High-tech Lawsuit Could Become Modern Version of David and Goliath

Two Israelis who invented a wireless game technology hope they’ll become a high-tech version of David battling a computing Goliath.

Michael Kagan and Ian Solomon immigrated to Israel from England in the 1970s, eventually becoming business partners in the early 1990s.

Their latest company, Peer-to-Peer Systems, is suing Palm Inc., the Silicon Valley personal digital assistant giant, and AOL-backed Cybiko Inc., which has developed an operating system for its own brand of mobile hand-held devices, for patent infringement.

Peer-to-Peer filed suit in U.S. District Court in Delaware this January alleging that Palm’s use of its PDAs and clone PDAs for multiple-player games, played wirelessly and interactively on two or more devices, directly infringes a 1995 technology that Kagan and Solomon patented in 1997.

Peer-to-Peer also claims that Palm’s promotion of multiplayer games in selling its PDAs and clone PDAs induces patent infringement.

“Unfortunately, the general feeling of many large corporations vis-a-vis individual inventors is that the latter do not have the resources to protect their patents,” Kagan says. “These companies often decide simply to infringe the patent — perhaps inadvertently at first, but later deliberately — in order to avoid paying anything at all to the rightful owners of the technology.”

Peer-to-Peer’s attorney, Stephen Sulzer, said the Israeli company took action against Palm after settlement talks between the companies broke down.

“Peer-to-Peer maintains a policy of vigorously enforcing its intellectual property rights against infringers,” Sulzer said.

Palm has not responded publicly to the lawsuit, but spokeswoman Marlene Somsak said the suit is “without merit, and we will defend against it vigorously.”

For Kagan and Solomon, it’s been a long road from Britain to the U.S. courts.

After opening a small Jerusalem office in the early 1990s, they began collaborating with Yissum, the commercial arm of the Hebrew University’s prolific research departments.

While working on bringing other peoples’ inventions to market, Kagan and Solomon began to tinker with their own idea: a device and platform allowing multiple users to communicate with each other wirelessly and simultaneously. The technology could have a number of uses, from playing games to simulations used in corporate training programs.

In April 1997, the U.S. Patent Office granted Kagan and Solomon a patent for the technology that allows multiple players to play computer games on such devices as play-station consoles by wireless networking.

Their company licenses its technology to producers and vendors of PDAs, hand-held computers, cell phones and wireless gaming devices.

The Israelis are hoping that legal precedents will convince Palm and Cybiko to back down.

“In the majority of patent infringement lawsuits that reach the verdict stage, the finding is that the patent is ‘not invalid,’ ” said Sulzer, of the Washington office of the Dickinson Wright law firm.

In past cases, courts have presumed that the patent office did sufficient research before granting the patent and acted in good faith, he added. Indeed, it took two years for the Israeli duo to secure their seven-page patent, which is retroactive to the 1995 filing date.

Kagan and Sulzer also predict that other large multi-national corporations, such as Microsoft, Nokia, Ericsson, Samsung and Motorola — all leaders in the hand-held device and cellular telephone industries, which have boomed in the years since Kagan and Solomon’s breakthrough — will be watching this battle closely.

They could be observing the legal maneuvering for some time. The discovery process alone may take up to 18 months, and the first trial, involving Cybiko, is not scheduled to begin until May 2004.

A spokesperson for Cybiko could not be reached for comment.

The Cybiko case is designed to produce a precedent upholding the patent, while the Palm lawsuit is Peer-to-Peer’s signal that it will not be intimidated by the rich and powerful, Sulzer said.

There remains a good chance that the parties will sit down again and at least try to reach a settlement before going to a jury trial.

Meanwhile, Peer-to-Peer officials say Palm is forging ahead as if the lawsuit didn’t exist.

“Palm is continuing to encourage its customers to infringe, with the full knowledge that our patent exists and has been brought to management’s attention,” Kagan said.

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