IP Aspects of Augmented Reality and Virtual Reality Technologies 

Ryan N. Phelan, Barrett Spraggins, David Pointer, & George Raynal

I. Augmented Reality / Virtual Reality Overview (Ryan Phelan)

This section provides a brief overview, and suggested definitions, for Virtual Reality (VR) and Augmented Reality (AR). The authors provide the definitions for purposes of context for this paper and note that the understanding of these terms is evolving, especially in view of new technologies or industrializations that make use of this technology, such as the “Metaverse.”

NASA recognizes that the term Virtual Reality (VR) has been “notoriously difficult to define over the years.”^[1] Nonetheless, NASA defines VR as “the use of computer technology to create the effect of an interactive three-dimensional world in which the objects have a sense of spatial presence.” Id.  In this definition, NASA describes that “spatial presence" means that “the objects in the environment effectively have a location in three-dimensional space relative to and independent of your position.” Id.

 NASA describes that “[t]he basic idea is to present the correct cues to your perceptual and cognitive system so that your brain interprets those cues as objects ‘out there’ in the three-dimensional world.” Id.  According to NASA, “a good virtual reality system” achieves the effect of emulating a “concrete existence without actually having concrete existence.” Id.

VR systems typically involve the use of a VR device, such as a VR headset. A popular example of a VR headset is the Oculus series of headsets as provided by REality Labs and parent company Meta Platforms.

Augmented Reality (AR) has been defined as “the real-time use of information in the form of text, graphics, audio and other virtual enhancements integrated with real-world objects."^[2] When compared to VR, it is the real world element “that differentiates AR from virtual reality.” Id. That is, AR integrates and adds value to the user’s interaction with the real world, versus a simulation. Id.

A popular example of AR is the Pokémon Go series of video games that use mobile devices with GPS to locate, capture, train, and battle with virtual creatures called Pokémon, which appear as if they are in the player's real-world location.

Mixed Reality (MR) has been defined as “a blend of physical and digital worlds, unlocking natural and intuitive 3D human, computer, and environmental interactions.”^[3] The term "mixed reality" was introduced in a 1994 paper by Paul Milgram and Fumio Kishino, "A Taxonomy of Mixed Reality Visual Displays.”^[4] The paper described “mixed reality” as “a particular subset of Virtual Reality (VR) related technologies that involve the merging of real and virtual worlds somewhere along the virtuality continuum" which connects completely real environments to completely virtual ones.” Id.

II. Augmented Reality and Virtual Reality Technologies use in the “Metaverse”

In 1992, in his cyberpunk novel titled “Snow Crash,” author Neal Stephenson coined the term “Metaverse” to describe an online, virtual reality (VR) enabled world where the inhabitants of humankind could interact and escape the unpleasantness of the dystopian world portrayed in the novel.

Fast forward to the present day, and Merriam-Webster defines the “Metaverse” in a similar manner as “a highly immersive virtual world where people gather to socialize, play, and work.”

Others, including Wired, have recognized that the term “Metaverse” has taken on a more expansive definition that can include, but is not limited to, VR. Instead, the “Metaverse” can more broadly be characterized by a persistent virtual world that continues to exist even when a person exits (“logs off”) from that virtual world. The Metaverse can be accessed via one or more immersive technologies, including VR, augmented reality (AR) (i.e., a technology that combines aspects of the digital and physical worlds), and/or standard 3D technology, the latter of which can include standard display screens of personal computers, game consoles, and even mobile phones.

Interactive virtual worlds are not new. Instead, modern video games now routinely include this feature. Therefore, it can be argued that the “Metaverse” had an early start in the video game industry. In particular, virtual worlds where people gather and interact have existed in popular games such as World of Warcraft, Second Life, and Fortnite, among others, since at least the early 2000s.

Therefore, cases dealing with the “Metaverse” will likely be influenced by prior rulings and precedents on video game-related law. The metaverse is sometimes also called the multiverse because the platform uses both AR and VR technologies to simulate a real world in which people from anywhere in the world interact as if in the same room, building, park, or space.  The most recent developments of the metaverse allow users to purchase “real estate,” where they then design a building or else their space of a building.  These users either purchase assets or create their own assets, to go into the space they purchase.  Then they allow people to have real-time meetings, go shopping, check out an interior space for new furniture or decorations, or even walk through a crime scene to test re-enactments.  However, much like in AR and VR, lawsuits are beginning to form around the ownership of assets or the patenting of a platform’s design.  Other issues are evolving around the centralized metaverse and choice of currency, as well as the psychological outcomes of using the metaverse on human perception.

