Tuesday, October 30, 2007

PurePlay's Patented Legal Hack

Some months ago, I noted that Betzip.com (since rechristened "PurePlay.com") employs an intriguing legal hack to avoid anti-gambling regulations. It charges its customers a flat monthly fee, which qualifies them to win large prizes for winning online poker games. Non-paying customers can play the same games for free, too—though without qualifying for the largest prizes.

Why adopt that business model? Presumably, because it allows PurePlay to argue that it does not offer a gambling service. Specifically, PurePlay could claim that, because the amount players win has no relation to how much they stake, it dodges the "consideration" element of the legal definition of gambling. Query whether that claim would survive the devoted attentions of a prosecutor and court. I set that question aside, though, and here focus on PurePlay's claim that they have patented their business model.

Curious about the scope of PurePlay's patent, I searched its website for details. It offered none. I wrote to PurePlay asking for the patent's number. PurePlay refused to say. So I put my able research assistant, Mr. Sherwood Tung, on the case. He found PurePlay's patent, and more.

MMJK Inc., an entity located in San Francisco, California, owns PurePlay. It holds U.S. patent # 7,094,154. The Patentscope database of the World Intellectual Property Organization indicates that MMJK has also sought similar patent protection in many foreign countries. The patent's abstract reads thusly:
A computer networked, multi-user game system utilizing subscription based membership and alternative methods of entry, as well as the award of prizes of immediate value to the winner is described. A game tournament is hosted by a game server computer coupled to client computers operated by participating players. The games offered are games that involve elements of both skill and chance and require active player participation and decision making. A subscription-based membership is established for each player by charging a fee for a pre-determined membership time period. An alternative method of entry is provided to allow non-subscription players to participate in the tournament without payment of the fee. The non-subscribing players receive equal access to the games and at least the same chance of winning as the subscribing players, but are limited to a single entry per game or tournament. The game server hosts at least one game or tournament within the period, and players are potentially eliminated until a winning player and any runner-up players are determined. A prize pool is disbursed to the winning players in the form of cash, cash-equivalent notes, or prizes that have inherent and immediate value.

That of course offers only a shorthand description of the patent. You must carefully read its claims to know its actual scope. Or, I should say, its supposed scope; any patent can fall to a legal challenge, and business method patents prove especially susceptible to failing "non-obvious" inquiries.

[Crossposted to Midas Oracle and The Technology Liberation Front.]


Ran said...

What does it mean that "[t]he non-subscribing players receive […] at least the same chance of winning as the subscribing players"? Does this imply that people who are actually paying for it — i.e., the people that the company might have to pay out to — have a potentially lesser chance of winning?

I guess this isn't shocking when you consider the company's incentives, but I don't know why they'd admit it in a patent.

Anonymous said...

There patent seems very broad. I do not see how they can allow or enforce it by not allowing others to provide a subscription based multi-user online game.