Patentees Out of Luck Again: Sides with DraftKings that Remote Gambling Patent Ineligible

by Dennis Crouch

The Federal Circuit has affirmed a D.N.J. court’s dismissal of patentee Beteiro’s infringement complaints against DraftKings, et al., agreeing that the asserted claims are directed to patent ineligible subject matter under 35 U.S.C. § 101. Beteiro, LLC v. DraftKings Inc., No. 2022-2275 (Fed. Cir. June 21, 2024). The patents at issue were directed to methods of facilitating remote gambling activity using devises equipped with GPS. 

Claim 2 of the US10255755 (2002 priority date), was the most discussed claim in the case.  The claim is directed to a method for facilitating remote gambling and requires detecting information about a gaming or sporting event, notifying a user about the event, receiving a bet from the user along with their location information (determined by a GPS device in their communication device), and then determining whether to allow or disallow the bet based on the user’s location. This claim is significant in the context of gaming because it attempts to address a key challenge in the online gambling industry: ensuring that bets are only accepted from locations where such activities are legal.

Applying the two-step Alice/Mayo framework, the Federal Circuit agreed with the district court that the claims were directed to the abstract idea of “exchanging information concerning a bet and allowing or disallowing the bet based on where the user is located.” The court found the claims exhibited several indicia of abstractness, including: reciting generic steps of detecting information, generating and transmitting notifications, receiving messages, making determinations, and processing information; using result-focused functional language; being analogous to other claims found abstract in precedent; and being directed to longstanding real-world practices.

The court rejected Beteiro’s argument that the claims were tied to technological improvements, finding they involved “the mere use of computers as tools and do not claim any improvement in the computer-related technology itself.”  The claims include content regulation and checking legal compliance, but those are legal problems, not technical problems.

At step two, the court agreed with the district court that the claims lacked an inventive concept, achieving the abstract steps using “several generic computers” and “a set of generic computer components.” The court found the patents described the components, including the GPS on mobile phones, generically, supporting the conclusion they were conventional. Although GPS is not preemptive of all ways to locate user, its use was still generic enough to fail step 2.  Reciting the  common use/improvement dichotomy refrain, the court rejected Beteiro’s argument that the claims were tied to technological improvements, finding they involved “the mere use of computers as tools and do not claim any improvement in the computer-related technology itself.”

Unconventional – Focus on Specification: The court was unpersuaded by Beteiro’s contention that the complaint raised a genuine dispute about whether including GPS on mobile phones was conventional in 2002, the claimed priority date. But the specification did not provide technical instructions on creating/using a GPS system. The court concluded that this could “only plausibly mean that the patent applicant drafted the specification understanding that a person of ordinary skill in the art knew what GPS was, how to include it on a mobile device, and that using it for the purposes disclosed in the patent was routine, conventional, and well-understood.”  The court stated that the specification dedicated “only 15 lines” to GPS – I counted and this was 117 words.  The court noted that amount was quite small – especially in recognizing that the specification is almost 50 pages long. In my opinion, 15 lines can certainly be sufficient, but the problem is that those 15 lines don’t contain any genuine technical details. For me, The basic idea here is that the patentee should not expect to hang their eligibility hat on their use of off-the-shelf technology that they mention only in passing in the specification.

The case is also important because it retrains eligibility focus on the claims and specification – in an attempt to prevent patent litigants from avoiding dismissal by raising or spinning new facts in the complaint.

No Examiner Buffer: During prosecution, the examiner had expressly considered eligibility issues and then allowed the patent to issue. On appeal, the Federal Circuit gave no weight with two different lines of reasoning:

1. The examiner applied pre-Alice case law and so should be disregarded for applying the wrong law.
2. Even proper examination does not “in any way shield the patent’s
   claims from Article III review for patent eligibility.” Quoting Commc’n Techs., LLC v. ShoppersChoice.com, LLC, 958 F.3d 1178 (Fed. Cir. 2020).

Based upon this outcome, it is unclear whether any weight can be given to an examiner ruling – likely none in this context.

In the end, the Federal Circuit wrote that Beteiro’s claims are “nothing more than the practice of an abstract idea using conventional (even as of 2002) computer equipment, including GPS on a mobile phone.”