One of the benefits that the metaverse has provided to followers of the new platform is the ability to run on the blockchain and allow users to interact with cryptocurrency.  While cryptocurrency is becoming an ever more prevalent trend, the current president signed an executive order in March of 2022 requiring that the Department of Treasury explore the benefits and risks of the use of Cryptocurrency. ^[5]  Further, requiring the Treasury also to explore the ability to create a centralized digital dollar. ^[6]  The current format for cryptocurrency is a decentralized platform where people from all over the world can engage in activities accepting the currencies.  However, with the new executive order, Americans may become subject to a centralized digital currency that is not easily interchangeable with the decentralized options currently in use.  However, the order makes it clear that the USA is to stay competitive in the crypto atmosphere, and any type of centralization or policy from the order depends on what the Department of the Treasury finds.  If they find decentralization unsafe, it may greatly limit who American partakers in the metaverse can interact with, vastly changing one of the overarching purposes of this virtual meeting space.

III. Intellectual Property Aspects of Augmented Reality and Virtual Reality Technologies

AR and VR technologies involve views or spaces in a three-dimensional (3D) environment. It comes as no surprise then that these technologies have had an early start in the video-game industry, where 3D games have been in development for decades. In the beginning, such 3D games were implemented on 2D screens or displays. For example, a popular game that widely introduced AR technology to the world was Pokémon GO, a mobile app-based video game released in 2016  that allowed users to view AR virtual characters (i.e., Pokémon monsters) in real-world scenes using a mobile device's camera and display screen.

Fast forward to today, and AR and VR technologies use AR or VR headsets to immerse users in real-world gaming environments.

Of course, AR and VR technologies are being used outside of the video game industry, too, for a variety of new and different uses. This section will explore intellectual property (IP), and other aspects related to AR and VR technologies.

A. Trademarks

1. Trademark Filing Considerations (Barrett Spraggins)

A trademark is a type of intellectual property that consists of a word, phrase, design, or a combination of elements that identifies the goods or services of a particular source, distinguishes the goods or services of the particular source from the goods or services of others, and indicates the particular source of the goods or services. ^[7] In addition to other requirements for U.S. registration, the brand owner must demonstrate that the mark is distinctive and used in U.S. commerce for each classification of goods or services in which protection is sought.  Federal registration protects the trademark from being registered by others without permission and helps prevent others from using a mark that is similar to the registered mark with related goods or services.^[8] Protection, however, generally extends only to the classifications of goods or services that the trademark owner actually offers for sale.  As a result, companies in different industries may have separate zones of trademark protection for the same mark.  For example, Apple Computing Inc. and Apple Cleaning Systems LLC each have registered the trademark “Apple”.^[9]

Considering that protection is generally classification restricted, when a brand owner uses or intends to use a mark in connection with a new set of classifications of goods or services that are not listed in the trademark, the brand owner should seek trademark protection for that new set of goods or services.  The clothing apparel industry is confronted with this reality as companies in this field begin offering virtual or metaverse goods and services in addition to their physical goods or services.  Often in the form of non-tangible tokens (NFTs), these virtual representations are associated with an image, video, or other type of visual digital depiction of an item that includes the mark traditionally associated with a physical good.  These virtual or metaverse offerings are fundamentally different from the brand owner’s real world physical goods or services.  In order to protect these new types of virtual or metaverse goods or services, brand owner should consider filing trademark applications with metaverse classifications, such as class 9 (downloadable virtual goods), class 35 (retail store services featuring virtual goods), and class 41 (online entertainment services, namely, providing on-line, non-downloadable virtual goods).  Nike is an example of a company that has adopted its trademark strategy to protect its new metaverse products.  In October 2021, Nike filed several new trademark applications for the NIKE trademark in the 009, 035, and 0041 classes. ^[10]

            If the brand owner does not have trademark protection for a mark in metaverse goods or services, unaffiliated third parties may attempt to register the brand’s mark in metaverse goods and services classifications.  At a minimum, brands that limit their trademark protection to their physical goods are exposed to a risk that a third party may use the brand’s trademark in association with the third party’s metaverse related goods or services.  Faced with unauthorized use of their trademark, the brand owner may be left with pursuing claims of trademark infringement against the third party.

