Microsoft's Xbox Live sparks patent suit

Paltalk, a New York-based company that facilitates online video chat, announced Wednesday that it has filed a patent infringement lawsuit against Microsoft in the U.S. District Court for the Eastern District of Texas. Paltalk says in its complaint that Microsoft infringes on Paltalk patents related to group-messaging systems, and that Paltalk seeks damages and a permanent injunction.

Paltalk alleges that Microsoft's Xbox Live online game service (whether accessed on the Xbox or the Xbox 360) infringes on two patents--U.S. Patent Nos. 5,822,523 and 6,226,686--and that privately held Paltalk has suffered resulting damages "in at least the tens of millions of dollars."

Microsoft is reviewing the complaint, a company representative said in an e-mail Thursday.

The complaint says Paltalk's technology covers a number of aspects of online communications, including game communications through a group message server. Xbox Live, which launched in late 2002, is a subscription-based service that lets Xbox owners play games against other players around the world.

So why was the suit against a Washington-based company filed in East Texas? Because, according to PC enthusiast site Ars Technica, "Microsoft has subscribers who reside in the Eastern District of Texas, and Microsoft provides infringing online services to its subscribers in this district."

Notably, the Eastern District of Texas has been identified as a magnet for patent suits due to fast-moving dockets and a disproportionate number of verdicts favoring patent holders in the past decade.