It is interesting when core parts of our online experience -- things that you always took for granted -- all of the sudden become a legal mosh pit of patent lawsuits and cease/desist press releases. It usually stems from a company realizing they own a patent similar to a technology now ubiquitous with the Internet. Something that the WWW could not live without.
It is basically extortion, since technology companies and individual users could not eliminate it without derailing the fabric of the WWW. They would have no choice but to pay a licensing fee or exorbitant settlement cost.
For instance, originally the only image file supported by web browsers was
GIF. Or technically "
Compuserve GIF" since it was developed for that early
pre-AOL online service. As the WWW grew, all web pages used this format for their images.
Unisys decided they owned the original
GIF format and
sued everyone to ensure that they got credit for it (to the tune of $10 for every graphic software package sold that supported
GIF from 1994 - 2003).
The same thing happened
over the MP3 format (
Alcatel-
Lucent won $1.5 billion against Microsoft, which was later overturned). Microsoft again was sued (and lost $521M) over the fact
Internet Explorer supported plug-ins -- Flash,
Shockwave,
Quicktime, Java Applets, Active X, etc. -- which are necessary to do anything beyond reading web text and watching looped animations.
Google got hit with a lawsuit over
ranking paid search results based on bid price by Yahoo/Overture (the backbone of search engine marketing). It was settled when Yahoo granted Google a perpetual license for 2.7M Google shares.
And in the most bizarre -- and most potentially crippling -- British Telecom actually claimed in 2002 that they owned
a patent on web hyperlinks. Even though they filed it in 1976, 15 years before the WWW was born. It would have required any
ISP hosting pages with hyperlinks (um... all of them) to pay a license fee. Fortunately it was thrown out by the courts.
[Additional lawsuits submitted by readers include
online shopping carts and browser frames. Thanks Manuil and Gavin!]
The trend continues with the recent lawsuit announcement by Worlds.com (small virtual worlds company) against
NCSoft, over the use of
virtual world avatars. It hints that this is just the beginning:
Stephen Roth, attorney at the law firm representing Worlds.com., could not discuss which other companies Worlds.com might draw into the lawsuit, but said the patent covers "many ways of managing avatars in the virtual world," and there are "certainly other companies that could come within the scope of our patent claims." Roth said Worlds.com has yet to request a dollar amount for damages. The amount set will depend on "reasonable royalties" related to NCSoft's sales for online gaming and monthly service fees.
NCSoft is also a little guy in this space and a good test case for Worlds.com. If they win, then the real royalties come from the Big Guys such as online gaming companies
World of Warcraft and
Everquest. It could also impact virtual world companies such as
Habbo,
Second Life, and
There.com.
Even more lucrative (since they actually generate revenue) are kid-focused virtual world/gaming sites such as
Club Penguin and
Webkinz. Not to mention the marketing-driven virtual worlds from Disney (
1,
2,
3),
Barbie,
MTV, and even
Coke. And don't forget
Nintendo's extremely popular
Wii Miis.
Virtual worlds are widely viewed as the future of the
Internet. Avatars are the
GIFs of virtual worlds. It will be fascinating to see how this one plays out.