Paper No. 2
`Filed: December 3, 2020
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`
`
`MICROSOFT CORPORATION
`Petitioner,
`
`v.
`
`WORLDS INC.,
`Patent Owner.
`
`
`Trial No. IPR2021-00277
`Patent No. 8,082,501
`
`
`
`
`PETITION FOR INTER PARTES REVIEW OF
`U.S. PATENT NO. 8,082,501
`
`
`
`
`
`
`
`
`
`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`
`B. 
`
`C. 
`
`D. 
`
`III. 
`
`
`TABLE OF CONTENTS
`
`INTRODUCTION ........................................................................................... 1 
`A.  Overview of the ’501 Patent .................................................................. 2 
`B. 
`Overview of the Prior Art ...................................................................... 3 
`C. 
`Level of Skill in the Art ......................................................................... 6 
`GROUNDS FOR STANDING ........................................................................ 6 
`A.  Appropriate Legal Framework .............................................................. 8 
`B. 
`There Exists No Shared Control or Opportunity to Control Between
`Microsoft’s Proceedings on the One Hand and Either of Activision’s
`or Bungie’s Proceedings on the Other ................................................ 11 
`STATEMENT OF THE PRECISE RELIEF REQUESTED FOR EACH
`CLAIM CHALLENGED ............................................................................... 14 
`IV.  CLAIM CONSTRUCTION........................................................................... 15 
`V.  GROUNDS FOR UNPATENTABILITY ..................................................... 16 
`A. 
`[Ground 1A] Claims 1-6, 12, 14, and 15 are Obvious over Funkhouser
`and Sitrick .......................................................................................... 16 
`1.  Independent claim 1 ...................................................................... 19 
`2.  Independent claims 12 and 14 ....................................................... 30 
`3.  Dependent claims .......................................................................... 33 
`4.  Rationale to Combine .................................................................... 37 
`[Ground 1B] Claims 7 and 16 are Obvious over Funkhouser, Sitrick,
`and Wexelblat ...................................................................................... 39 
`[Ground 1C] Claims 8 and 10 are Obvious over Funkhouser, Sitrick,
`and Funkhouser ’93 ............................................................................. 40 
`[Grounds 2A-2C] Addition of Durward to Grounds 1A-1C ............... 47 
`i
`
`I. 
`
`II. 
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`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`VI.  PTAB DISCRETION SHOULD NOT PRECLUDE INSTITUTION .......... 52 
`A.  Discretion Under § 314(a) ................................................................... 52 
`1.  Factor 1: Institution Will Enable a Stay ........................................ 53 
`2.  Factor 2: Uncertain District Court Schedule ................................ 53 
`3.  Factor 3: Early Stage of Microsoft Litigation .............................. 55 
`4.  Factor 4: The Petition Raises Unique Issues ................................ 57 
`5.  Factor 5: The Petition Will Enable Cancellation of Claims That
`Might Be Reasserted ..................................................................... 58 
`6.  Factor 6: Other Considerations Support Institution ..................... 59 
`Discretion Under § 325(d) ................................................................... 60 
`B. 
`VII.  CONCLUSION .............................................................................................. 60 
`VIII.  MANDATORY NOTICES UNDER 37 C.F.R § 42.8(A)(1) ....................... 61 
`A. 
`Payment of Fees under 37 C.F.R. §§ 42.15(a) and 42.103 ................. 61 
`B. 
`Real Party-In-Interest Under 37 C.F.R. § 42.8(b)(1) .......................... 61 
`C. 
`Related Matters Under 37 C.F.R. § 42.8(b)(2) ................................... 61 
`D. 
`Lead And Back-Up Counsel Under 37 C.F.R. § 42.8(b)(3) ............... 61 
`E. 
`Service Information ............................................................................. 62 
`IX.  APPENDIX – LIST OF EXHIBITS .............................................................. 63 
`
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`
`ii
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`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`
`I.