2. Trademark Infringement Considerations (Barrett Spraggins)

Technologies such as Virtual Reality (VR) and Augmented reality (AR) allow developers and creators the ability to create and modify a representation of their world.  In many instances, a user may act as a developer creating a VR or AR representation that is released to the public.  Often these representations are made to simulate or augment real-life settings, which would naturally include common items protected by trademarks.  For example, if a developer created a representation of a person’s kitchen, the developer may include visual depictions of items one would expect to see in a kitchen.  In this example, the AR/VR representation may include visual depictions of Coca-Cola cans, a box of Wheaties cereal, a bag of Doritos, a bottle of Ketchup, a Wolf oven, a Frigidaire refrigerator, and a Whirlpool dishwasher.  According to the U.S. legal framework and existing case law, determining whether the developer’s use of these trademarks will be balanced between trademark protection and the First Amendment right to free expression. 

In general, the same laws that protect trademarked content in the real world also apply to content uploaded to an AR/VR world.  To establish infringement of a protected mark, a plaintiff must show 1) it has the mark that is eligible for trademark protection, 2) it owns the mark, and 3) the defendant’s use for the mark causes a likelihood of confusion as to the origin or sponsorship of goods or services.^[11]  In Rogers v. Grimaldi, the Second Circuit articulated a two-factor test for balancing trademark infringement with the First Amendment right to free expression, requiring that the trademark use have “no artistic relevance to the underlying work” or “explicitly mislead” as the source of the work for a finding of infringement. ^[12]

In 2008, the ninth circuit in E.S.S. Entm’t 2000, Inc. v. Rock Star Videos, Inc. applied the Rogers v. Grimaldi two-pronged test and found that use of the trademarks by Rocker Star Videos, Inc. within the videogame Grand Theft Auto that would otherwise violate the Latham Act is not actionable “unless the [use of the mark] has no artistic relevance to the underlying work whatsoever, or if it has some artistic relevance, unless [it] explicitly misleads as the source or the content of the work.^[13]  Because the video game was held to be artistic, the use of the trademarked content was not a violation of trademark law.

In 2017, AM General, LLC, the maker of HUMVEE vehicles, sued Activision Blizzard, Inc. for using the design of HUMVEE vehicles in their Call of Duty videogames and using the trademark “Humvee” and design of the HUMVEE vehicle in various promotional materials.^[14]  AM General owns the trademarks and trade dress rights for HUMVEE, and they sued for infringement of trademark and trade dress, dilution, and other related claims.  In April 2020, the Court applied the Rogers v. Grimaldi two-pronged test and found that Activision’s use satisfied the bar for artistic relevance.  The court found that Activision’s use was not explicitly misleading according to the Polaroid factors, partly because AM General was a manufacturer of vehicles and Activision Blizzard was a producer of video games.  According to the Court, enhancing the game’s realism was enough of a reason for determining that the use of Humvees in the game was part of the game’s artistic expression.

Although this is a rapidly evolving area of trademark law, as indicated above in the few cases that have considered the fair use exception, there is a rather low bar for artists that want to tie their AR/VR world to the real world by including possibly trademarked material in their AR/VR world.^[15]

3. Trademarks and Non-fungible Tokens (David Pointer)

The Metaverse incorporates new technologies that courts have yet to analyze in IP disputes.  As an example, non-fungible tokens (NFTs) have recently emerged in a limited set of use case scenarios.  Within the Metaverse, the number of use case scenarios can quickly expand. For example, developers have produced NFTs derived from real world products and three-dimensional NFT characters that can be customized by the end users in a metaverse environment.

Yet, there are few intellectual property cases regarding NFTs that have been litigated, even in a non-metaverse setting.  However, cases are emerging through the courts that could provide indications as to how NFT-based cases will be analyzed by the courts.

In early 2022, Hermès International et al. sued Mason Rothschild for trademark infringement for Rothchild generating NFTs that include digital images of luxury handbags produced by Hermès. In Hermès International et al. v. Mason Rothschild, the court denied Rothschild’s motion to dismiss the amended complaint for failure to state a claim upon which relief can be granted under Fed. R. Civ. P.12(b)(6). ^[16]

Hermès is a luxury fashion manufacturer that produces the well-known Birkin bag.  Hermès owns the trademark rights for the Hermès mark and the Birkin mark.  Hermès also has trade dress rights for the Birkin handbag design.  Rothschild generated a collection of digital images titled “MetaBirkins” and each MetaBirkins includes an image of a blurry faux-fur-covered Birkin handbag.  Rothschild has sold a series of these MetaBirkins NFTs for prices comparable to the actual physical Birkin handbags.

