DCT
3:04-cv-01053
Intl Gamco v. Multimedia Games Inc
Key Events
Complaint
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: International Gamco, Inc. (Nebraska)
- Defendant: Multimedia Games, Inc. (Texas)
- Plaintiff’s Counsel: Nordman, Cormany, Hair & Compton
- Case Identification: 3:04-cv-01053, S.D. Cal., 05/25/2004
- Venue Allegations: Venue is alleged to be proper because the Defendant is doing business within the judicial district.
- Core Dispute: Plaintiff alleges that Defendant’s electronic lottery systems, and components thereof, infringe a patent related to networked video gaming systems that use a fixed, finite pool of game plays.
- Technical Context: The technology relates to centralized, networked electronic gaming systems, specifically for lottery-style games, a significant sector of the regulated public gaming market.
- Key Procedural History: The complaint notes that on February 10, 2003, Plaintiff assigned the patent-in-suit to International Game Technology ("IGT") but retained an exclusive right to bring infringement actions related to the "New York State Lottery Market." This arrangement may raise questions regarding the Plaintiff's standing to sue and the scope of recoverable damages.
Case Timeline
| Date | Event |
|---|---|
| 1991-12-02 | ’035 Patent Priority Date |
| 1994-06-28 | ’035 Patent Issue Date |
| 2001-12-03 | ’035 Patent assigned to Plaintiff International Gamco, Inc. |
| 2003-02-10 | Plaintiff assigned ’035 Patent to IGT, retaining certain rights |
| 2004-05-25 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 5,324,035 - "Video Gaming System with Fixed Pool of Winning Plays and Global Pool Access"
- Patent Identification: U.S. Patent No. 5,324,035, "Video Gaming System with Fixed Pool of Winning Plays and Global Pool Access," issued June 28, 1994.
The Invention Explained
- Problem Addressed: The patent’s background section states that prior lottery games, whether paper-based or electronic, lacked a meaningful element of competition among players. A player would compete only against the machine or a static ticket, with no sense that other players' actions could impact their own chances of winning (’035 Patent, col. 1:56-col. 2:6).
- The Patented Solution: The invention is a networked gaming architecture designed to introduce inter-player competition. The system features a "master processing unit" connected to multiple "slave" player terminals (’035 Patent, Fig. 1). The master unit stores a pre-determined, "fixed pool of game plays" with a finite number of winning and losing outcomes. Players at all connected slave terminals draw from this same, shared pool. As plays are purchased, the pool is depleted, and the system can display the number of plays remaining, allowing players to strategically assess the changing odds of securing a remaining prize (’035 Patent, Abstract; col. 2:36-50; col. 3:14-22). When a pool is exhausted, a central processor can supply a new one to enable continuous play (’035 Patent, Abstract).
- Technical Importance: This system created a dynamic, shared gaming environment that emulated the competitive dynamic of buying scratch-off tickets from a limited physical roll, but in an electronic, networked format that could connect numerous players across different locations (’035 Patent, col. 3:1-9).
Key Claims at a Glance
- The complaint does not identify specific asserted claims but makes a general allegation that the accused system is "claimed in the '035 patent" (Compl. ¶9). Independent claim 1 is the broadest system claim.
- Essential elements of Independent Claim 1 include:
- A master processing unit operative to distribute game plays from a finite pool.
- A memory device coupled to the master unit, operative to store at least one finite pool of game plays containing a predefined number of winning and losing records, where each record indicates the outcome and amount won.
- A communication interface coupled to the master processing unit.
- A plurality of slave terminals coupled to the interface to receive game play records in response to a player's request.
- A plurality of player-controlled selection devices (e.g., buttons) coupled to the slave terminals for transmitting game play requests.
- A plurality of output devices (e.g., screens) coupled to the slave terminals to communicate the outcome to the player.
III. The Accused Instrumentality
Product Identification
- The complaint identifies the accused instrumentality as the "Central System" used by the New York Lottery, which Defendant allegedly "designed, implemented, operates, and otherwise uses" (Compl. ¶¶9-10). The complaint also separately accuses Defendant's "master processing units" which it allegedly offers for sale and sells for use in the Central System (Compl. ¶12).
Functionality and Market Context
- The complaint alleges the Central System is an electronic lottery network installed at various horse race tracks in New York (Compl. ¶9). It is described as a network of "video lottery terminals" connected to and supported by a "master processing unit" (Compl. ¶¶9-10). According to the complaint, this master unit "stores a finite number of game plays," and when a player uses a terminal to request a play, the master unit distributes one from this finite collection (Compl. ¶10). The complaint includes a map from a proposal document illustrating what is alleged to be Defendant's nationwide linked, interactive gaming networks (Compl. Ex. B, p. 47).
IV. Analysis of Infringement Allegations
Claim Chart Summary
- The complaint does not contain a claim chart. The following table summarizes the infringement theory for representative Claim 1 based on the narrative allegations in the complaint.
