The tides have turned again in the litigation campaign against gaming companies by Worlds, Inc., who many may recognize as one of the named parties in often-cited Federal Circuit case law on real-parties in interest (“RPI”). In 2018, the Federal Circuit shook up the IPR landscape with a series of RPI decisions, starting with Wi-Fi One, LLC v. Broadcom Corp., which held that the PTAB’s time-bar determinations under § 315(b) are appealable. A series of frequently-cited Federal Circuit decisions followed, including Applications in Internet Time, LLC v. RPX Corp. and Worlds, Inc. v. Bungie, Inc.

In Worlds, Inc. v. Bungie, Inc., the PTAB issued final written decisions holding 34 out of 40 challenged claims unpatentable. On appeal, the Federal Circuit held that the petitioner bears the burden of persuasion for proving that the petition is not time-barred under § 315(b), meaning Bungie had the burden of persuasion to show that Activision—which had been served with a complaint more than one year before Bungie filed its petition—was not an RPI. The Federal Circuit vacated and remanded, and on remand, the PTAB vacated its final written decisions.

Those vacated IPR decisions laid the groundwork for invalidating Worlds’ patents. Recently, a U.S. District Court (D. Mass.) invalidated the asserted patents under § 101, based in part on the PTAB’s substantive analysis. See Worlds, Inc. v. Activision Blizzard, Inc., et al., No. 12-cv-10576-DJC, Dkt. 358 (D. Mass. Apr. 30, 2021) (“Decision”). The Court noted that the PTAB decisions were vacated on procedural grounds and considered the PTAB findings as persuasive authority. “Although now vacated, the substance of the PTAB’s prior rulings serves to support the Court’s analysis below that the client-side and server-side filtering of position information is not inventive.” Decision at 7-8.

The parties focused on four representative claims, including claim 1 of U.S. Patent No. 7,945,856 (the “’856 patent”).

For Step 1, World’s prior arguments, including in the IPR, were used against it. Worlds had argued that its patents were directed at a method of “crowd control” and that these claims are the filtering function to do so. Citing to those characterizations, the Court held the claims to be directed to “the abstract idea of ‘filtering’ (here of ‘position’ information”) which amounts to ‘crowd control.’” Decision at 14.

Activision argued that such filtering is “a fundamental and well-known concept for organizing human activity,” and that the claims do nothing more than recite a general client-server computer architecture to perform routine functions of filtering information to address the generic problem of crowd control. See Decision at 14 (citing BASCOM Global Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1348 (Fed. Cir. 2016)). The Court agreed that this conclusion was consistent with Mayo, Alice, and other cases.

For Step 2, Worlds’ briefing relied heavily on BASCOM’s holding that an inventive concept “may arise … in the ordered combination of the limitations.” BASCOM, 827 F.3d at 1349 (emphasis added). Worlds argued that the claims teach an inventive ordered combination of steps: “a multistep process whereby a server receives position information of avatars associated with network clients; the server filters the received positions and then sends selected packets to each client,” whereby a client can then further determine which avatars to display.” See Decision at 17.

However, the Court held that “there is nothing in the ordering of the steps in the claims (i.e., receiving, determining, comparing) that make them inventive; the ‘steps are organized in a completely conventional way.’” Decision at 18. “The steps of the claims here use only ‘generic functional language to achieve the purported solution’ of filtering of position information for crowd control.” Id. (citing Two-way Media, Ltd. V. Comcast Cable Comms. LLC, 874 F.3d 1329, 1339 (Fed. Cir. 2017)). “None of the remaining claims are limited to ‘any specific form or implementation of filtering . . . .” Id.

While Worlds emphasized technical-sounding terminologies, such as clients, servers, avatars, networks, and packets, the Court noted that “[c]lient-server networks, virtual worlds, avatars, or position and orientation information are not inventions of Worlds but rather, their patents seek to demonstrate their use in a technological environment.” Decision at 19. “That is, Worlds’ asserted claims use a general-purpose computer to employ well-known filtering or crowd control methods and means that ultimately use same to display graphical results and generate a view of the virtual world, none of which is inherently inventive or sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.” Id.

Notably, the briefing and the Court’s decision did not appear to rely on expert testimony or evidence in the district court litigation. Therefore, the PTAB’s technical analysis from its vacated decisions played an important role, providing the foundation for the Court’s conclusion that “client-side and server-side filtering of position information is not inventive.” Decision at 7-8.

While gaming companies must be mindful of the many potential procedural pitfalls in PTAB challenges, this recent decision shows the importance of attacking non-inventive patents using both § 101 and IPRs.