`
`INTRODUCTION
`Microsoft Corporation petitions for Inter Partes Review (“IPR”) of claims
`
`1-8, 10, 12, and 14-16 (“the Challenged Claims”) of U.S. Patent No. 8,082,501
`
`(“the ’501 patent”).
`
`This petition advances a subset of the same grounds that were previously
`
`presented and finally decided in IPR2015-01319. EX-1024. Specifically, this
`
`petition advances the grounds based on Funkhouser, Sitrick, Wexelblat, and
`
`Funkhouser ’93 that were fully briefed, orally argued, and finally decided on the
`
`merits in a final written decision that found each of the Challenged Claims
`
`unpatentable, and this petition does so adopting the claim constructions applied in
`
`that earlier decision. See generally EX-1024. Indeed, after hearing the entirety of
`
`Worlds’ responsive arguments and after considering evidence offered by Worlds,
`
`including its expert testimony, the Board held that “claims 1–6, 12, 14, and 15 of
`
`the ’501 patent are unpatentable under 35 U.S.C. § 103(a) in view of” Grounds 1-3
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`of IPR2015-01319. EX-1024, 63.
`
`Based on a finding that was unrelated to the merits—i.e., that petitioner
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`Bungie, Inc. (“Bungie”) was procedurally barred from filing its petition—the
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`Board later vacated its final written decision and terminated the proceeding. See
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`generally EX-1025. In doing so, the Board never disturbed its findings on the
`
`merits of the grounds presented in IPR2015-01319; they remain sound.
`
`1
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`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`Microsoft—which in no way participated in the previous cases alleging
`
`infringement of the ’501 patent—has since been sued by Worlds on allegations of
`
`infringement based on Minecraft, which is entirely separate and unrelated to the
`
`video games earlier accused by Worlds. Compare EX-1021, 2-6 (alleging
`
`infringement of Minecraft video game) to EX-1022, 2-3 (alleging infringement of
`
`World of Warcraft and Call of Duty video games). As explained in Section II,
`
`supra, Microsoft is not barred from filing this petition against the ’501 Patent. On
`
`the contrary, Microsoft has filed this petition approximately two months of being
`
`served the complaint.
`
`Worlds should not be rewarded for choosing to delay assertion of the ‘501
`
`patent against Microsoft for 8-years after asserting against Activision. Nor should
`
`Microsoft be prejudiced by Worlds’ delay, which withheld the incentive for
`
`Microsoft to earlier bring this IPR. Rather, the PTAB should review under the
`
`circumstances to promote efficiency, particularly given the final written decision
`
`earlier reached by the PTAB on the grounds advanced by Microsoft in this petition.
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`Thus, simply applying the same findings and logic earlier endorsed in
`
`IPR2015-01319, the Board should again find the Challenged Claims unpatentable.
`
`A. Overview of the ’501 Patent
`In a general sense, the ’501 patent is directed to a client-server network
`
`system for enabling multiple users to interact with each other in a virtual world.
`
`2
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`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`See, e.g., EX-1001, Abstract, claim 1; see also EX-1002, ¶¶14-27. Each user is
`
`represented by an avatar and interacts with a client system that “is networked to a
`
`virtual world server.” EX-1001, 3:15.
`
`A user’s movement and viewing of the virtual world includes server-based
`
`processing of users’ virtual world positional information, in addition to client
`
`processing techniques similar to previous peer-to-peer systems. EX-1001,
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`Abstract, 2:3-9. The ’501 patent indicates “each user executes a client process to
`
`view a virtual world from the perspective [or point of view] of that user.” EX-
`
`1001, Abstract, 2:41-42; see also EX-1001, 5:27-35, 3:33-35, 45, FIG. 1. The ’501
`
`patent states that “[i]n order that the view can be updated to reflect the motion of
`
`the remote user’s avatars, motion information is transmitted to a central server
`
`process which provides position[al] updates to client processes for neighbors of the
`
`user at that client.” EX-1001, Abstract , 2:44-58; see also EX-1001, 5:52-59. As
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`the user avatar moves throughout the virtual space, the user’s client system sends
`
`the server updates. EX-1001, 3:39-44.