With regard to the trademark infringement claim, the parties disputed the appropriate test for analyzing the trademark infringement claims. The Court decided that the Second Circuit’s test in Rogers v. Grimaldi  875 F.2d 994 (2d Cir. 1989) applies to the trademark infringement analysis of Rothschild’s use of “MetaBirkins” because of the need to balance First Amendment concerns with the protections that the Lanham Act provides. The Court reasoned that the complaint “includes sufficient allegations of explicit misleadingness either as a function of likelihood of confusion under the Polaroid factors ... or under Rothschild's own theory of the explicitly misleadingness either as a function of likelihood of confusion under the Polaroid factors ... or under Rothschild's own theory of the explicitly misleading analysis,” and thus, the Court denied the motion to dismiss the trademark infringement claims^[17].

The Court analyzed whether “MetaBirkin” was used as a source indicator or as an artistic expression by Rothschild.  Rothschild created a collection of digital images with the title “MetaBirkin.”  Each digital image in the collection included a blurry faux-fur-covered Birkin handbag.  Each NFT in the collection was titled with a number from 0 to 99.  The Court considered that Rothschild sold digital images of handbags, which could be considered as a form of artistic expression. As such, the Court reasoned that First Amendment concerns should be balanced with Lanham Act protections.  Accordingly, the Court determined that the Rogers test by the Second Circuit should be applied.

Additionally, the Court considered whether the Rogers test protects Rothschild’s use of “MetaBirkin.” Under the Rogers test, the Court first considered the artistic relevance of the trademark by Rothschild. The Court determined that Rothschild’s own statements were relevant because these statements could be construed as Rothschild intending to associate the “MetaBirkins” mark with the goodwill of Hermès’ Birkin mark, rather than the mark being used only for artistic purposes.

Under the Rogers test, the Court considered the explicit misleadingness of “MetaBirkin” by Rothschild.  The Second Circuit stated in Rogers that the Lanham Act "should be construed to apply to artistic works only where the public interest in avoiding consumer confusion outweighs the public interest in free expression”. ^[18] Further, the Second Circuit stated, in Twin Peaks Prods., Inc. v. Publ'ns Int'l Ltd. 996 F.2d 1366, when applying the Polaroid factors for a likelihood of confusion, the relevant question is whether the defendant’s use of the mark “is misleading in the sense that it induces members of the public to believe [the allegedly infringing use] was prepared or otherwise authorized by the plaintiff.” ^[19]

Here, the Court reasoned that the amended complaint had sufficient factual allegations to support a determination of explicit misleadingness because of, at least, Rothschild’s own statement, in which Rothschild stated “for me, there's nothing more iconic than the Herm[e]s Birkin bag. And I wanted to see as an experiment if I could create that same kind of illusion that it has in real life as a digital commodity.”  Accordingly, the Court determined that the complaint’s allegations had sufficient evidence of explicit misleadingness to survive a motion to dismiss.

B. Design Patents (George Raynal)

As both the importance of design rights for innovators and brand owners and the prominence of virtual worlds continue to expand, the question arises: can design rights be obtained and enforced against virtual infringement?

In Europe, the answer is more clearly yes, a design right for a product should also cover infringement in a digital environment such as a video game or metaverse; product designs appearing as graphic designs and symbols may be registered in Locarno Class 32 and under Article 36.6, indication of product should not be a limitation.

In the US design patent system, designs are not protected per se, or applied to any article, they generally must be directed to a particular article.  More recently, the identification of the article of manufacture has taken on more significance.

The Federal Circuit recently reversed a USPTO Board appeal decision in the case In re SurgiSil, which had affirmed a rejection for lack of novelty in view of prior art which looked the same but originated from an unrelated field of use (claimed surgical implant versus prior art artist tool for smudging charcoal).^[20]

Thus, in the validity context, the prior art applied against the design was limited to the identified article.

Similarly, in the infringement context, in the case Curver Luxembourg Sarl v. Home Expressions, Inc., the Federal Circuit held that where the article of manufacture in the design patent was a chair, the scope of the design claim does not include baskets.^[21]

Thus, protection for product designs in digital environments is less certain in the U.S. and might require a separate design patent, directed not to the product itself, but to a display screen showing the product.  This type of patent has been used widely to protect icons and graphical user interfaces, and now applicants might well file to protect their product designs as graphical user interfaces or icons. The display screen itself need not be claimed.

