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Michael Katz
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Close follower of Social Media and Gaming stocks. Offers Social Media consultancy for startups all over the world providing advice on all aspects of marketing, user acquisition and retention.
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  • Are Zynga's Patents Worth A Dime? 0 comments
    Feb 6, 2013 3:01 AM | about stocks: ZNGA, GOOG, FB

    As the clock ticks down to Zynga's (NASDAQ:ZNGA) earnings call later today, there has been much speculation about the flurry of patents that Zynga has locked down over the past year. But do these patents really give a solid security blanket to the company developing the product behind the patent or do they just stand in the way of innovation?

    Will Zynga really pursue any and every new innovation of technology with an underlying claim of copyright?

    In August last year, it was reported in the Wall Street Journal that Walker Digital filed around 30 suits targeting hundreds of companies. This was done after Jay Walker, owner of Walker Digital had not received the asking price for his portfolio of patents. Among the companies targeted were Zynga, Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN). It was also reported that the case was dismissed four days after re-assigning 33 of those patents to Zynga, even though the actual patent referred to in the lawsuit was not re-assigned to Zynga. The term used for enforcing patents for profit is "patent trolling". Surely Zynga will not become a patent trolling business. The details of the Walker Digital patent reassignment have never become public knowledge.

    Google, Dell (NASDAQ:DELL), Facebook (NASDAQ:FB), Redhat, Zynga, Homeaway(NASDAQ:AWAY), Intuit (NASDAQ:INTU) and Rackspace (NYSE:RAX) filed an amicus brief against Alice Corporation at the end of 2012. This was done based on the notion that the patents filed by Alice Corp were too vague. Additionally, the brief contained language which ensured future patents be written in very specific language concerning the actual idea behind the patent. The brief quotes "Abstract patents are a plague in the high tech sector".

    The brief then continues by distinguishing all of the patents filed by Zynga, Google, Facebook etc. from the patent that they are attempting to tear apart by claiming that to make a valid case for a patent , the patent need to contain the following elements:

    · Add steps that are conventional or obvious

    · Add non-specific steps that don't limit the claim's scope

    · Limit ideas to only to a particular technological environment, like a computer

    · Add insufficient information to a claim and don't specify a specific machine an idea is performed on

    Last Friday saw the US Patent Office issue a preliminary notice overturning the famous 'Steve Jobs' patent, describing multi touch on-screen technology. Although not the final outcome as Apple has two months to appeal, it marks a huge turnaround in the world of patent law.

    So, back to the original question of the 50 plus patents currently filed by Zynga. Are they actually worth a dime or will future loopholes always be found in the interest of innovation which will declare today's patent as tomorrow's 'abstract'?

    Stocks: ZNGA, GOOG, FB
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