`
`Claim 1 of the ’501 patent is representative of the claims at issue. See EX-
`
`1002, ¶¶18-26.
`
`B. Overview of the Prior Art
`This petition is supported by the expert declarations of Dr. Michael Zyda.
`
`EX-1002; EX-1033; EX-1034. As explained in detail in Dr. Zyda’s declarations
`
`3
`
`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`and addressed in further detail below (Section V), virtual reality systems utilizing
`
`client/server network architecture were known prior to the alleged invention of the
`
`’501 patent, as were the server-side filtering and client processing that are the
`
`focus of the ’501 patent claims. EX-1002, ¶¶35-51, 66-157. This is illustrated in
`
`the prior art on which the current challenge is based, which are detailed in Section
`
`V.
`
`Funkhouser (EX-1005) described a virtual reality system utilizing a client-
`
`server architecture, server filtering, and client processing before the application for
`
`the ’501 patent. Funkhouser appears in a collection entitled PROCEEDINGS OF THE
`
`1995 SYMPOSIUM ON INTERACTIVE 3D GRAPHICS (“1995 SI3D”). EX-1006. The
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`1995 SI3D symposium was sponsored by ACM SIGGRAPH, and took place on
`
`April 9-12, 1995. EX-1006, Title Page. Funkhouser, in particular, was presented
`
`on the morning of April 11, 1995. EX-1006, 2. Dr. Zyda served as the chair of
`
`this symposium in 1995 and has personal knowledge that copies of the
`
`proceedings, which included Funkhouser, were distributed to the approximately
`
`250 attendees at the symposium. EX-1002, ¶¶41-42. Accordingly, Funkhouser
`
`was published and distributed no later than April 12, 1995, the final day of the
`
`1995 SI3D symposium, and qualifies as prior art under 35 U.S.C. § 102(a).
`
`Moreover, the Proceedings publication was provided to ACM members pursuant to
`
`its Member Plus program, “which means distribution of the proceedings to more
`
`4
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`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`than 4,000 individuals.” EX-1006, 4; see also EX-1007.
`
`Sitrick (EX-1013) describes the ability for a user to customize their own
`
`avatar, whereby “[t]he user selects a distinguishable visual image representation by
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`which that user is identified,” either by “creat[ing] an original image or select[ing]
`
`one of a predetermined set of visual images.” EX-1013, Abstract; see also id. at
`
`11:41-45.. Sitrick, issued on June 4, 1985 and qualifies as prior art under 35
`
`U.S.C. § 102(b).
`
`Wexelblat (EX-1020) is directed to “generating dynamic, interactive visual
`
`representations of information structures within a computer,” which the reference
`
`refers to as a “cyberspace.” EX-1020, Abstract; 1:20-28. Wexelblat is a U.S.
`
`Patent issued on June 4, 1991, and qualifies as prior art under 35 U.S.C. § 102(b).
`
`Funkhouser ’93 (EX-1017), discloses an “optimization algorithm” that
`
`calculates whether objects within a virtual environment should be displayed at a
`
`reduced level of detail, or even not at all, based on a cost/benefit analysis in view
`
`of a target frame rate. See, e.g., EX-1017, 251, 253; EX-1002, ¶48. Funkhouser
`
`’93 was included in a printed collection of presentation materials handed out at an
`
`ACM conference and subsequently publicly available from ACM. EX-1018; EX-
`
`1002, ¶48. Funkhouser ’93 was distributed as a printed publication no later than
`
`August 6, 1993, the final day of the 1993 SIGGRAPH conference, and qualifies as
`
`prior art under 35 U.S.C. § 102(b). Id.
`
`5
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`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`Durward (EX-1008) describes a “virtual reality system” where “multiple
`
`users located at different remote physical locations may communicate with the
`
`system.” EX-1008, Abstract, 1:46-48. Durward is a U.S. Patent filed on Sep. 23,
`
`1993, and qualifies as prior art under 35 U.S.C. § 102(e).