In 2014, a district court judge held that no reasonable person would purchase a defendant's video game believing that they were purchasing plaintiff’s patented stun gun noting that Plaintiffs did not allege infringement of a design patent for a computer icon, and such a hypothetical situation is not before the Court. ^[22] Plaintiffs also argued that an ordinary observer “would believe the Defendants['] icon is related to [and] connected and licensed by the Plaintiffs” but the Judge noted that this argument misapplies the ordinary observer test and is more properly associated with plaintiffs' trademark claims.

The Judge seemed to note that the patentee could have, but did not obtain a design patent for the design as a graphical user interface appearing on a display screen. Although this is a lone, district court decision that was not appealed, it foreshadows article and context limitations of design patent enforcement, and suggests that Applicants should consider using a  design patent directed to a GUI to protect product designs in digital environments.

Current USPTO guidelines consider computer-generated images to be subject matter eligible for design patent protection under 35 U.S.C. §171 when the computer-generated image is a GUI or icon which is integral to the operation of a programmed computer and is shown on a computer screen, monitor or other display panel.^[23]

Display technologies are advancing quickly, mainstreaming projected, augmented and virtual reality and immersive displays of computer-generated images without a traditional screen, potentially leaving the USPTO's screen requirement outdated and potentially unduly limiting.^[24] Moreover, the Board decision on which the Guidelines are based acknowledges that appearing on a screen is not what makes computer-generated designs eligible.^[25]

The USPTO issued a Comment Request regarding the Article of Manufacture Requirement (Docket No. PTO–C–2020–0068; Fed. Reg. Vol. 85, No. 245 (Dec. 21, 2020) addressing this issue. Of 19 comments received, 13 comments favor protecting computer-generated image designs without limitation to a display screen.^[26]

The display screen requirement was apparently adopted as a proxy to convey that the computer-generated image is displayed integral to the operation of a programmed computer, the computer being the relevant article of manufacture for eligibility purposes under 35 U.S.C. 171, not the display screen. When a programmed computer no longer displays the computer-generated image on a display screen, the display screen is not a useful proxy, and should not be required. The USPTO previously jettisoned the outdated physical article for digital type designs and should do so now for graphical user interfaces and icons, eliminating the screen requirement.^[27]

The USPTO published a Summary of Public Views on the Article of Manufacture Requirement under 35 U.S.C. 171, about design patent protection for graphical user interfaces, released in April 2022, and is still considering the matter.          

Meanwhile, the PTAB declined to incorporate a functional requirement to be an integral and interactive component in the operation of a computer.  See Appeal No. 2020-001664 (Serial No. 29/510,320)(decided Nov. 2, 2020).

The rejection was based on 35 U.S.C. §171(a), which provides: “Whoever invents any new, original and ornamental design for an article of manufacture may obtain a patent therefor, subject to the conditions and requirements of this title.”

The Examiner rejected the design as merely a displayed picture and found that the MPEP guidance for computer-generated icons did not apply because the claim is directed to a “graphic” not an icon.  The Examiner took the position that although the distinction between patentable icons and other images such as pictures, graphics, images, drawings, photographs, paintings, sketches, caricatures, artwork, charts, maps, cartoons, or diagrams appearing on a computer screen is not addressed in the MPEP, it is addressed by a previous decision, Ex parte Strijland, Appeal No. 92-0623 (USPQ 2d 1259 (BPAI Apr. 2, 1992).

The Board recognized the principal issue in dispute as whether the MPEP’s guidance is limited to only certain kinds of images shown on a display screen being patent-eligible. The Board noted that the MPEP describes exemplary icons as including “full screen displays and individual icons” and concluded that the Appellants claimed design likely falls under the MPEP’s guidance as a patent-eligible combination of an icon image appearing as surface ornamentation on a computer display screen.

The Examiner’s answered that Strijland requires, in order for an image to be patent-eligible as displayed on a computer display screen, that the image “is an integral and active component in the operation of a programmed computer.

