Fantasysports.com filed its lawsuit late yesterday in Virginia's U.S. District Court seeking to bar Yahoo and the others from using its fantasy sports game concept. The suit asks for an unspecified amount in damages, though Fantasysports' attorney said the figure could reach at least $285 million.
The suit is one of several patent disputes that have popped up recently as more Internet companies race to have their business ideas protected, a practice that has been widely criticized.
Patrick Hughes, Fantasysports chief executive, said he was granted a patent in 1990 for his software for playing fantasy football. He said he learned that others started copying his methods several years later.
He tried to negotiate a licensing agreement with the defendants but was brushed off, said his attorney, Raymond Niro Sr., of the Chicago firm Niro, Scavone, Haller & Niro.
"It takes time to take on the caliber of defendants we have decided to take on," Niro said. "It's been estimated that the average patent infringement case costs $1.5 million or so."
Attorneys for CBS SportsLine had previously studied the patent and concluded that SportLine's program was lawful, spokesman Larry Wahl said, adding that the lawsuit "doesn't have merit."
Representatives for ESPN and Sandbox Entertainment could not immediately be reached for comment. Yahoo declined to be interviewed, saying it could not discuss matters that are pending litigation.
Fantasy and rotisserie leagues, in which fans "draft" teams and compete for points based on the performances of real players, have long been a popular sidelight to professional sports. The games have made a natural fit with online sports services, offering players a convenient forum to choose teams, trade players and tabulate scores.
"It's the hottest thing around," Niro said. "I play it at the office all the time. It allows you to micromanage your own football team."
The floodgates for business practices patents opened following a landmark July decision by a Federal Circuit Court of Appeals' three-judge panel that allowed patents of business ideas in a case called State Street Bank vs. Signature Financial Group.
"Before this case, business models were considered too nebulous to patent," said Palo Alto, Calif., attorney Daniel Harris, who specializes in Internet-related litigation for the firm Brobeck, Phleger & Harrison. "With State Street Bank, the court opened the doors to patenting concepts rather than what have traditionally been known as inventions that you can hold and see."
Since then, Harris said, large numbers of such business model patents have been issued, and many "aren't worth the paper they're printed on."
Patents secured by OpenMarket, for instance, kicked up a considerable furor. They covered so-called shopping carts in Web storefronts, certain secure-card payments over the Net, and certain ways of tracking visitors through a Web site.
Critics attacked the shopping cart patent in particular, arguing that it was an obvious concept because it copied a model that existed in the non-Internet business arena for years.
In October, online retailer Amazon.com sued Barnesandnoble.com over its patented 1-Click technology.
The 1-Click technology allows a user to make a purchase with a single mouse click, without having to retype billing and shipping information. A federal judge in Seattle granted a temporary restraining order against Barnesandnoble.com, reasoning that it was easy to get around the patent by simply clicking twice.
"For a long while, the opinions of people in the Internet community believed that methods of doing business should not be patented, that it should be free for anybody to use," said Palo Alto attorney Woody Higgins of Cooley Godward, an intellectual property law firm. "That viewpoint is now on the losing side."
Harris said he believes judges will begin interpreting such business model claims "very narrowly as a means of curtailing some of these patents."
As for Yahoo and the other powerhouse sports Internet firms, their best defense is to prove that Fantasysports did not provide "prior art," or fully investigate whether other companies had come up with a similar business idea, Higgins and Harris said.
Another company offering fantasy league games and software is Center Field Software. According to the company's Web site, it has offered online fantasy software since 1988, originally through a bulletin board service.