If you take some time to look through the enormous catalog of patents the United States government has granted over the course of nearly two and a half centuries, you’ll find some interesting concepts, to put it kindly.
A general concept in that nebulous task of deciding whether to grant a patent and what exactly the patent is for is that you can’t patent an abstract idea. The “whats-it” you apply to the patent must exist in the corporeal realm, and it must serve a demonstrable purpose.
According to the most recent court to consider the complaint, that abstract idea concept was the cause of a recent challenge to the operation of several regulated US online casinos. The resulting decision should give the operators of those casinos additional confidence to move forward in the US.
Beteiro v. DraftKings, et al challenged online casinos’ use of geolocation tech
The matter at issue is Beteiro v. DraftKings, et al. Beteiro is a Texas corporation that develops technology for gaming activities. Among the defendants in this lawsuit were:
- DraftKings
- Entain
- Kindred
- PointsBet
All of those companies either are or have been involved in operating licensed online casino products in at least one state. Beteiro originally filed the complaint in the federal district court for New Jersey on Nov. 22, 2021.
Among its allegations was that the defendants infringed upon several of Beteiro’s patents related to the geolocation of individuals accessing online gambling platforms. However, on Sept. 7, 2022, the district court granted the defendants’ petition to dismiss the case entirely, stating that it found the subject matter of Beteiro’s patent claims ineligible for protection and thus, Beteiro failed to make an acceptable claim to the court.
In simpler language, what Beteiro was trying to argue that it had patents for was too indefinite for the court to render an opinion on whether the defendants’ technology had violated a patent for or not. Because Beteiro had no other argument for how it had been wronged to the point the court needed to intervene, there was no case.
On Sept. 29, 2022, Beteiro appealed that decision to the US Court of Appeals for the Federal Circuit. That was to no avail, however, as the circuit court affirmed the district court’s ruling on June 21, 2024.
Appellate court strengthens district court’s ruling
From the perspective of 20/20 hindsight, Beteiro probably would have been better off not appealing this matter. The appellate court’s involvement only strengthened precedent against future similar claims by Beteiro.
The appellate court reviewed the district court’s application of the Alice/Mayo test for patent infringement claims and agreed with the analysis. That test is the standard for reviewing such claims.
For example, the appellate court agreed “with the district court that Beteiro’s claims are directed to the abstract idea of ‘exchanging information concerning a bet and allowing or disallowing the bet based on where the user is located.'” Furthermore, the appellate court deemed Beteiro’s claims as “drafted using largely (if not entirely) result-focused functional language, containing no specificity about how the purported invention achieves those results.'”
To use a less wordy analogy, the court found that Beteiro was essentially trying to patent a peanut butter and jelly sandwich, not the process of preparing such a sandwich or specific ingredients in a recipe. While Beteiro still has appeal options left, this is probably the end of this particular dispute.
For the defendants and similar enterprises, the affirmation should provide additional security for present and future operations.
Ruling likely settles patent law in this situation pertaining to online gambling
Going forward, if Beteiro or a similar company is going to make a claim of this nature, its ducks had better be in the most unassailable row ever. The ability to challenge online gambling companies’ use of geolocation technology from a patent infringement perspective is now extremely narrow.
As defense counsel Arnold & Porter stated, the appellate court’s opinion creates “a defendant-favorable standard for pleading inventive concept that requires patent infringement plaintiffs to tie a complaint’s claim of an inventive concept to language in the patent specification, and instructs courts to be skeptical of such claims in the complaint if they were not reflected in the patent specification.”
Put another way, entities like Beteiro can’t “reverse-engineer” patent infringement claims simply because another company’s technology achieves a similar result to that which its products aspire to. They will have to show how their tech reinvents the wheel of geolocation for online gaming and how the defendants’ processes replicate that same innovation.
While there are still many market and regulatory challenges for online gambling firms across the US, this particular matter is likely put to rest. Attorneys for gaming companies can shift their billable hours to other concerns.