The Board disagreed that this can be the proper test for patent eligibility for two reasons. First, the Examiner’s test would apply a functional requirement – that the image be an integral and active component in the operation of a computer – to determine the subject mater eligibility of a design patent claim. The Board stated that this functional requirement is at best in tension with, and at worst, outright contradicts, the scope of design patent protection as extending only to the “ornamental design” for an article of manufacture.  Second, the Board noted that the MPEP guidance expressly considered the Strijland decision yet when implementing the MPEP guidance following public comment, the office did not adopt the Strijland decision’s functional requirement which the Examiner sought to impose.  Therefore, the PTAB reversed the Examiner’s rejection. Thus, there is no interactivity requirement for patentability of graphical user interfaces appearing as a result of the operation of a programmed computer beyond identifying the image as a graphical user interface or icon.

To give applicants better clarity and protection using design patents, the Office should move beyond the status quo on two issues. First, it should provide guidelines for how to protect graphical user interfaces and icons that are three-dimensional. The Office has issued numerous design patents directed to the appearance of three-dimensional GUI designs, but nevertheless, some Examiners reject or restrict multiple images showing the same design from different angles.  Second, the Office should eliminate the display screen requirement because it was only ever a proxy for the relevant article of manufacture for computer-generated image designs - a programmed computer.

Other countries such as Korea, Singapore, and Japan have passed laws to modernize protection for next-generation graphical user interfaces, and the US should lead on this front, not trail behind.  Indeed, on the international level, USPTO professionals regularly advocate for the protection of digital designs.^[28] Meanwhile, however, US Applicants are left in a position to consider filing separately for a physical product design and a digital product design to better assure coverage for digital infringement, because the Office is still debating internally whether virtual and tangible product environments can or should be covered by a single issued patent.

Moreover, some Examiners seem to take issue with protecting the appearance of a product on screen using more than one view, such that it is the product, as a GUI, that is protected as opposed to the display screen. Such concerns seem misplaced, considering that the display screen edge or appearance itself is rarely claimed in patents directed to graphical user interfaces, and numerous patents showing three dimensional GUI already exist.  For example, see U.S. Patent Nos. D916,123, D916,124, D909,410, D869,483, D797,767, D853,409, and D858,537.

Copyright generally could apply to protect aspects of product design considered two-dimensional artistic and three-dimensional sculptural works, and to original separable expression from useful articles. To the extent that a work is registrable, it should be subject to enforcement against infringement by physical or virtual means. However, copyright protection may be limited for physical and virtual designs which the Copyright Office considers too simple, such as some logos, or designs which it excludes or limits under the idea-expression dichotomy, and product designs where it finds no original separable expression.

Registration and enforcement of trade dress rights for a product design requires a significant showing of distinctiveness and non-functionality, and trade dress protection for graphical user interfaces could fail, e.g., as in Apple Inc. v. Samsung Elecs Co. Ltd., where the Federal Circuit determined that the design made product easier to use, improved pocketability, durability and had other functional benefits.^[29]

C. Utility Patents – 35 U.S.C. Section 101 Issues (Subject Matter Eligibility)

AR and VR-related technologies are fundamentally rooted in computer and software-based technology. Such technologies are frequently challenged as non-patentable “abstract ideas” under the U.S. Supreme Court’s test in Alice Corp. v. CLS Bank International.

In addition, the “metaverse” as an emerging technology field has captured the public’s attention.  Entities will likely seek patent protection for development projects for various reasons, especially for inventions that are highly detectable.  However, even as an emerging technology field, practitioners still need to be mindful of subject matter eligibility considerations.

1. Worlds Inc. v. Activision Blizzard, Inc. (Ryan Phelan)

For example, one recent case, Worlds Inc. v. Activision Blizzard, Inc., involved VR technology that faced scrutiny under 35 U.S.C. 101. See Case No. 1:12-cv-10576 (D. Mass. Apr. 30, 2021), aff’d 2022 WL 726969 (Fed. Cir. Mar. 10, 2022), cert denied 2022 WL 4651998 (U.S. Oct. 3, 2022).

In the Worlds case, the court  considered a set of patents directed to VR-related technology. In particular, the patents described, e.g., “a highly scalable architecture for a three-dimensional graphical, multi-user, interactive virtual world.” U.S. Pat. 7,181,690, Abstract (the “’690 Patent”) (emphasis added). In addition, the patents sought to provide “an efficient system for communication between many client systems over dedicated or open networks to provide graphical interaction between users operating the client systems.” ’690 Patent.

