As reported on Kotaku.com – "British Telecommunications, a multinational mega-conglomerate with origins dating back to the 1800s, is suing Valve, a video game company that can't count to three".

British Telecommunications (BT) alleges that on-line services offered by Valve infringe on four U.S. patents held by BT. The patents at trial are broadly worded and could implicate many popular video game, social networking, and video streaming services. If British Telecommunications Plc. v. Valve Corporation [BT v Valve] were to succeed, they would be granted legal authority allowing them police many of the services relied upon by the video game industry, as well as many other popular websites.

David versus Goliath

Valve, founded in 1996, owns and operates  Steam, an industry-leading software distribution and social networking application for computer gaming. Steam, released in 2003, commands a near-monopoly over the digital rights management (DRM) and computer game distribution. Despite massive support among developers and gamers alike, Steam—and Valve—have increasingly come under fire.

British Telecommunications (BT) group is the oldest telecommunications company on the planet, tracing its roots to the invention of the first telephone by Alexander Graham Bell. BT is a leading communications provider in the United Kingdom. According to court documents, BT “spends £470,000,000 annually on research and development,” in network telecommunications.

What the suit claims

BT argued that Valve continued to operate services at great cost to the patent holder, despite multiple communications asking Valve to stop. The following patents are alleged to have been infringed:

• Communications node for providing network based information service: US 6578079 B1

• Method for automatic and periodic requests for messages to an e-mail server from the client: US 6334142 B1

• Communications network and method having accessible directory of user profile data: US 6694375 B1

• Multi-user display system: US 7167142 B2

One can see how Valve's services are implicated in these patents. Steam is a digital marketplace that distributes “items for which the respective associated customer has access rights”; provides chat services “[t]o supply messages to an audience of Internet users [etc.]”; stores “profile data in a directory” for its users; and allows these users to “output to… [a public,] communal display.”

Valve is far from the only company implicated by the broad language of these patents (and certainly not the most financially successful). Messaging, video streaming, and web marketplaces are endemic to the internet and the tech world. As the patent holder, BT has a choice to enforce the patent against whomever they wish. Why go after Valve?

Possible reasons:

1. This is intended as the first of many similar suits

If the court were to rule in favour of BT in this case—however likely that may be—it would open the door for further enforcement of the strict language contained by the patents-in-suit. If the court accepted the language that “BT has been damaged and continues to be damaged by Valve’s infringement,” and applied retributive, pecuniary damages, this would set a precedent allowing BT to challenge industry leaders’ social media and networking IPs.

2. BT is looking to become involved in gaming, DRM, or streaming

Video games are a multibillion dollar industry. Leading publishers and distributors, like Valve, command the industry’s continually expanding value. Social and competitive gaming services, like Valve's Steam are at the heart of a parallel, expanding market for “e-Sports”. Video game “sport” tournaments have exploded in popularity and now host regular tournaments each year. Cash prizes range in the tens of thousands of dollars. It is not improbable that major telecommunications companies would keep an eye on this growing market. If BT had any interest in permeating the market, the ability to enforce this patent against Valve could pay serious dividends.

3. A suit against Valve will allow BT to test public opinion

Most computer gamers must interact with Steam. As a result,  news related to Steam and Valve receives a great deal of attention. The video game consumer base is very large. An accusation against Valve is sure to gain the attention of a large audience, including many people who would not otherwise follow tech news. This is a known tactic within the video game industry to lobby public opinion. Kotaku.com has gone so far as to develop a separate Steamed news page to cover all of the grievances--material and superficial--raised against Valve/Steam. Targeting Valve is a sure way to determine if public opinion will allow BT to go ofter other, higher-profile internet services with patent suits (e.g., Facebook, Amazon).

What does this mean? 

Perhaps this can be dismissed as a "patent troll" case. But, granting patent rights to BT in this case might lead to controversial effects. The Trans Pacific Partnership (TPP) continues to loom over the US presidential election (albeit, with rapidly diminishing support). The TPP would permit greater US-based regulation of the public internet. If this were ratified, a decision like that in BT v Valve would support and legitimize BT and the US government's policing of many of the most popular applications and resources on the internet.

Further news related to the suit will follow in the coming months.

 

Christopher McGoey is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.