Fan duel case 814

CG Tech Loses Patent Fight Against Gaming Platforms

By Samantha Kaplan, NYU Law 3L

In CG Tech. Dev., LLC v. FanDuel, Inc., the court affirmed the United States Patent Trial and Appeal Board’s (“PTAB”) decision finding appellant CG Tech’s ‘818 patent invalid.  CG Tech. Dev., LLC v. FanDuel, Inc., 794 F. App’x 942 (Fed. Cir. 2019). 

This case was the final stop in the parties’ protracted litigation over the ‘818 patent.  In 2016, CG Tech, a provider of gaming technology, sued seven online gambling companies, including the three appellees here, for infringing a number of CG Tech’s patents.  CG Tech. Dev., LLC v. FanDuel, Inc., No. 216CV00801RCJVCF, 2017 WL 58572, at *4 (D. Nev. Jan. 4, 2017).  A Nevada Federal Judge dismissed all claims except for the alleged infringement of the ‘818 patent.  Id. at *7. 

In March 2017, Fanduel, DraftKings, and BWin.Party Digital Entertainment petitioned for inter partes review of the ‘818 patent, an action that triggers a trial proceeding before the PTAB to determine the patentability of certain claims in a patent.  Inter partes review allows parties to challenge claims they believe lack novelty or are obvious in light of prior patents or other existing works. 

The petitioners alleged that a number of the ‘818 claims were obvious in light of two prior patents.  The ‘818 patent “describes a video game system with personalized wireless controllers” that utilize a user’s personal data to customize the gaming experience.  CG Tech. Dev., LLC v. FanDuel, Inc., 794 F. App’x 942, 944. One piece of personal data included in the patent is a user’s age.  The petitioners argued that the ‘818 patent was obvious in light of two prior patents, Walker and Kelly, that disclosed personalizing gaming based on a user’s age. 

The main issue before the PTAB was the meaning of a specific phrase in the patent.  The patent specified that the gaming system would, among other things, allow a wireless controller to transmit data on a user’s age to a video game system.  The transmission of this personal information could allow the game to “authorize play based on age.”  The court needed to determine what this phrase meant in order to evaluate the obviousness of the patent.  The PTAB determined the “plain and ordinary meaning” of this phrase was “a control that either prohibits or adjusts operation of a video game based on the user’s age.”  CG Tech. Dev., LLC v. FanDuel, Inc., 794 F. App’x 942, 944 (emphasis added).  Based on this construction of the phrase, the PTAB found that the challenged claims “would have been obvious based on [two prior patents,] Walker and Kelly.”  Fanduel, Inc. v. Cg Tech. Dev., LLC, 2018 WL 5269266, at *29.

CG Tech appealed the PTAB’s decision to the Federal Circuit, contending that the PTAB incorrectly construed the meaning of the phrase “authorize play based on age.”  It argued the PTAB defined this phrase too broadly by including the term “or adjusts” in its definition:  “‘Adjusting’ a game impacts ‘how’ a particular game is played, [whereas] ‘[p]rohibiting’[or not authorizing] a game impacts whether a player can play a particular game.”  Brief for Appellee at *5, CG Tech. Dev., LLC v. FanDuel, Inc., 794 F. App’x 942 (Fed. Cir. 2019) (No. 19-1261).  This misconstruction, the appellant argued, was not harmless error.  While both the Walker and Kelly patents included embodiments that spoke to “adjusting” play based on age, appellant argued that neither mentioned “authorizing” play based on age.  Therefore, if the PTAB had interpreted the phrase “authorize play based on age” correctly, it would not have concluded the patent was invalid. 

While the Federal Circuit agreed with CG Tech that the PTAB had misconstrued the meaning of the phrase, the court held that the patent was nevertheless invalid because the Kelly patent did, in fact, “disclose[] prohibiting [gameplay] based on age.”  CG Tech. Dev., LLC v. FanDuel, Inc., 794 F. App’x 942, 946. The court pointed to language from the Kelly patent that disclosed “players can. . . be required to meet certain conditions before participating in a credit game or tournament,” with one of those conditions being age.  Id at 945.  The court also cited to language in the PTAB decision that supported this understanding, i.e., that “Kelly discloses using the age of the game player as a prerequisite to playing a particular game.”  See Fanduel, Inc. v. Cg Tech. Dev., LLC, 2018 WL 5269266, at *15. The court thus held that PTAB’s misconstruction of the phrase was “harmless error” due to the substantial evidence supporting its findings on the Kelly patent, and affirmed the PTAB’s ruling.  CG Tech. Dev., LLC v. FanDuel, Inc., 794 F. App’x 942, 945.

In a last ditch effort to salvage its patent, CG Tech filed a petition for rehearing en banc.  The petition was denied on March 20, 2020, putting an end to the dispute and invalidating the ‘818 patent. 

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