The court  focused on a set of claims directed to determining a maximum number of user avatars (i.e., in-game virtual characters) that could be displayed at one time. In particular, claim 1 and its dependent claim 4, recite the “avatars.” Claim 4 was treated as the representative claim in the Worlds cases:

As an example, Figure 1 of the ’690 Patent illustrates a set of avatars as penguins:

Despite the VR-related technology at issue, the court in Worlds found that Claim 4 was directed to an abstract idea “similar to those abstract ideas found to be patent-ineligible in step one of the Mayo/Alice analysis in these cases.” Worlds at 16.

Specifically, in Worlds, the court found that the type of “maximum capacity” filter employed in claim 4 of the ‘690 patent was directed to the abstract idea of “solving the problem of crowd control by teaching a computer network architecture to enable multiple users to interact.” Worlds at 16. The abstract idea was “analogous to real-world maximum capacity limits on elevators, at restaurants and other physical spaces typically open to the public” Id.

In addition, the Worlds court found that claim 4 lacked an “inventive concept” sufficient to save the claims. In particular, the court found that “[c]lient-server networks, virtual worlds, avatars, or position and orientation information are not inventions of Worlds” but rather well-known technology that could be used on 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.” Id. at 19.

Because of this, Claim 4 failed to be “inherently inventive”  and further failed to sufficiently “‘transform’ the claimed abstract idea into a patent-eligible application.” Id. For all these reasons, claim 4 failed to involve an inventive concept necessary to convert the abstract idea into a patent-eligible process, and therefore was found invalid as a matter of law under 35 U.S.C. § 101.

Thus, looking at video game-related cases, such as Worlds, we get a preview of court treatment for VR-related patents. One lesson: it remains a best practice to draft software-related patent applications with an eye to overcoming issues related to 35 U.S.C. 101/Alice.

2. Utherverse Gaming LLC v. Epic Games (David Pointer)

In Utherverse Gaming LLC v. Epic Games 2021 U.S. Dist. LEXIS 248920 (W.D. Wash. Nov. 2, 2021), the district court considered subject matter eligibility issues for four patents involving metaverse-related technology in response to a motion to dismiss by Epic Games.  Utherverse brought an action alleging that Epic Games infringed four of Utherverse’s patents (United States Patent Nos. 8,276,071 ("071 Patent"); 8,812,954 ("954 Patent"); 9,123,157 ("157 Patent"); and 9,724,605 ("605 Patent").

Although the four patents survived the motion to dismiss, the district court concluded that the claims for the patents were directed to abstract ideas during step one of the subject matter eligibility analysis.  For example, the ‘071 Patent is related to solving “technological limitations within previous virtual reality environments that limited the number of people who could participate in the virtual environment.” Id. at *20.  Yet, the district court concluded that the “focus of these inventions amounts to an abstract concept — the organization of data and organization of human activity” Id. at *23.  The district court further stated that “the inventions do not specify a method for improving the relevant technology, rather the improvements alleged amounted to benefits flowing from explaining an abstract idea and using computer technology to implement that idea within multi-layered three-dimensional virtual environments.” Id.

For example, claim 1 of the ‘071 Patent is reproduced below:

A method for managing a multi-instance, multi-user animation process, comprising:

modeling, using a computer, a plurality of parallel dimensions in a computer memory, each of the plurality of parallel dimensions being a replica of a modeled three dimensional space configured for modeling occupancy and movement of multiple avatars within limits that are defined by at least one model of a three dimensional object;

assigning ones of a plurality of avatars within the computer memory so that each of the plurality of avatars populates a respective one of the parallel dimensions and each of the plurality of parallel dimensions is populated by a unique subset of the plurality of avatars, so as to prevent over-population of any one of the parallel dimensions by avatars; and

animating ones of the plurality of avatars populating different ones of the parallel dimensions in response to input from respective corresponding ones of the plurality of clients to provide virtual-reality data, using the computer, the virtual-reality data configured to enable clients to output an animated display of a corresponding one of the parallel dimensions and avatars populated therein.

As earlier indicated, the district court determined that claims are directed to an abstract idea under step one of the subject matter eligibility analysis.  The court reasoned that the inventions do not specify a method for “improving the relevant technology, rather the improvements alleged amount to benefits flowing from explaining an abstract idea and using computer technology to implement that idea within multi-layered three-dimensional virtual environments.” Id. at 23. Under step two, the court determined that Utherverse’s complaint sufficiently alleges that the patents contain an inventive concept for the purpose of defeating the motion to dismiss based on the plaintiff’s contentions that the patents describe certain benefits and technological advancements over the prior art.