DCT
1:19-cv-01105
Interactive Games LLC v. DraftKings Inc
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Interactive Games LLC (Nevada)
- Defendant: DraftKings, Inc. (Delaware)
- Plaintiff’s Counsel: McCarter & English, LLP; Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
- Case Identification: 1:19-cv-01105, D. Del., 06/14/2019
- Venue Allegations: Venue is alleged to be proper in the District of Delaware because Defendant DraftKings is a Delaware corporation and is therefore deemed to reside in the district.
- Core Dispute: Plaintiff alleges that Defendant’s daily fantasy sports and sports betting platforms infringe four patents related to secure, location-based mobile gaming systems.
- Technical Context: The technology concerns methods for verifying a user's identity, device integrity, and geographic location to ensure compliance with jurisdictional regulations for remote online wagering.
- Key Procedural History: Subsequent to the filing of this complaint, Inter Partes Review (IPR) proceedings were initiated against U.S. Patent Nos. 8,956,231 and 8,616,967. The Patent Trial and Appeal Board ultimately found the asserted claims of these two patents (claims 1-23 of the '231 patent and claims 1-20 of the '967 patent) to be unpatentable. These cancellations present a significant and likely dispositive obstacle for the infringement claims related to those two patents. The complaint also notes that the asserted patents were confirmed as patentable by the USPTO during prosecution after consideration of prior art rejections.
Case Timeline
| Date | Event |
|---|---|
| 2004-02-25 | Earliest Priority Date for U.S. Patent No. 8,616,967 |
| 2005-07-08 | Earliest Priority Date for U.S. Patent No. 9,430,901 |
| 2010-08-13 | Earliest Priority Date for U.S. Patent Nos. 8,956,231 & 8,974,302 |
| 2013-09-10 | USPTO confirmed patentability of the ’967 Patent during prosecution |
| 2013-12-31 | U.S. Patent No. 8,616,967 Issued |
| 2014-11-19 | USPTO confirmed patentability of the ’231 Patent during prosecution |
| 2014-12-09 | USPTO confirmed patentability of the ’302 Patent during prosecution |
| 2015-02-17 | U.S. Patent No. 8,956,231 Issued |
| 2015-03-10 | U.S. Patent No. 8,974,302 Issued |
| 2016-04-15 | USPTO confirmed patentability of the ’901 Patent during prosecution |
| 2016-08-30 | U.S. Patent No. 9,430,901 Issued |
| 2019-06-14 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 8,956,231 - "Multi-Process Communication Regarding Gaming Information"
- Issued: February 17, 2015
The Invention Explained
- Problem Addressed: The patent addresses the technical challenges of enabling remote, mobile wagering while complying with strict jurisdictional regulations that vary by geographic location (Compl. ¶¶22, 25). The core problem is ensuring that a user, their device, and their physical location are all authorized for gaming before and during a wagering session (Compl. ¶20).
- The Patented Solution: The invention is a system that performs a multi-part verification before allowing gaming. It first determines if a device is authorized (e.g., not "rooted" or running improper software) and if the user is authorized (e.g., by age) (Compl. ¶¶22-23). Crucially, it then verifies the device is in an approved location (e.g., within a geofence) and subsequently re-checks the location at variable time intervals (Compl. ¶25; '231 Patent, col. 2:38-51). The time between these location checks is determined based on parameters like the device’s speed and its distance from the boundary of the approved area, a technique intended to improve system efficiency (Compl. ¶26).
- Technical Importance: This approach provided a technical framework for mobile gaming operators to manage regulatory compliance risk by dynamically adjusting the frequency of location verification based on the likelihood of a user crossing a jurisdictional boundary (Compl. ¶26).
Key Claims at a Glance
- The complaint asserts independent claim 1 and dependent claims 2-23 (Compl. ¶39).
- Essential elements of independent claim 1 include instructions for a processor to:
- determine that a device is authorized to use a gaming service based on characteristics other than location;
- determine that a user of the device is authorized to use the gaming service;
- determine that the device is associated with a first location in which gaming activity is allowed;
- allow gaming activity based on the three prior determinations;
- determine a period of time after which a location redetermination should be made, where the period of time is determined based on a distance of the first location from a boundary of an area;
- determine that the period of time has passed; and
- in response, determine whether the device is associated with a second location in which gaming activity is allowed.
U.S. Patent No. 8,974,302 - "Multi-Process Communication Regarding Gaming Information"
- Issued: March 10, 2015
The Invention Explained
- Problem Addressed: Similar to the ’231 Patent, this patent addresses the technical problem of enabling secure and geographically compliant remote wagering on mobile devices (Compl. ¶20). It focuses on ensuring both the user and the device are authenticated and remain within an authorized jurisdiction throughout a gaming session (Compl. ¶¶20, 25).