`
`For these reasons, and as explained below and in Dr. Zyda’s declaration, the
`
`methods and system for allowing a plurality of users to interact with a virtual space
`
`as recited in the Challenged Claims were already described in the prior art as of the
`
`earliest priority date for the ’501 patent.
`
`C. Level of Skill in the Art
`As Dr. Zyda explains, a person of ordinary skill in the relevant field prior to
`
`November 13, 1995 (“POSITA”) would include someone who had, through
`
`education or practical experience, the equivalent of a bachelor’s degree in
`
`computer science or a related field and at least an additional two years of work
`
`experience developing or implementing networked virtual environments. EX-
`
`1002, ¶52-57.
`
`II. GROUNDS FOR STANDING
`Petitioner certifies the ’501 patent is available for IPR. This petition is being
`
`filed within one year of service of a complaint against Petitioner. Petitioner is not
`
`barred or estopped from requesting this review of the Challenged Claims.
`
`In 2012, a complaint of infringement was filed against Activision Blizzard,
`
`6
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`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`Inc., Blizzard Entertainment, Inc., and Activision Publishing, Inc. (collectively
`
`“Activision”). EX-1023. The complaint was later amended, but did not add any
`
`parties. EX-1022. In 2015, Bungie, Inc. filed a petition for IPR against the ’501
`
`patent. EX-1028. The Board ultimately terminated this proceeding, finding that
`
`Bungie had “not met its burden of persuasion to show that its Petitions are not
`
`time-barred under § 315(b) based on a complaint served on an alleged real party in
`
`interest more than a year earlier.” EX-1025, 45. In reaching that finding, the
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`Board continually highlighted Bungie’s failure to offer evidence supporting its
`
`arguments regarding Activision’s control and opportunity to control. EX-1025, 32
`
`(“Petitioner points to no evidence in the record from which we could find that
`
`Petitioner’s patentability analyses embodied in the Petitions were not performed
`
`pursuant to the Agreement”), 35 (“Without any evidence indicating, for example,
`
`whether Activision sought indemnification from Bungie after the notification to
`
`Activision that Patent Owner intended to add Destiny to the infringement
`
`litigation, we cannot determine Activision’s involvement”), 38 (“However, it was
`
`incumbent upon Petitioner to provide persuasive argument supported by evidence
`
`to reduce or remove any speculation” (emphasis in original)), 40 (“Accordingly,
`
`making any findings in this regard would require us to speculate because Petitioner
`
`has not produced evidence of communications between it and Activision”).
`
`In contrast, the evidence in support of Microsoft’s instant petition directly
`
`7
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`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`addresses the very issues for which the Board previously found Bungie’s record
`
`lacking. Specifically, Microsoft provides declarations that attest to its complete
`
`lack of control in the prior proceedings involving the ’501 patent, the absence of an
`
`opportunity to control them, and that neither Activision nor Bungie are controlling
`
`or have had the opportunity to control Microsoft’s co-pending litigation or this IPR
`
`petition. See EX-1026, 1027. Thus, for at least the following reasons, Microsoft is
`
`neither a real party-in-interest nor a privy of either Activision or Bungie with
`
`respect to these prior proceedings. Similarly, neither Activision nor Bungie is a
`
`real party-in-interest or privy of Microsoft with respect to this IPR petition.
`
`A. Appropriate Legal Framework
`The Federal Circuit specifically addressed the “legal standard for privity” in
`
`WesternGeco LLC v. ION Geophysical Corp., 889 F. 3d 1308, 1316-1319 (Fed.
