Atari, Other Parties Settle Major Game Patent Suit

Major U.S. game publisher and developer Atari has released the paperwork surrounding its latest financials, and embedded within the document is significant news on the firm's $300,000 settlement of the American Video Graphics video game patent lawsuit, a suit which all parties have now apparently settled. The American Video Graphics suit was originally filed against game software publishers Electronic Arts, Take-Two, Ubisoft, Activision, THQ, Vivendi Universal Games, Sega, Square Enix, Tecmo, Lucasarts, and Namco in August 2004, and alleged infringement of US Patent No. 4,734,690 (method and apparatus for spherical panning) in these company's games, seeking unspecified damages. A separate lawsuit was filed against Sony, Microsoft and Nintendo regarding similar infringement on their console hardware. In its results, Atari reveals that: "On October 19, 2005, we and AVG executed a Patent License and Settlement Agreement pursuant to which we will pay $0.3 million in full settlement of the lawsuit and receive an irrevocable, nonexclusive, worldwide license to use, publish, sell, etc. products covered by the AVG patents." In fact, John Flock, who is senior partner at New York law firm Kenyon & Kenyon, which represented the Sony entities in the suits, confirmed to Gamasutra that all lawsuits in the American Video Graphics suit have now been settled, to his knowledge. However, only Atari has revealed the amount of the settlement in financial filings thus far. The patent in question was originally filed in 1987 by William G. Waller of company Tektronix, Inc., and covers the situation when "a graphics display terminal performs a pan operation with respect to a view motion center to effectuate spherical panning, thereby providing perspective and non-perspective views", in addition to a zoom feature. Taken in the context of video games, this would seem to mean that any 3D game engine that uses camera movement or zooming of any kind relative to a specific object would be liable, a description that encompasses the vast majority of current video games. American Video Graphics mentioned Sega's title Super Monkey Ball 2 specifically when bringing its lawsuit against that firm, for example. In a recent IGDA column on the subject, lawyer Jim Charne commented on the danger of this exceptionally wide-ranging patent, noting that: "Several of these defendants have joined together to mount a common (and very costly) defense", and further commenting: "The ‘690 patent litigation is an attack on the industry as a whole. It is indeed something for developers to worry about." American Video Graphics filed three separate initial lawsuits in August 2004, and this is the first concrete news regarding the 'Game Publishers' part of the case. The other two parts of the case, for 'Game Consoles' and 'PC Makers', have a little more information regarding them, with Intel already settling for an undisclosed sum, according to online reports, and ATI setting aside $8.6 million for a possible settlement that has not yet been officially negotiated. In addition, the Atari filing revealed the settlement of a much smaller, but nonetheless notable patent lawsuit brought by the game company iEntertainment Network against Epic Games, Atari, Valve Corporation, Sierra, Sony Online Entertainment and various Sony offices, regarding latency in online games. The original patent, which seems to have been filed in 1996 by Dale Addink while working on early online flight sim title Warbirds, revolves around "minimizing the effects of time latency in multiplayer electronic games played on interconnected computers" by including "time dependent attribute information" in the packets. Patent owner iEntertainment, which was founded by Microprose co-founder JW 'Wild Bill' Stealey, demanded unspecified damages regarding the patent. However, according to Atari, on December 15, 2005, the parties entered into a settlement agreement pursuant to which in exchange for $175,000, iEntertainment released all parties (and their affiliates) from claims and granted Atari an irrevocable, fully paid-up, nonexclusive right and license to the patent. Atari's portion of the settlement amount was $25,000, and the wording seems to imply that the other parties banded together for a joint settlement. [UPDATE - 02/23/06, 1.27pm PST: Added lawyer comment on all AVG lawsuits now being settled.]