- The Patented Solution: The claimed invention is an apparatus that authenticates both the mobile device and the user, and then "repeatedly" checks whether the device is within a permitted geographical area (Compl. ¶¶53, 56). The system allows or disallows gaming activity based on these repeated location checks ('302 Patent, col. 2:27-34). Like the ’231 patent, it determines the time to elapse until the next location check based at least in part on the device's distance from the boundary of the gaming-allowed area (Compl. ¶53). The complaint references a figure illustrating a network of concentric geofences used for this purpose (Compl. p. 13, citing '302 Patent, Fig. 5).
- Technical Importance: The invention provides a system for continuous or periodic compliance monitoring, a necessity for operators in the highly regulated remote wagering industry where users are mobile (Compl. ¶¶19, 25).
Key Claims at a Glance
- The complaint asserts independent claim 1 and dependent claims 2-25 (Compl. ¶53).
- Essential elements of independent claim 1 include instructions for a processor to:
- determine whether a mobile device is authorized to use a gaming service;
- determine whether a user of the mobile device is authorized to use the gaming service;
- to repeatedly determine whether the mobile device is within or without a geographical area allowing gaming;
- allow or disallow gaming activity based on the device authorization, user authorization, and location determinations; and
- determine a period of time to elapse until the next repetition of the location determination, with the period based at least in part on a distance of the mobile device from a boundary of the gaming-allowed geographical area.
U.S. Patent No. 9,430,901 - "System and Method for Wireless Gaming with Location Determination"
- Issued: August 30, 2016
Technology Synopsis
The patent describes a method for determining a mobile device's location by comparing its current wireless signal characteristics (e.g., signal strength from various network devices) to a pre-established database of signal characteristics associated with known locations (Compl. ¶¶31, 33, 66). The system enables gaming functionality based on this determined location and disables wagering functionality after a period of non-use (Compl. ¶¶66, 75).
Asserted Claims
The complaint asserts method claim 27, among others (Compl. ¶¶66, 69).
Accused Features
The complaint alleges that the DraftKings sports betting platform infringes by associating user device identifiers with locations, using geolocation techniques to determine location, enabling betting based on that location, and disconnecting users after inactivity (Compl. ¶¶71-75).
U.S. Patent No. 8,616,967 - "System and Method for Convenience Gaming"
- Issued: December 31, 2013
Technology Synopsis
This patent discloses a system for managing wager-based gaming within an approved geographic area. The system permits a user to engage in wagering, increments a time-based counter while the user is active, and if the device moves to an unapproved area, prevents further wagering and stops the counter (Compl. ¶¶34, 78).
Asserted Claims
The complaint asserts apparatus claim 1, among others (Compl. ¶¶78, 81).
Accused Features
The complaint alleges the DraftKings sports betting platform infringes by determining if a user is in an approved location (e.g., New Jersey), permitting wagering, implementing time-based "Player Limits," and terminating sessions if the user leaves the jurisdiction (Compl. ¶¶83, 87, 88).
III. The Accused Instrumentality
Product Identification
The accused instrumentalities are the DraftKings daily fantasy sports and sports betting platforms, accessible via mobile applications (iOS and Android) and web browsers ("Accused Products") (Compl. ¶18).
Functionality and Market Context
The complaint alleges the Accused Products provide online contests and sports betting where users can pay to play for monetary prizes (Compl. ¶15). A core feature of the Accused Products is their system for complying with state-by-state gambling regulations (Compl. ¶13). This system is alleged to determine a user's eligibility by verifying their identity and age, and critically, by determining the user's geographic location before and during gameplay to ensure they are in a jurisdiction where the activity is authorized (Compl. ¶¶15-16). The complaint provides a screenshot of the DraftKings app prompting the user, "To play in contests, we're required to verify your location. Rules are rules," as evidence of this functionality (Compl. p. 23). DraftKings is identified as one of the largest online sites for daily fantasy sports (Compl. ¶14).
IV. Analysis of Infringement Allegations
U.S. Patent No. 8,956,231 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| determine that a device is authorized to use a gaming service based on one or more characteristics of the device other than location | The DraftKings platform allegedly determines if a user's device runs approved software, meets minimum compatibility requirements, and is not running software that allows cheating. | ¶44 | col. 76:5-7 |
| determine that a user of the device is authorized to use the gaming service | The platform allegedly requires users to verify their identity and confirm they are at least 18 years of age. A screenshot of the app's birthday entry screen is provided as evidence (Compl. p. 22). | ¶45 | col. 76:8-9 |
| determine that the device is associated with a first location in which gaming activity is allowed | The platform allegedly determines that the user's device is within a non-restricted state before permitting paid-entry contests. | ¶46 | col. 76:10-11 |
| allow gaming activity based on the determination that the device is authorized, the determination that the user is authorized, and the determination that the device is associated with the first location | The platform allegedly grants access to gaming services once the user's identity, the device's integrity, and the device's location have all been verified. | ¶47 | col. 76:12-15 |
| determine a period of time ... after which a location redetermination ... should be made, in which the period of time is determined based on a distance of the first location from a boundary of an area | The complaint alleges on information and belief that the platform periodically locates user devices and that the period of time between location checks may depend on the device's location relative to the boundary of the allowed area. | ¶48 | col. 76:16-20 |
| determine that the period of time has passed; and in response ... determine whether the device is associated with a second location in which gaming activity is allowed | After a period of time expires, the platform allegedly determines if the user is still in an authorized location where gaming services can be accessed. | ¶49 | col. 76:21-24 |
Identified Points of Contention
- Technical Questions: A central technical question will be whether the DraftKings platform actually performs the function recited in the "determine a period of time" element. The complaint alleges, "on information and belief," that the time between location checks "may depend on the location of the device in relation to the boundary" (Compl. ¶48). The case may turn on whether discovery reveals evidence that the accused system performs this specific distance-based calculation, or if it uses a simpler method, such as fixed-time intervals, that may not meet the claim limitation.
