protection, licensing and intellectual property issues rising in corporate transactions.

 Andrew Baca is an attorney in Goodwin Procter's Business Law Department, a member of IEEE, and a corresponding member of the IEEE-USA Intellectual Property Committee. As a patent attorney, he advises clients about patent portfolio development and protection.

Both authors are interested in virtual worlds and video games, and the IP issues that arise in both.

Comments may be submitted to todaysengineer@ieee.org.