PalTalk Holdings is seeking $90 million from Microsoft in a lawsuit that claims the Xbox 360 console and Halo infringe upon two of its patents relating to multiplayer online games.
The suit claims that both the console and the hit game make unauthorized use of technology developed by MPath, "a pioneer in the online video industry in the area of real-time, multiplayer online games," PalTalk's attorney told the jury. "Microsoft had many meetings with MPath regarding their technology, and Microsoft found the technology to be very valuable."
Microsoft admits that it did "review" the MPath technology but elected not to use it, saying it was for older dial-up methods of communication between computers. "The patents don't cover the way the Halo games work," Microsoft's lawyer said. "Microsoft decided to go in another direction and work with another company. Obviously, this was upsetting to PalTalk and its employees."
Furthermore, he added, the technology in question is "certainly not [worth] $90 million," claiming that PalTalk bought the patents for less than $200,000.
MPath Interactive was the parent of MPlayer, an online multiplayer gaming service that was popular in the late 90s. Among its features was integrated voice chat, which proved so popular that it was ultimately spun off as HearMe, a general VoIP service. MPath actually changed its name to HearMe and in 2000 sold the unprofitable MPlayer business to GameSpy. In 2001, MPlayer was shut down in favor of GameSpy Arcade.
But HearMe didn't fare much better, going out of business itself in 2000. PalTalk acquired the rights to its technology later that year and, in 2007, relaunched HearMe as a VoIP and videoconferencing service.
The trial is expected to last two weeks.