IP Law Daily Validity of patent for remote gambling system affirmed over FanDuel’s challenge
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Wednesday, July 29, 2020

Validity of patent for remote gambling system affirmed over FanDuel’s challenge

By Brian Craig, J.D.

Substantial evidence supported the PTAB’s analysis that a patent for a remote gambling system is not obvious.

The Patent Trial and Appeal Board correctly ruled that a patent for a remote gambling system owned by Interactive Games LLC is not obvious and unpatentable, the U.S. Court of Appeals for the Federal Circuit has held. In rejecting a challenge brought by online sports betting company FanDuel, Inc. in an inter partes review, the Federal Circuit held that the Board did not violate the Administrative Procedure Act by adopting a purported new theory in its final written decision. The Federal Circuit also held that substantial evidence supported the Board’s obviousness analysis and the Board did not have to give deference to the challenger’s expert. Judge Timothy Dyk wrote a dissenting opinion arguing that the Board erred in its obviousness analysis (Fanduel, Inc. v. Interactive Games LLC, July 29, 2020, Hughes, T.).

Interactive Games LLC owns U.S. Patent No. 8,771,058 (the ’058 patent) which describes a gaming system wherein a gaming service provider—such as a casino—wirelessly communicates with users’ mobile devices, allowing them to gamble remotely. FanDuel petitioned for inter partes review (IPR) of the ‘058 patent on several grounds of obviousness. The Board found that FanDuel failed to prove that claim 6 of the ’058 patent was obvious in view of the asserted prior art. FanDuel appealed arguing that the Board violated the Administrative Procedure Act (APA) and erred in its obviousness analysis.

Procedural challenge. The Federal Circuit first held that the Board did not violate the APA by adopting a purported new theory in its final written decision. To comply with the APA in an IPR proceeding, the Board must timely inform the parties of the matters of fact and law asserted. The Board may not change theories midstream without giving the parties reasonable notice of its change. FanDuel argued that the Board violated this requirement by adopting a "new theory" in the final written decision. Specifically, FanDuel argued that the combination of three prior art references failed to disclose jurisdictional profiles stored in a database employing look-up tables, including an ordered list which the patent owner never raised during the proceeding.

The Federal Circuit held that the Board’s purported new theory in this case was merely an assessment of the arguments and evidence FanDuel put forth in its petition. The APA does not require the Board to alert a petitioner that it may find the asserted theory of obviousness lacking in evidence before it actually does so in a final written decision. Nor is a petitioner entitled to a pre-decision opportunity to disagree with the Board’s assessment of its arguments. The time to disagree with that assessment comes after the final decision has issued, in a request for Board rehearing or an appeal to the Federal Circuit.

Obviousness. The Federal Circuit held that substantial evidence supported the Board’s rejection of FanDuel’s obviousness challenge. The Board reasonably identified a gap between the concept of a look-up table being well-known and the beneficial application of that concept to the gaming system in a prior art reference. The Board reasonably found that simply calling the addition of a look-up table "an obvious design choice" did not fill that gap. The three prior art references do not render obvious claim 6’s limitation of determining the "game configuration" by accessing a lookup table which contains an ordered list of locations and associated game configurations.

Furthermore, the Federal Circuit found no error when the Board failed to give deference to an expert opinion. The court held that there was no merit to the suggestion that the Board was somehow obligated to defer to one party’s expert opinion of unpatentability just because the patent owner did not supply opposing expert guidance. While the Board may appreciate receiving expert opinion from both sides to help it do so, no expert submissions are required.

There was no need for the Board to rely on an expert to corroborate its reading of the asserted disclosures. Therefore, the Federal Circuit affirmed the Board’s determination in its obviousness analysis.

Dissent. While Circuit Judge Timothy Dyk agreed with the majority’s opinion on the procedural challenge, he dissented from the majority’s obviousness analysis. Judge Dyk argued obviousness is particularly is apparent where the alleged novelty of the patent is not related to the differences between a finite number of identified, predictable solutions identified in the prior art. Because the use of a look-up table and an ordered list was only one of a number of finite, predictable solutions, it would have been obvious to use a technique that was known to one of ordinary skill in the art. The Board erred by requiring FanDuel to supply a specific motivation to use a look-up table and ordered list in this particular context when that choice would have been a simple alternative design choice to a skilled artisan, Judge Dyk opined.

This case is No. 19-1393.

Attorneys: Eric Allan Buresh (Erise IP, P.A.) for FanDuel Inc. James R. Barney (Finnegan, Henderson, Farabow, Garrett & Dunner, LLP) for Interactive Games LLC.

Companies: FanDuel Inc.; Interactive Games LLC

MainStory: TopStory Patent FedCirNews GCNNews

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