`
`Cir. 2018).1 “Privity is essentially a shorthand statement that collateral estoppel is
`
`to be applied in a given case.” Taylor, v. Sturgell, 553 U.S. 880, 894-95 (2008)
`
`(citing 77 Fed. Reg. at 48,759) (emphasis added). Yet, based on its analysis of
`
`
`1 Neither of the Federal Circuit’s subsequent decisions in Applications In Internet
`
`Time, LLC v. RPX Corp. (“AIT”), 897 F.3d 1336, 1360 (Fed. Cir. 2018) or Worlds
`
`Inc. v. Bungie, Inc. (“Worlds”), 903 F. 3d 1237 (Fed. Cir. 2018) invalidate this
`
`precedent.
`
`8
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`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`Taylor with respect to IPRs, the Federal Circuit cautioned against an over-
`
`application of privity and its preclusive effect. See WesternGeco, 889 F.3d at 1319
`
`(“Because nonparty preclusion risks binding those who have not had a full and fair
`
`opportunity to litigate, the Supreme Court has cautioned that there is a general rule
`
`against nonparty preclusion, subject to certain exceptions.” (emphasis added)).
`
`With regard to RPI, the Federal Circuit focuses more specifically on the
`
`relationship of an unnamed party to the IPR proceeding. Wi-Fi One, LLC v.
`
`Broadcom Corp., 887 F. 3d 1329, 1351 (Fed. Cir. 2018) (“whether a petition has
`
`been filed at a nonparty’s ‘behest’” is “at the heart” of “[d]etermining whether a
`
`non-party is a ‘real party in interest’”). As with privity, though, the Board has
`
`acknowledged that it “must be cautious not to ‘overextend[]’ the reasoning set
`
`forth in AIT to any situation where ‘a party benefits generally from the filing of the
`
`Petition and also has a relationship with the Petitioner.’” Ventex Co., Ltd. v.
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`Columbia Sportswear North America, Inc., IPR2017-00651, Paper 148 at 10
`
`(PTAB Jan. 24, 2019) (precedential) (citations omitted).
`
`“Although there are many factors relevant to whether a non-party is a real
`
`party in interest or privy, important inquiries are ‘whether the non-party exercised
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`or could have exercised control over a party’s participation in a proceeding,’
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`whether the non-party funds and directs the inter partes review proceeding, and
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`whether the petition was filed at the behest of a non-party.” NOF Corporation V.
`
`9
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`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`Nektar Therapeutics, IPR2019-01397, Paper 24, (PTAB Feb. 10, 2020) (citing
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`Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,759–60; Consolidated
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`Trial Practice Guide 14, 16–17 (Nov. 2019)). Indeed, the Board’s precedent
`
`explores issues of control with respect to an unnamed non-party and representation
`
`of that party’s interests when evaluating both RPI and privity.
`
`In its precedential Ventex decision, the Board’s RPI analysis focused on the
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`fact that petitioner was obligated to indemnify its customer, which afforded
`
`petitioner the opportunity to control the co-pending litigation. Ventex., IPR2017-
`
`00651, Paper 148 at 6-8. Further, the Board highlighted Petitioner’s “express
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`desire to shield its customers and potential buyers from” Patent Owner, which led
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`the Board to conclude that petitioner was representing the customer’s interests. Id.
`
`at 8-10. With respect to privity, the Board focused on the fact that petitioner was
`
`acting as a “proxy” for the barred customer and that evidence suggested the barred
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`customer had paid for the petitions. Id. at 11-15.
`
`Yet, the facts present in Ventex are in contrast with more common business
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`relationships between parties that the Federal Circuit has found do not provide an
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`opportunity for control, and therefore do not give rise to privity or RPI. In
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`WesternGeco, the Federal Circuit found that the relevant parties were not in
`
`privity, despite the existence of (1) a “contractual and fairly standard customer-
`
`manufacturer relationship regarding the accused product” between the parties, and
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`10
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`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`(2) a purchase agreement with potential indemnity obligations. See WesternGeco,
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`889 F.3d at 1321. The Federal Circuit held similarly in Wi-Fi One, LLC v.
