Innovention Toys, LLC v. MGA Entertainment, Inc.

Citations: 637 F.3d 1314; 98 U.S.P.Q. 2d (BNA) 1013; 2011 U.S. App. LEXIS 5664; 2011 WL 941563Docket: 2010-1290

Court: Court of Appeals for the Federal Circuit; March 21, 2011; Federal Appellate Court

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MGA Entertainment, Inc., Wal-Mart Stores, Inc., and Toys "R" Us, Inc. appeal a summary judgment from the United States District Court for the Eastern District of Louisiana, which ruled that they infringed U.S. Patent 7,264,242 (the '242 patent) held by Innovention Toys, LLC and that the patent was not invalid due to obviousness. The Federal Circuit affirmed the district court's finding of infringement based on the interpretation of the term "movable," but vacated the ruling on nonobviousness due to errors in the district court's factual findings. 

Innovention Toys’ patent covers a chess-like board game with a light-reflecting feature, involving a game board, laser sources that project light, and both mirrored and non-mirrored playing pieces. Players take turns moving pieces or rotating them and then firing lasers to eliminate opposing pieces. The claims in question all include a "key playing pieces" limitation where these pieces must be "movable." MGA contended that the '242 patent was invalid under 35 U.S.C. § 103, arguing that it was obvious in light of two articles on computer-based strategy games (Laser Chess and Advanced Laser Chess) and U.S. Patent 5,145,182 (the Swift patent), which describes a physical laser-based strategy game.

The objective of the games involves using a laser beam to eliminate the opponent's non-mirrored king piece through strategic placement and manipulation of mirrored game pieces. In both Laser Chess and Advanced Laser Chess, the king piece can move, with Advanced Laser Chess allowing kings to capture other pieces. The Swift patent describes a physical strategy game where players place mirrored pieces on a chess-like board to direct a laser beam towards the opponent's scoring module, scoring when the beam strikes it. MGA's Laser Battle is similarly a physical board game where players manipulate mirrored pieces to hit the opposing Tower piece. 

In "Classic Game Play," Towers remain in fixed positions, but during "Advanced Game Play," they can be relocated. On October 14, 2009, a district court ruled on Innovention's and MGA's motions for summary judgment regarding infringement and invalidity. The court granted Innovention's motion for summary judgment of literal infringement, interpreting "movable" as capable of movement per game rules, rejecting MGA's narrower definition. The court found that the Tower pieces in Laser Battle met the "movable" claim limitation, even though the game rules suggested they should remain stationary. The court noted the Towers could fit into recessed spaces and be rotated, indicating movement capability.

Additionally, the court ruled on Innovention's motion for summary judgment of nonobviousness, determining the Laser Chess references were not analogous since they pertained to electronic games. The court concluded that MGA could not substantiate its obviousness claim due to a lack of evidence regarding the ordinary skill level in the art, limiting their argument to what would be obvious to a layperson.

MGA failed to establish a prima facie case of obviousness in its challenge against Innovention, as it did not present evidence that a layperson would have been aware of the Laser Chess articles or had reasons to modify their teachings. The court recognized several secondary considerations of nonobviousness from Innovention, including: (1) significant commercial success with the sale of 140,000 games, despite Innovention being a small company with limited marketing, alongside evidence of global fan clubs and tournaments; (2) a long-felt need, evidenced by the game's rapid success and favorable media attention; and (3) industry accolades, such as nominations for awards from the International Academy of Science and the Toy Industry Association. Following these findings, the district court issued a permanent injunction in favor of Innovention on January 13, 2010, which MGA subsequently appealed.

The appellate court has jurisdiction under 28 U.S.C. 1295(a)(1) and reviews summary judgment decisions de novo. Summary judgment is warranted when there are no genuine disputes over material facts. In evaluating infringement, the court first interprets the patent claims and then compares these claims to the allegedly infringing device. Claim construction is a legal question reviewed de novo, while infringement is a factual question.

MGA did not contest the district court's interpretation of "movable" but argued that the court improperly expanded this definition during the infringement analysis by including "during game set up." MGA contended that Laser Battle’s Tower pieces do not meet the "movable" requirement as per the game rules, asserting that movement would only occur if players disregarded the rules. Innovention countered that the Tower pieces are indeed "capable of movement," as they can be positioned and rotated on the game board, unlike the stationary key pieces in the Swift patent. Innovention also highlighted that the game rules allow for more complex gameplay, indicating that the Towers can move during "Advanced Game Play."