- Scope Questions: What constitutes "a boundary of an area" will likely be a subject of claim construction. The parties may dispute whether this refers only to a state border or could also refer to the edge of a smaller, administratively-defined geofence, such as one around a casino property.
U.S. Patent No. 8,974,302 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| determine whether a mobile device is authorized to use a gaming service | The platform allegedly determines if the device runs approved software and is not running inappropriate software that could enable cheating. | ¶58 | col. 70:19-20 |
| determine whether a user of the mobile device is authorized to use the gaming service | The platform allegedly requires each user to verify their account, including their identity and that they are at least 18 years of age. A screenshot of the birthday verification screen is referenced (Compl. p. 30). | ¶59 | col. 70:21-22 |
| to repeatedly: determine whether the mobile device is within or without a geographical area in which the user is allowed to engage in gaming activity | The platform allegedly determines the user's location "periodically and in real time" to ensure the device is within a non-restricted state before allowing entry into paid contests. | ¶60 | col. 70:23-27 |
| allow or disallow the user's gaming activity based at least in part on the determination that the mobile device is authorized, the determination that the user is authorized, and the determination that the mobile device is located... | Once the platform verifies the device, user, and location, it allegedly grants the user access to its gaming services. | ¶61 | col. 70:28-33 |
| determine a period of time to elapse until the next repetition of determination ... the period of time to be based at least in part on a distance of the mobile device from a boundary of the gaming-allowed geographical area | The complaint alleges on information and belief that the platform periodically determines device location and that the "elapsed period of time may relate to the user's location within the non-restricted boundary and the user's distance to the boundary." | ¶62 | col. 70:34-40 |
Identified Points of Contention
- Technical Questions: As with the ’231 Patent, a key factual dispute will likely concern the final "determine a period of time" element. The plaintiff will need to produce evidence that the time between location checks is not merely periodic, but is specifically modulated "based at least in part on a distance" from a boundary.
- Scope Questions: The term "repeatedly" may be a point of contention. The defendant may argue that its location checks are too infrequent or are not performed in a manner that satisfies the claim's requirement for repeated determination throughout a gaming session.
V. Key Claim Terms for Construction
For the ’231 and ’302 Patents
- The Term: "determine a period of time ... based at least in part on a distance of the ... device from a boundary of the ... area"
- Context and Importance: This term is the core of the asserted novelty, distinguishing the invention from a simple system that merely checks location at fixed intervals. The infringement case for both patents hinges on whether the Accused Products' location-checking frequency is modulated by the device's proximity to a jurisdictional boundary. Practitioners may focus on this term because it recites a specific, conditional logic that Plaintiff must prove is present in the accused system.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The claim language "based at least in part on a distance" suggests that distance need not be the only factor; other parameters could also influence the timing, potentially broadening the scope to cover more complex algorithms.
- Evidence for a Narrower Interpretation: The specification describes using "a network of concentric geofences" to determine the parameters for location checks and varying the "time between periodic location checks based on these parameters" (Compl. ¶¶13, 26; ’302 Patent, col. 12:8-14). A defendant may argue this disclosure limits the claim to systems that use such specific geofence-based or similar dynamic timing mechanisms, and not systems with fixed or manually triggered checks.
VI. Analyst’s Conclusion: Key Questions for the Case
The resolution of this dispute, subject to the dispositive validity issues for the ’231 and ’967 patents, will likely depend on the answers to two central questions:
- A core question will be one of claim construction and scope: Can the phrase "determine a period of time ... based on a distance ... from a boundary," which describes a dynamic, conditional process, be construed to read on the actual location-verification architecture used by the DraftKings platforms? The outcome will depend on whether this language requires a specific calculation based on proximity to a border, a function the Accused Products may not perform.
- A key evidentiary question will be one of technical proof: The complaint alleges on "information and belief" that the accused backend systems vary location check frequency based on distance to a boundary. Can the plaintiff, through technical discovery, produce concrete evidence that the accused systems perform this specific function, or will the evidence show a more generic, fixed-interval location check system that falls outside the claim limitations?