<em> Beteiro, LLC v. DraftKings Inc., et al. </em>
The Federal Circuit Court affirmed the District Court of New Jersey’s decision to dismiss a patent infringement case by determining the asserted patents patent-ineligible for containing abstract ideas and lacking innovation.
A Texas-based company, Beteiro, LLC, specializes in developing technology for gaming or gambling activities. The company owns multiple patents, 9,965,920, 10,043,341, 10,147,266, and 10,255,755, dating back to 2002. Collectively, the asserted patents enable users to participate in live gaming or gambling activities remotely, through GPS software, and in compliance with local laws—the essential feature of the patents grants or removes access to users based on their location. For simplicity, the Federal Circuit Court chose to analyze the ’920 patent, filed in 2016 and approved by the United States Patent and Trademark Office in 2018.
In 2021 and 2022, Beteiro filed complaints against eleven online gaming companies. The complaints alleged that all defendants’ online platforms violated the four asserted patents by using global positioning software to verify users’ locations. For online gaming platforms to operate their businesses effectively, companies must use GPS to locate users because the United States legalizes gambling at the state level. The complaints, therefore, accused the defendants’ entire business model of violating the asserted patents. The defendants filed a Rule 12(b)(6) motion to dismiss, arguing that the plaintiff’s patents failed to satisfy an innovative software requirement.
The complaints were compiled under 2022-2075 with respect to Rule 42 of Civil Procedure. Initially filed in New Jersey federal court, the compiled complaint arrived before the Federal Circuit Court of Appeals to reassess the dismissal of the plaintiff’s failure to state a claim. The Federal Circuit affirmed the District Court’s decision under 35 U.S.C. § 101, in which both courts found the plaintiff’s arguments unpersuasive.
The Federal Circuit applied the two-step Alice/Mayo framework that assesses patent eligibility to reach its decision. Step one of the Alice/Mayo framework considers whether a patent is directed to an ineligible concept, in this case, an abstract idea. See Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 216-26 (2014); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 77-80 (2012). If step one is satisfied, step two considers whether additional elements transform the nature of the claim into a patent-eligible application. If found to be an inventive concept, this step allows an abstract idea to become patent eligible.
The plaintiff argued against both factors of Alice/Mayo, claiming the patents were not abstract but technologically innovative. The asserted patents did not simply use technology but rather enhanced it. Beteiro’s appeal rested on the idea that GPS for a mobile phone was not conventional technology in 2002, and therefore, the application of GPS software went beyond the general use of computers. However, the Federal Circuit disagreed and quickly dismissed the plaintiff’s argument.
The court first found that the language of the patents pointed to an abstract idea. The patents broadly applied general terms describing the desired results, but the language did not provide evidence of how the inventions achieved these results. For example, the patents asserted “detecting information” or “generating and transmitting a notification,” contributing to a merely functional description. Additionally, the Federal Circuit relied on the District Court’s analysis of the importance of gambling in the correct location. Gambling has always required being in the proper location, whether virtually or in person, reinforcing that the GPS locator is fundamental to the activity and, therefore, an abstract idea. The finding of an innovative concept in step two of the Alice/Mayo analysis relied heavily on the description of abstractness. Most of the asserted patents describe the normal functions of computers, communication functions, and global positioning devices. The inventors of the patents used layman’s terms and described the standard business practices of GPS software instead of something novel; the Federal Circuit contended that an individual of ordinary skill could understand the language included in the asserted patents. The court described the patents as routine, conventional, and well-understood because even in 2002, GPS software was standard in electronic devices.
The Federal Circuit ruled that Beteiro, LLC’s asserted patents involved unpatentable material. While the Federal Circuit did not rely on prior cases regarding remote-gaming patents for this finding, the court has seen a pattern of appeals regarding remote-gaming patents, all of which experienced a similar fate to Beteiro.