The district court's decision that MGA's Laser Battle game literally infringes the claims of the ’242 patent is affirmed. The court rejected MGA's narrow interpretation of "movable," which was limited to movements allowed by game rules, and instead adopted a broader definition that differentiates "movable" from "mounted." The court noted that the key playing pieces in the ’242 patent can be repositioned at the start of the game and moved during play, unlike the fixed scoring modules in the Swift reference. This definition includes movement during setup and does not render "movable" superfluous, as it distinguishes the patent's key pieces from mounted components. Consequently, Laser Battle's Tower pieces satisfy the "movable" requirement based on their ability to be physically repositioned on the game board. MGA's argument against the district court’s construction is seen as indirect, and therefore, the construction is not reviewed. The court also affirms the summary judgment of literal infringement.

Regarding obviousness under the Patent Act, a patent may be deemed invalid if the differences between it and the prior art would have been obvious to a person with ordinary skill in the relevant field. The evaluation of obviousness involves several factual findings, including the scope of prior art and differences from the claimed invention. MGA contends that the asserted claims are obvious when considering the Laser Chess references and the Swift patent. MGA argues that the district court erred in classifying the Laser Chess references as non-analogous and in defining a person of skill as a layperson rather than a mechanical engineer knowledgeable in optics. Additionally, MGA claims that Innovention's assertions of secondary considerations do not sufficiently counter their case for obviousness.

Innovention contests MGA’s assertion of obviousness regarding the asserted claims, arguing that MGA has not established a prima facie case. Innovention notes that the Swift patent does not disclose movable key pieces, and the Laser Chess references lack any physical, non-virtual game components, rendering them non-analogous art. Innovention claims these references do not relate to their field of endeavor, which is a non-virtual, three-dimensional laser board game. They also assert that MGA did not provide evidence on the pertinent skill level, which defaults to that of a layperson, and argue that secondary considerations support non-obviousness.

The district court is criticized for erroneous factual findings in its obviousness analysis, particularly for misclassifying the Laser Chess references as non-analogous art and assuming a layperson's skill level. The criteria for determining analogous art involve whether the reference is from the same field of endeavor or is reasonably pertinent to the inventor's problem. Innovention contends that the Laser Chess references are relevant because they address similar game elements and objectives as the ’242 patent, which details the components, rules, and objectives of a laser-based strategy game. The court’s failure to recognize the relevance of the Laser Chess references to the invention's purpose constitutes a legal error. The ’242 patent and the Laser Chess references both focus on the essential elements of a laser-based strategy game, despite the former being physical and the latter electronic.

Laser Chess and Advanced Laser Chess present specific game pieces, rules, and objectives that yield a chess-like, laser-based strategy game, aiming for an engaging and winnable experience. Both games feature distinct playing pieces with unique abilities, turn rules, and a primary goal of capturing the opponent’s king. The ’242 patent aligns with these goals, emphasizing that its inventors faced challenges in game design, which includes variations in board layout, piece types, and movement mechanics that influence gameplay strategy and skill levels required.

The unique combination of game elements in the ’242 patent addresses the game design issue, suggesting that any strategy game elements would attract an inventor’s interest when tackling this problem. Basic game components are consistent across mediums, whether physical or digital, as illustrated by the Swift patent, which allows for modifications enabling single-player gameplay against a computer.

The district court's failure to recognize the Laser Chess references as analogous prior art is seen as a legal error that hindered its evaluation of the prior art's scope, differences from the claimed invention, and whether a person of ordinary skill would combine teachings from Laser Chess and the Swift patent, as per KSR International Co. v. Teleflex, Inc. These issues are remanded for further examination.

Additionally, a factual determination of the ordinary skill level in the art is essential for assessing obviousness under 35 U.S.C. § 103. A district court's incorrect finding on skill level can only result in reversible error if it impacts the final conclusion on obviousness. The district court found that MGA did not present evidence of the skill level in the art, concluding that MGA's argument hinges solely on a layperson's perspective. This was deemed erroneous, as MGA can argue for any skill level to support an obviousness claim, yet the factual record does not substantiate a finding based solely on layperson standards.

Innovention acknowledged to the district court that the ordinary skill level in the relevant field exceeded that of a layperson. The company argued that creating a three-dimensional game was complex, requiring significant expertise, as demonstrated by their team’s qualifications (a Ph.D. in mechanical engineering and two students) and the year-and-a-half development timeline. The district court appeared to concur, noting that some knowledge of mechanical engineering or optics was necessary. However, the court erred by assessing obviousness based on a layperson's perspective despite acknowledging a higher skill level in the art, leading to a flawed conclusion of nonobviousness. Consequently, the court must reevaluate the skill level in the art and adjust its obviousness analysis accordingly. Additionally, the permanent injunction granted to Innovention, based on the now vacated summary judgment of nonobviousness, is also vacated. The court affirmed the summary judgment of literal infringement but vacated the nonobviousness judgment, resulting in an affirmation in part and a vacation in part, with a remand for further proceedings.