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| a master processing unit... operative to distribute game plays from a finite pool of game plays | The Central System includes a "master processing unit" that "distributes the electronic instant lottery tickets to the video lottery terminals." | ¶10 | col. 2:36-38 |
| a memory device coupled to the master processing unit... operative to store at least one finite pool of game plays, each finite pool containing a predefined number of winning and losing play records... | The "master processing unit stores a finite number of game plays, each game play indicating whether it is a winning ticket, a losing ticket, and if a winning ticket, the amount won." | ¶10 | col. 2:38-42 |
| a communication interface coupled to the master processing unit | The system is described as a "network" where terminals are "supported by a master processing unit." | ¶9 | col. 2:42-43 |
| a plurality of slave terminals... coupled to the communication interface to receive game play records in response to a game play request from a player | The system includes "a number of video lottery terminals" that are used by players "to purchase electronic instant lottery tickets." | ¶9 | col. 2:42-47 |
| a plurality of player-controlled selection devices... operative to transmit game play requests from the player to the master processing unit | "To play, players use the video lottery terminals to purchase electronic instant lottery tickets. The terminals transmit the requests to the master processing unit..." | ¶9 | col. 2:47-52 |
| a plurality of output devices... operative to communicate to the player the receipt of a winning or losing play and the amount won | The video lottery terminals are described as part of a "gaming system," which inherently includes output devices like screens to display game outcomes. | ¶9 | col. 2:52-56 |
Identified Points of Contention
- Scope Questions: The core of the patent is the use of a "finite pool of game plays." A central question for the court will be whether the accused Central System functions by drawing from a truly pre-determined and exhaustible set of outcomes, as alleged (Compl. ¶10), or if it uses a different architecture, such as a system that generates outcomes dynamically using a random number generator. The complaint's allegations on this point are conclusory and will require factual discovery.
- Technical Questions: The complaint alleges infringement by Defendant's sale of "master processing units" (Compl. ¶12). A key technical question will be what evidence shows that these units, as sold, meet all the functional limitations of the claimed "master processing unit," particularly the requirement to store and administer a finite pool of plays, rather than being general-purpose network servers.
V. Key Claim Terms for Construction
The Term: "finite pool of game plays"
- Context and Importance: This term is the central technical concept of the patent. The infringement case hinges on whether the accused system's architecture includes this specific feature. Practitioners may focus on this term because the distinction between drawing from a pre-generated, exhaustible pool versus using a continuous random-number-generator is a fundamental architectural difference in gaming systems.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification suggests the term is not limited by scale, noting the system has the ability to handle "'lotto' type games including a million plays or more" (’035 Patent, col. 6:1-3). This may support an argument that the term applies to very large, electronically managed sets of outcomes.
- Evidence for a Narrower Interpretation: The specification repeatedly draws an analogy to "paper pull-tab lottery games," where the outcomes are determined "at the time the tickets are printed" (’035 Patent, col. 1:31-39; col. 5:32-35). The Abstract refers to a "fixed pool." This language may support a narrower construction requiring the entire pool of outcomes to be generated and fixed before any play begins, precluding on-the-fly outcome generation.
The Term: "master processing unit"
- Context and Importance: The complaint alleges both direct infringement by "using" the system and contributory infringement by "selling master processing units" (Compl. ¶¶11-12). Defendant may argue that the servers it sells are staple articles of commerce and do not meet the specific functional requirements of the claimed "master processing unit."
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: Claim 1 defines the unit by its high-level functions, such as being "operative to distribute game plays" (’035 Patent, col. 29:3-4). Plaintiff may argue that any central server performing this core role falls within the claim scope.
- Evidence for a Narrower Interpretation: The detailed description provides specific software architecture for the master unit, including polling slave terminals one-by-one, handling specific command-response protocols, and generating detailed audit reports from specific file structures like "AUDIT.PTG" (’035 Patent, col. 9:34-37; Fig. 18). This could support a narrower construction requiring a processor with these particularized functionalities, not just any generic network server.
VI. Other Allegations
- Indirect Infringement: The complaint alleges contributory infringement, stating Defendant sells "master processing units" knowing they are "especially made or especially adapted for use in the Central System" and are not a "staple article or commodity of commerce suitable for substantial noninfringing use" (Compl. ¶¶12-13).
- Willful Infringement: The complaint alleges that Defendant had "actual and constructive notice" of the patent and that its infringement is willful (Compl. ¶14). However, it does not plead specific facts supporting pre-suit knowledge, such as a notice letter.
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of technical architecture: Does the Defendant's accused "Central System" in fact operate using a pre-determined and exhaustible "finite pool of game plays" as required by the patent claims, or does it utilize a different technical method, such as real-time outcome generation, to provide a similar player experience? The resolution will depend on evidence developed during discovery.
- A key threshold question will be one of standing to sue: Given that Plaintiff assigned the patent to a third party (IGT) while retaining enforcement rights limited to the "New York State Lottery Market," a central legal issue will be whether this contractual arrangement confers constitutional standing to sue for infringement and how it would constrain the scope of any potential injunction or damages award.
- An additional question will be one of liability: The complaint alleges direct infringement by "using" the system and indirect infringement by selling components. The court will have to determine whether Defendant's conduct constitutes making or using the entire claimed system, or if its liability, if any, is more properly assessed under the doctrine of indirect infringement for supplying key components to the New York Lottery.