`
`Broadcom Corp., where “evidence showed that Broadcom’s interests as to the
`
`issue of infringement were generally aligned with those of its customers, and that
`
`Broadcom had indemnity agreements with at least two of the D-Link defendants,”
`
`yet “the evidence did not show that Broadcom had the right to control that
`
`litigation or otherwise participated in that litigation to the extent that it should be
`
`bound by the results.” Wi-Fi One, 887 F. 3d at 1341. In other words, the “right to
`
`control” a litigation requires more than the existence of commercial links between
`
`two companies related to the product(s) at issue in the litigation, even when
`
`combined with agreements between the parties that contain potential indemnity
`
`language. Id.
`
`B.
`
`There Exists No Shared Control or Opportunity to Control
`Between Microsoft’s Proceedings on the One Hand and Either of
`Activision’s or Bungie’s Proceedings on the Other
`As explained by Mr. Michael Allen, Microsoft’s records indicate there has
`
`been no control or funding by Microsoft of either Activision’s litigation or Bungie’s
`
`IPRs. EX-1026, ¶¶3-5. Nor has either Activision or Bungie controlled or funded
`
`either Microsoft’s litigation or this petition. Id. at ¶6. That stands to reason.
`
`The video games Worlds included in its complaint against Activision (i.e.,
`
`World of Warcraft and Call of Duty) were published and owned by Activision or its
`
`11
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`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`subsidiaries (e.g., Blizzard Entertainment). EX-1029, 1; EX-1030, 1. The Destiny
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`game that was the focus of the Bungie IPR was developed by Bungie and
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`“exclusively published and distributed by Activision.” EX-1025, 7-8. The
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`content—developed and published by the parties of these prior proceedings—is the
`
`focus of those proceedings. In contrast, the Microsoft litigation involves an entirely
`
`separate video game (Minecraft), which Worlds’ complaint asserts is published and
`
`owned by entirely separate and distinct entities from those involved in the prior
`
`proceedings. EX-1023, ¶¶5-13 (asserting that Microsoft and Mojang AB own the
`
`Minecraft “product” alleged to have infringed Worlds’ patent). Indeed, neither
`
`Activision nor Bungie publish or own the Minecraft products at issue in the
`
`Microsoft litigation. Thus, the parties serve their own individual interests with
`
`respect to their own proceedings.
`
`Beyond lack of actual control, Microsoft also lacked the opportunity to control
`
`either of the Activision litigation or Bungie IPRs. As Mr. Allen attests, his search
`
`of Microsoft’s records found no indication that either Activision or Bungie have ever
`
`sought indemnity from Microsoft with relation to the prior proceedings. EX-1026,
`
`¶¶3-4. This directly contrasts the earlier Bungie IPR, in which the Board focused on
`
`the lack of evidence regarding “whether Activision sought indemnification from
`
`Bungie.” EX-1025, 35. Nor did Mr. Allen’s search identify any records to suggest
`
`Microsoft ever participated in or funded the defense of the above-noted Activision
`
`12
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`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`litigation or Bungie’s IPR petition. EX-1026, ¶¶5. Without either Activision or
`
`Bungie proffering control through a request for indemnity or Microsoft exercising
`
`control of these earlier proceedings, there could be no opportunity for control. Thus,
`
`this IPR is not at the “behest” of either Activision of Bungie, and Microsoft is not
`
`representing either of these parties’ interests.
`
`Indeed, because Activision is unrelated to Microsoft’s litigation, and
`
`Microsoft owes Activision no duties in relation to Activision’s litigation, Activision
`
`could settle out of the co-pending litigation, and Microsoft’s position would be
`
`unchanged—it would owe no obligations to Activision, it would still be defending
`
`its co-pending litigation against Worlds, and it would still seek to pursue its IPRs.
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`Activision does not and cannot represent Microsoft in any of these proceedings;
`
`Microsoft has and continues to represent and defend its own interests, without
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`reliance on any control or funding of Activision or any other party. Accordingly,
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`Microsoft’s interests cannot be adequately represented by Activision or anyone else
`
`with the same interests who is a party in a litigation.
