Yahoo sues Xfire for patent infringement

Web giant accuses game start-up of misappropriating "messenger service" technology; seeks injunction, money damages, jury trial.

In a twist on the classic David and Goliath formula, Web giant Yahoo is suing Menlo Park, Calif., start-up Xfire for patent infringement.

The basis of the complaint, filed last week in a U.S. District Court in Northern California and served on Xfire representatives two days ago, alleges that Xfire is willfully infringing on a patent controlled by Yahoo.

The patent, referred to as the '125 patent for the last three numbers of U.S. Patent No. 6,699,125, was granted to two then-Yahoo employees, Brian Gottlieb and Chris Kirmse, on March 2, 2004. As is typical, ownership of inventions by employees remains with the corporation the employees work for. Such ownership rights are usually sealed in hiring contracts signed by employees when they're hired.

In the case of the '125 patent, Gottlieb and Kirmse were employed by Yahoo when they developed technologies for a game-specific variation on Yahoo's popular Yahoo Messenger. Yahoo has been the sole owner of the '125 patent since it was granted.

The complaint describes the Yahoo Messenger instant-message service--in this case, the GameProwler instant messenger application--as one that "allows users to use a game server in connection with a messenger server to permit 'buddies' to know when other 'buddies' are playing games online, and easily join such games."

Xfire offers a client application that allows gamers to chat with other gamers online. It also serves to help quickly facilitate gameplay on remote servers.

The Xfire client was first made available in beta form last year. Xfire recently promoted the fact that it had reached 1 million registered users.

Yahoo's GameProwler appears to be the application it feels was compromised by the Xfire client. Industry sources told GameSpot that Xfire currently has a patent pending for its service.

Key to the complaint is Kirmse, now Xfire's vice president of engineering. Yahoo claims that "after Kirmse joined defendant (Xfire), defendant began to develop, test and offer instant messenger 'client' software and a messenger server that, when operated with game servers, offers the capabilities of the invention."

Kirmse joined Xfire in August 2003. He left Yahoo some years earlier, according to sources familiar with the situation.

Neither Yahoo employees connected with the complaint nor attorneys representing Yahoo in the matter would comment on the case. Xfire officials released a statement saying, "Xfire does not infringe the Yahoo patent. We are very disappointed in the way this has been handled to date. We are hoping that this will be resolved shortly."

Xfire was founded in 2002 by Mike Cassidy, Dennis "Thresh" Fong and Max Woon.

Lawyers familiar with patent law say a case like this could cost up to $2 million to defend and take up to two years to fully adjudicate.

Yahoo recently reported it had earned $372.5 million on revenue of $1.08 billion for the most recently concluded quarter. Prospects of a drawn-out legal imbroglio, therefore, wouldn't seem to threaten Yahoo's well-being.

Curt Feldman reported for GameSpot.

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