For three long years, a small toy company headed by a UCCS professor has been at war with one of the country’s toy giants.
Innovention Toys, LLC, founded by Michael Larson, director of the Mind Studios at the University of Colorado at Colorado Springs, has sued MGA Entertainment, Inc., the mega toy-maker known for its popular Bratz dolls and Little Tykes line, saying the company ripped off the design for his laser board-game, called Khet.
The David-and-Goliath battle, which already has played out in district court and a federal court of appeals, comes down to whether the idea behind Khet was “obvious” because of a 1980s Atari computer “Laser Chess” game and that it never should have been issued a patent.
A trial is set for April 30, 2012 in Louisiana, where the game was created.
It’s a case that highlights the ins and outs of U.S. patent law and has attorneys blogging like anxious spectators about which company will emerge as the victor.
“Most people have this idea that once you get a patent, that you are protected,” Larson said. “Even the validity of the patent is tested in the courts.”
Larson is a college professor with a doctorate in engineering who became interested in entrepreneurialism while teaching design at Tulane University back in 2003. He had a government grant to pay for studies on the effects of lasers on a variety of materials.
“Everyone coming into my lab would get excited seeing my lasers, because lasers are cool,” he said.
Lasers were so cool that that he came up with the idea to incorporate them into a board game. He enlisted the help of engineering graduate students Luke Hooper and Del Segura, who are his partners in Innovention Toys.
The engineers spent a year creating Khet, which is the Egyptian word for fire. The game features lasers, mirrors and a classic game strategy. A mounted laser allows players to fire on their opponents’ pieces, including pharaohs, pyramids and scarabs.
In 2005, they filed for a patent on the game.
“We scraped together some money and formed a company and decided to have 5,200 units made,” Larson said. “I thought that would be all the games we would ever buy and I would have them in my garage forever.”
The partners took the game to the 2005 International Toy Fair, where it was a hit with industry journalists and was included in Wired magazine’s coveted Holiday Gift Guide.
“The buzz we created was astounding,” Larson said. “We were the darlings of that toy fair.”
Internet orders were coming in from individuals and small mom-and-pop toy stores across the country. In the second year of business, Innovention Toys, with its one game, did more than $1 million in sales.
“At the end of 2006, my phone started ringing off the hook from people inside the toy industry and friends familiar with the game,” Larson said. “They were seeing a game pop up in Wal-Mart that looked just like our game.”
MGA Entertainment put out a game called Laser Battle — it had the same rules as Khet and similar laser and mirrored game pieces. Larson wrote to the company demanding it stop selling the game and provided copies of his patent-pending documents.
Innovention Toys’ sales receipts show that Ami Shapiro bought two Khet games in 2005 using an MGA credit card. MGA filed for a patent on Laser Battle in 2006. But, it was denied on the basis that Innovention Toys already had the patent, Larson said. MGA kept selling its game.
California-based MGA Entertainment did not respond to CSBJ’s requests for interviews.
An attorney representing MGA declined to comment. Shapiro, who is listed as the inventor of Laser Battle on boardgamegeek.com — a data base of board games — did not respond to an interview request.
MGA has played the court game before.
In August, it won $85 million in punitive damages from Mattel, the makers of Barbie, in a fight over trade secrets. The company’s CEO told the Wall Street Journal in January that it had spent about $150 million in legal fees.
MGA never responded to Larson’s letters, even after Innovention Toys received its patent in 2007. That year, Innovention filed suit in U.S. District Court for the Eastern District of Louisiana.
So far, the war over laser battle has cost Innovention more than $1 million in legal fees.
“This company — they are adept at working the legal system and they have managed to stretch this thing out,” Larson said. “The tactic here seems to be to wear us down.”
Toys in the U.S. are a $21 billion industry. Without marketing, Khet has proved to be a successful product, one worth fighting for, said Mike Martensen, Colorado Springs attorney who specializes in intellectual property.
“The key to understanding big business is the court system is an aspect of doing business,” Martensen said. “Some businesses don’t view it as having a bad reputation for suing or being sued. MGA is considered a very litigious company.”
Patents are awarded when the invention is new and novel. It must have utility, or be something that people are interested in; and, it has to be nonobvious. This is one of the trickier parts of the patent law and it can be lost on a jury, Martensen said.
Nonobvious typically means that a person having ordinary skill in the area related to the invention would not find it obvious.
MGA claims Khet is obvious because a 1980s Atari computer game called Laser Chess already existed.
In 2009, a district court judge ruled that MGA had infringed on Innovention’s patent and said the game was not obvious. MGA appealed to U.S. Court of Appeals for the Federal Circuit. That court said the district court should have at least considered the computer game in its decision. In March, the case was sent back for reconsideration.
“If this game was so obvious why wasn’t someone selling a game like this before us,” Larson said. “If you make a computer game that has a flying car in it does that mean that you cannot make a real flying car?”
If Khet is found to be nonobvious, Innovention Toys wins and MGA could be ordered to pay Innovention damages. If the court finds the game to be obvious, the patent would be void and MGA could start selling its Laser Battle game.
It’s the court’s move, Martensen said.
Meanwhile, Khet is having a banner year in sales. In 2010, Innovention’s engineers redesigned Khet and came out with Khet 2.0. It’s a smaller package, which has helped with costs and allowed the company to ship to overseas distributors.
Khet fans have started clubs and tournaments around the game and it continues to pick up awards including “Best of the Toy Fair,” and “The Swedish Family Game of the Year.” And, Innoventions just signed a deal with Toys “R” Us.
“We are on pace to hit 100,000 games this year,” Larson said.
That equates to about $3.4 million in sales. And by Innovention’s calculations, the laser board game and the patent are worth the fight.