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`Further, Microsoft is a separate and distinct company from each of Activision
`
`and Bungie, underscoring that Microsoft lacked any opportunity to control the prior
`
`proceedings. As described by Mr. Matthew Skelton, while Microsoft once owned
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`Bungie, Bungie was reconstituted as a separate legal entity from Microsoft in 2007,
`
`five years before Worlds suit against Activision, and well before the release of the
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`13
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`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`Destiny video game—the product relating Bungie to the Activision suit. EX-1027,
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`¶2; see also EX-1025, 7-10 (explaining Bungie’s relationship to Activision
`
`Litigation). When Bungie reconstituted, it formed and maintained an independent
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`management structure that was responsible for the company’s day-to-day decision-
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`making. EX-1027, ¶2. The members of this independent management structure
`
`were not Microsoft employees and were not controlled by Microsoft. Id. Thus, at
`
`the relevant time, there was no pre-existing substantive legal relationships between
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`Bungie and Microsoft with regard to these IPRs or litigations.
`
`For the foregoing reasons, Microsoft is not an RPI or in privity with either of
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`Activision or Bungie, and the Supreme Court’s “general rule against nonparty
`
`preclusion” should be applied.
`
`III. STATEMENT OF THE PRECISE RELIEF REQUESTED FOR EACH
`CLAIM CHALLENGED
`Petitioners request an IPR and cancellation of the Challenged Claims on the
`
`grounds below.
`
`Ground Claims
`
`Basis For Rejection Under §103
`
`1A
`
`1B
`1C
`
`2A
`
`1-6, 12,
`14, 15
`7, 16
`8, 10
`
`1-6, 12,
`14, 15
`
`Funkhouser, Sitrick
`
`Funkhouser, Sitrick, Wexelblat
`Funkhouser, Sitrick, Funkhouser
`’93
`Funkhouser, Sitrick, Durward
`
`14
`
`

`

`Ground Claims
`
`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`Basis For Rejection Under §103
`
`2B
`
`2C
`
`7, 16
`
`8, 10
`
`Funkhouser, Sitrick, Durward,
`Wexelblat
`Funkhouser, Sitrick, Durward,
`Funkhouser ’93
`
`
`
`IV. CLAIM CONSTRUCTION
`The USPTO construes claims under the Phillips standard. Phillips v. AWH
`
`Corp., 415 F.3d 1303 (Fed. Cir. 2005). Under the Phillips standard, claim terms
`
`are given their ordinary and customary meaning, as would be understood by a
`
`POSITA in the context of the entire patent disclosure. Thorner v. Sony Comput.
`
`Entm’t Am. LLC, 669 F.3d 1362, 1365–66 (Fed. Cir. 2012).
`
`In its previous final written decision, the Board construed two terms of the
`
`’501 patent under the Phillips standard. EX-1024, 12. The Board construed only
`
`these two terms, having available to it the briefing of both Bungie and Worlds and
`
`the claim construction order issued in the Activision litigation. See EX-1031, 10, n.
`
`1. No subsequent rulings addressed—much less nullified—the Board’s
`
`constructions. Thus, this petition adopts the Board’s previous constructions, a
`
`summary of which follows.
`
`Claim Term
`“determining,” as recited in claims 1,
`12, and 14
`
`Board’s Previous Construction
`Need not be construed to resolve the
`issues presented in the case. EX-1024,
`13.
`“avatar,” as recited in claims 1, 12, and “the terms ‘an avatar’ . . . , ‘the other
`
`15
`
`

`

`14
`
`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`user avatars’ . . . , ‘avatars’ . . . , and
`‘the other users’ avatars’ . . . must be
`three-dimensional.” EX-1024, 14-18.
`
`Petitioner notes that, in addition to the above two terms, the Activision court
`
`issued a Markman order that also construed the term “a participant condition.”
