Court Trashes Patent Troll For Bogus Lawsuit Against Zynga; Awards Over $1 Million In Fees & Sanctions

from the the-sarcasm-is-flowing dept

The online gaming company Zynga is no stranger to patent lawsuits. Like basically any high-profile internet company, it's been sued a bunch of times, usually by patent trolls who are holding broad, generic patents on obvious concepts. In 2011, Zynga was sued by a company called Segan LLC, which does not seem to exist in any real form, other than as a company set up to sue Zynga over this patent (ridiculously Bloomberg News called Segan "a rival" despite Segan having no products and no presence online whatsoever). The patent in question is US Patent 7,054,928 and it's for a "system for viewing content over a network and method therefor."

Earlier this year, the judge in the Northern District of California (note: not East Texas!) Judge Vince Chhabria tossed out the case, noting that Zynga doesn't come anywhere close to performing what's in the patent. Zynga then moved in for the kill, asking for attorneys' fees and sanctions... and Chhabria has given it to them, along with a delightfully sarcastic benchslap of Segan and its lawyers. I really suggest reading the full order from Judge Chhabria, as it's quite enjoyable reading -- but here are a few of the highlights. First, it's important to understand what the '928 patent actually covers:

In the 1990's, Marc Segan came up with an idea for how people could surf the Internet, and how companies could draw Internet users to their websites. His idea was to allow Internet users to obtain an "icon" (say, an animated image of a cowboy or a baseball player) and entice the users to travel to designated websites with their icons. So for example, a person with a cowboy icon might visit a designated website because the site offers "enhancements" to cowboy icons (such as cowboy boots, or hats, or spurs). The person might click a button on the website, or correctly answer a trivia question posed on the website, and his cowboy icon receives an enhancement as a reward (for example, a cowboy hat appears on the animated cowboy's head). And hopefully while the person is visiting the site with his cowboy icon, he might buy an actual product – perhaps real cowboy boots, or perhaps a bottle of CowboyTM Bourbon – to make the whole endeavor worthwhile for the participating website.

He eventually gets the '928 patent that kinda sorta covers this, but when you get down to the crux of it, the patent could be summarized as follows:

In other words, Segan invented a system whereby a person who might for some reason be interested in using a character icon to browse the Internet is incented to visit particular "target websites" from which the icon could receive "enhancements" from those websites.

Okay. That's the background. The judge then gives the background of Zynga, immediately noting that: "It is not in the business of finding ways for people to explore the Internet. It is a social video game company." This does not bode well for Segan. The judge describes what Zynga does, and explains how it's nothing like what's in Segan's patent. At all. And there are little asides and jabs that make it clear he's not happy that this case ever showed up in the first place. And then he dives in to explain how Segan and its lawyers' attempt to pretend the patent applied to Zynga were so ridiculous:

This case is indeed exceptional, and Segan is indeed required to pay Zynga's fees, because the lawsuit was objectively baseless from the start. It is obvious that Claim 1 in the '928 patent describes an invention very different from the one Zynga practices in games like FarmVille. This is perhaps best illustrated by a claim construction position relating to the word "access" that Segan took throughout most of the litigation.

Among other things, Claim 1 of the '928 patent identifies a "service provider" from which the user obtains the character icon and which stores the user's information, and a "target website" that people visit to get enhancements for their characters. Claim 1 states that the target website uses a "unique identifier" on the user's device to "access" the user's record "at" the service provider, "whereby any new character enhancement offered to the user is appropriate for the user's character icon." In other words, with the invention described in the '928 patent, when someone is browsing the Internet with his cowboy icon and goes to a target website, that website accesses the user's record from the service provider so that the target website knows to offer the cowboy a pair of boots (rather than, say, a baseball glove). So for there even to be a chance of infringement, Facebook (the target web site) would need to access from Zynga (the service provider) the user record of the person playing FarmVille, so that Facebook could offer an enhancement for that person's FarmVille icon. But that doesn't happen, because that's not the way the Zynga-Facebook system works. That is so for a variety of reasons, but one of the most obvious is that Facebook does not "access" or "obtain" any user records for FarmVille players from Zynga.

