"WHAT YOU PATENT CAN AND WILL BE USED AGAINST YOU IN A COURT OF LAW" - What should serve as a lesson to entrepreneurs, Forterra Systems announced yesterday that a lawsuit was filed in the United States District Court for the Northern District of California against Palo Alto, Calif.-based Avatar Factory, and its founder Will Harvey, a noted gaming software developer. (Forterra Systems, Inc. v. Avatar Factory, etal., Case # 05-CV-4472).

The suit charges Avatar and Will Harvey with infringing a patent pertaining to instant messaging in a 3D virtual environment. While the press release doesn't list the patent, it would seem that the lawsuit is based off of US Patent 6,784,901, titled "Method, system and computer program product for the delivery of a chat message in a 3D multi-user environment."

The interesting thing about this lawsuit, is that Will Harvey a co-inventor in the '901 patent.

Harvey founded a company called There, which pioneered software offering virtual reality chat rooms over the Internet. Eventually, There changed its name to Forterra Systems, which currently owns the patent asserted in the lawsuit. During that time, Harvey left There and formed his new company, Avatar Factory. The suit alleges that a new virtual reality business at Avatar, which relies on virtual instant-messaging, infringes the patent for messaging in a 3D virtual environment developed and patented while Harvey was at There.

Byron Cooper, who represents Forterra, summed up the situation this way:

This case presents a recurring challenge in Silicon Valley regarding the ability of entrepreneurs to start a company and contribute intellectual property such as the patented technology in this case to attract investments, and later leave to start another venture that may infringe the intellectual property rights created during the earlier venture.

This is similar to Yahoo's ongoing litigation with XFire, where a co-inventor left Yahoo to work at XFire, only to find himself staring down the barrel of his own patent. Who needs non-compete clauses in employment contracts when you have patents?