`
`Specifically, the district court held that the term “participant condition” means “a
`
`condition set by the client.” EX-1032, 18. Worlds never raised this construction in
`
`the IPR, so neither Bungie’s grounds nor the Board’s consideration of them
`
`directly addresses this construction. Nonetheless, to be prudent, Microsoft
`
`addresses the district court’s construction of “participant condition” through the
`
`addition of Grounds 2A-2C—each based on the same references of Grounds 1A-
`
`1C, but further incorporating the teachings of Durward. Section V.D, infra.
`
`V. GROUNDS FOR UNPATENTABILITY
`A.
`[Ground 1A] Claims 1-6, 12, 14, and 15 are Obvious over
`Funkhouser and Sitrick
`As described in further detail below, claims 1-6, 12, 14, and 15 of the ’501
`
`patent would have been obvious to a POSITA in view of Funkhouser and Sitrick.
`
`EX-1002, ¶¶68-133.
`
`Funkhouser describes a client-server system for multi-user virtual
`
`environments. EX-1005, Title. The system disclosed in Funkhouser “supports
`
`real-time visual interaction between a large number of users in a shared 3D virtual
`
`environment.” EX-1005, 01. As described in Funkhouser, a “key feature of the
`
`16
`
`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`system is that server-based visibility algorithms compute potential visual
`
`interactions between entities representing users in order to reduce the number of
`
`messages required” to maintain the virtual environment across a network. Id.
`
`Funkhouser discloses that this message reduction is accomplished by sending
`
`avatar update information “only to workstations with entities that can potentially
`
`perceive the change.” Id.; see also EX-1002, ¶¶69-70.
`
`Funkhouser explains that this server-side filtering is based on computations
`
`regarding which users are potentially visible to each other, based on their location
`
`in the virtual environment. EX-1005, 03 (Fig. 6); see also EX-1002, ¶70.
`
`Funkhouser further explains that these computations regarding potential visibility
`
`are then used to filter distribution of update messages only to those users to which
`
`the updates are potentially relevant (i.e., potentially visible). EX-1005, 04 (Fig. 7);
`
`see also EX-1002, ¶71.
`
`
`
`17
`
`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`Funkhouser also discloses the client processing in the manner claimed in the
`
`’501 patent. Upon receiving the server-filtered update information, the client
`
`workstation then “process[es] the update messages” and “simulat[es] behavior for
`
`a small subset of the entities participating in the simulation.” EX-1005, 08. This
`
`processing includes a determination of which user avatars should be “displayed on
`
`the client workstation screen from the point of view of one or more of its entities.”
`
`EX-1005, 03; see also EX-1002, ¶72.
`
`Funkhouser’s Figure 6 (annotated version shown here) provides an example
`
`illustrating server-side filtering and client processing as claimed in the ’501 patent.
`
`EX-1002, ¶73. As Dr. Zyda explains, Funkhouser illustrates a virtual space
`
`(marked with Box #1) including all user entities (i.e., avatars) A, B, C and D
`
`positioned therein. The shaded area Funkhouser shows in “stipple” (marked with
`
`Box #2) includes users A and B (less than all users), and represents the cells within
`
`the virtual space that are potentially visible to A. Client A will only receive
`
`positional updates from the server for users which are within this area (Box #2).
`
`The cross-hatched region (marked with Box #3) represents A’s perspective or field
`
`of view. Thus, after receiving the filtered positional updates from the server for
`
`less than all users as shown by Box #2 (i.e., the “receiving” step of claim 1), the
`
`client responsible for A will determine which, if any, remote users fall within A’s
`
`field of view in order to display the perspective from A’s avatar as shown by Box
`
`18
`
`

`

`U.S. Patent No. 8,082,501
`Attorney Docket No. 42342-0086IP1
`#3 (i.e., the “determining” step of claim 1). Id.
`
`Funkhouser also discloses that each avatar “has a geometric description and
`
`a behavior” and that a user can update the “geometry” of their own entity. EX-
`
`1005, 03. While thus Funkhouser discloses that a user may update the appearance
`
`of their avatar, to the e