No Hero Souls for Patent Trolls

In the Clicker Heroes video game, players click on enemies to kill them, releasing gold rewards. If players collect rubies and gold, they obtain a currency called “hero souls.”

Using a series of small maneuvers to collect “hero souls” sounds like a fun virtual game. Unfortunately, patent trolls in the real world are doing this to collect startup souls.

On March 1st, Playsaurus, the creator of Clicker Heroes and upcoming Clicker Heroes 2, discovered this patent troll game the hard way when it was threatened with a lawsuit. The demand letter alleged that Playsaurus owed a $35,000 fee to cover a patent for “electronic tokens.” GTX Corp, the owner of patent no. 7,177,838 (or ‘838), claims to have patented “the acquisition and utilization of electronic tokens by consumers.”

With a patent that covers almost any kind of digital credit or currency, you would think the holder would have the right to sue any e-commerce platform and it turns out, it did just that. Patent ‘838 became a litigation weapon against Apple, Google, Amazon, eBay, and others. Most of that litigation was settled in 2009, before Congress created processes for quickly challenging bad patents. The patent owners went quiet for a few years, probably savoring their gold.

The U.S. patent system has improved remarkably since the America Invents Act of 2011 put in place a series of steps to weed out broad, vague, and otherwise bad patents, like ‘838. But the fact that a patent troll can go after a small company, demanding tens of thousands of dollars — just under the average cost for challenging a patent — for a bad and soon-to-be-expired patent, proves that the system’s not perfect.

Almost a decade after the 2009 settlements, and with just two years left until the patent expires, GTX is coming out from under the bridge to shakedown small gaming studios, like Playsaurus. The Los Angeles-based game studio has under ten employees, and the settlement amount is about half a year’s worth of salary for one of their engineers, making the shakedown particularly painful for a small team.

“I kind of feel like it’s as if someone walked into my home with a knife and asked me for $35,000, except it’s legal,” said CEO Thomas Wolfley said in an interview with ArsTechnica. “I see this as a personal attack, and the cost in my own time and well-being has already been significant and draining. It is a shame that the United States legal system can’t provide a quick and easy way for us to punish them for these actions.”

As a lawyer for Playsaurus explained in his response to GTX, the concept covered by the ‘838 patent should be unpatentable because its an abstract idea carried out by a computer, a principle bolstered by the Supreme Court’s decision in the 2014 case Alice Corp. v. CLS Bank. As Playsaurus’ lawyer explained, “after Alice, buying and using tokens for transactions (like a kid would do at Chuck E. Cheese’s), cannot be patented by simply reciting computers and the Internet.”

The case against Playsaurus makes it clear that the U.S. Patent and Trademark Office needs to work harder at weeding out bad patents, including through the challenge process established by the 2011 law. Congress also needs to protect those programs from attacks by anyone who wants to weaken them. These processes were created to allow parties to challenge bad patents without a time-consuming and costly court battle.

While many opt for a quick settlement when faced with a costly legal battle, Wolfley is the hero of this story. Standing up to the patent troll is nowhere near as simple as clicking on an enemy in a video game. Here’s hoping Playsaurus vanquishes this enemy and inspires other innovators faced with unreasonable demands to earn some “hero souls” of their own.