To try to avoid this glaring problem, Segan proposed that when Claim 1 says that the target website accesses the user record at the service provider, what the claim really means is that the target website sends user information to the service provider. Specifically, Segan proposed that the phrase "target website uses the unique identifier on the user device to access the user's record at the service provider" should be construed as follows: "the target website communicates information associated with the user to the service provider so that subsequent activity (offering a new character enhancement) is consistent with information in the user's record and thus conducted in a way suited to that user's particular character icon . . . ."

This was one of the main pillars on which Segan's infringement suit rested – the assertion that when Facebook "communicates information . . . to the service provider," Facebook is somehow "accessing" user records from Zynga. Segan proposed this construction even though every time the verb "access" or "accessing" appears in the patent (and it appears many times), it is used in the ordinary way (i.e., "to obtain" or "gain entry to"). Segan might as well have argued that the sky is the ground. Even in the world of patent law, where lawyers and experts often take great liberties with words, this proposed construction of "access" stands out as exceptional.

Just a note: when a judge suggests you "might as well have argued that the sky is the ground," things are unlikely to end well for you. The judge then lists out a bunch of cases where attorneys' fees were awarded for egregiously bad patent lawsuits, and notes that this is "more lacking in merit" than basically all of those cases.

That might be bad enough, but it gets worse. Because after Segan tried and tried to redefine access, and after it was shown that there is no access, Segan tried another game... with another word.

But then, to get around the fact that Facebook does not actually access a user's record from Zynga (at least when "access" is used in any remotely understandable fashion), Segan came up with a different way of tackling the same problem: it proposed, for the first time, to construe the word "website" (of "target website") as "a set of related web pages, each page identified by a URL and including its underlying code and all content presented by a browser when a user visits that page." In other words, Segan's new infringement theory was that when a user plays FarmVille while on Facebook, the FarmVille game becomes part of the "target website," and therefore when Zynga is sending code and content to the user of the FarmVille game, the "target website" is actually "accessing" the code and content (even though Facebook never gets it). As the discussion in Section I illustrates, that's not what the '928 patent meant when it used the phrase "target website." But even aside from that, as the Court explained in its claim construction and summary judgment order, at least two other claim limitations were obviously not met as a matter of law.

In the end, the judge orders Segan to pay Zynga $1,188,773.93 in legal fees. Segan also tried (of course) to argue that these fees were unreasonable, but the court shuts that down, noting that, if anything, these are "on the low side for a case like this" and "given the... difficulty Segan put Zynga through."

Separately, Zynga asked for sanctions against the law firm representing Segan, Blank Rome -- and again the court agrees, though rather than making that firm jointly and severally liable for the full amount of the fee award, it just tacks on $100,000 in sanctions for the law firm. Judge Chhabria notes that the work by Blank Rome failed in how it handled claim construction and infringement theory (in a footnote it also suggests that the firm's "litigation conduct" was so bad that the Blank Rome lawyer who handled the hearing about the attorneys' fees "admitted he 'cringed' at some of the conduct of his colleagues.") And then there was this:

Segan's attorney instructing its expert not to answer – time and time again – when Zynga's counsel asked the expert about the expert's factual investigation to support his expert testimony and about the assumptions he was adopting as part of his expert opinion

But, even ignoring that, the judge finds that Blank Rome failed so badly in actually figuring out what this patent covered and whether Zynga infringed, that it deserves to be sanctioned. He doesn't think the lawyers were evil, just not very good at their jobs:

... even though the Blank Rome attorneys devised and put forth objectively baseless claim construction and infringement positions, the record suggests they did not pursue the lawsuit in bad faith or with an improper purpose. For example, several of the pre-filing communications among Blank Rome attorneys are more suggestive of lawyers who come to believe in a ridiculous argument than they are of lawyers who are preparing to file a lawsuit in bad faith.

That seems like faint praise.

Segan has indicated that it's appealing this case up to CAFC, and CAFC certainly can have some nutty rulings, but this case is so weak that it would be surprising if CAFC completely reverses things.

Filed Under: attorneys' fees, patents, sanctions, troll, vince chhabria
Companies: blank rome, segan, zynga