DCT
6:14-cv-00151
Sweepstakes Patent Co LLC v. Burns
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Sweepstakes Patent Co, LLC (Florida)
- Defendant: Intl Internet Technologies, LLC (Oklahoma), et al.
- Plaintiff’s Counsel: Schneider Rothman Intellectual Property Law Group PLLC
- Case Identification: 6:14-cv-00151, M.D. Fla., 01/29/2014
- Venue Allegations: Venue is alleged to be proper as Defendants reside in, have a regular and established place of business in, and committed the alleged acts of infringement within the judicial district.
- Core Dispute: Plaintiff alleges that Defendants’ computer-based promotional sweepstakes systems, offered in internet cafes, infringe patents related to interactive, pre-determined outcome lottery games.
- Technical Context: The technology involves systems that use an entertaining, interactive video game to reveal the pre-determined outcome of a sweepstakes or lottery entry.
- Key Procedural History: Plaintiff SPC asserts rights via an exclusive license acquired in 2012, with the original patents licensed in 1999. The complaint alleges Defendants received notice of the patents from a prior licensee in 2010. Significantly, post-grant review proceedings were initiated against both patents-in-suit in 2015, resulting in the cancellation of all claims of both patents in February 2018. This subsequent invalidation of the asserted intellectual property is a critical development for the case.
Case Timeline
| Date | Event |
|---|---|
| 1995-04-06 | Earliest Priority Date for '082 and '603 Patents |
| 1996-10-29 | '082 Patent Issued |
| 1998-01-20 | '603 Patent Issued |
| 1999-03-05 | Initial Exclusive License Agreement to Gizmo Enterprises |
| 2010-01-01 | Defendants Allegedly Notified of Patents (stated as "at least 2010") |
| 2012-08-16 | Plaintiff SPC Acquired Exclusive License |
| 2014-01-29 | Complaint Filed |
| 2018-02-01 | U.S. Patent 5,569,082 Post-Grant Review Certificate Issued (All Claims Cancelled) |
| 2018-02-05 | U.S. Patent 5,709,603 Post-Grant Review Certificate Issued (All Claims Cancelled) |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 5,569,082 - "Personal Computer Lottery Game"
The Invention Explained
- Problem Addressed: The patent's background describes conventional lottery games, such as scratch-off tickets, as having a low level of excitement, insufficient player interaction, and being prone to fraud and tampering (’082 Patent, col. 2:36-44).
- The Patented Solution: The invention is a system where a player acquires a "gaming piece" (e.g., a ticket) containing a pre-determined, hidden "Destiny Code" that dictates a win or loss. The player enters this code into a computer, which then runs an entertaining "amusement game" (like a simulated poker game). The computer controls the amusement game's outcome to match the pre-determined Destiny Code, thus revealing the win or loss in an exciting fashion (’082 Patent, Abstract; col. 2:10-24).
- Technical Importance: This system separates the fixed, pre-determined outcome from the method of its reveal, allowing operators to offer engaging, video game-style experiences while maintaining the controlled odds of a traditional lottery or sweepstakes (’082 Patent, col. 2:6-9).
Key Claims at a Glance
- The complaint asserts independent claim 10 (Compl. ¶77).
- The essential elements of claim 10 are:
- A gaming piece with an unrecognizable code indicating a win/loss outcome for a lottery game and an amusement game.
- A processor to receive the code from the player.
- The processor generates an amusement game on a display for the player.
- The processor controls the win/loss of the amusement game based on the entered code.
- A display that indicates the win or loss to the player.
- The complaint reserves the right to assert other claims (Compl. ¶74).
U.S. Patent No. 5,709,603 - "Personal Computer Lottery Game"
The Invention Explained
- Problem Addressed: Like its parent '082 patent, the '603 patent aims to improve upon traditional lottery games by adding interactivity and excitement (’603 Patent, col. 1:16-29).
- The Patented Solution: This invention refines the concept by focusing on a reusable "gaming piece," such as a casino-style chip, that contains a "programmable memory" to store the Destiny Code. This allows the code to be stored and read electronically. The system also explicitly contemplates allowing the player to choose from a "plurality of amusement games" through which the single pre-determined outcome can be revealed (’603 Patent, Abstract; col. 16:36-40).
- Technical Importance: The invention advanced the art by moving from disposable, single-use media toward reusable electronic tokens with stored value or data, a precursor to modern card-based gaming systems in casinos and arcades (’603 Patent, col. 1:59-65).
Key Claims at a Glance
- The complaint asserts independent claim 7 (Compl. ¶78).
- The essential elements of claim 7 are:
- A gaming piece with a programmable memory for storing an unrecognizable code indicating a win/loss outcome.
- A processor for reading the code from the memory.
- The processor generates an amusement game on a display.
- The processor determines the win/loss outcome based on the code.
- A display that indicates the win or loss.
- The complaint reserves the right to assert other claims (Compl. ¶74).
III. The Accused Instrumentality
Product Identification
- The accused instrumentalities are the "computer based sweepstakes game products and systems" developed and licensed by Defendant IIT for use in internet cafes operated by other Defendants (Compl. ¶¶35, 39, 48).
Functionality and Market Context
- The system operates by selling customers internet access time, which comes with a "proportional number of entries into a free promotional sweepstakes" (Compl. ¶¶61, 62). Customers log in to a computer terminal, typically by swiping a magnetic stripe account card (Compl. ¶63). A visual provided in the complaint shows a login screen prompting the user to "Swipe the Card's Magnetic Stripe Toward Light" (Compl. p. 10).
- After logging in, the customer is given a choice to either use the internet or to play a "Sweepstakes Entry Revealer" game to find out the result of their sweepstakes entries (Compl. ¶64). A screenshot illustrates this choice, showing buttons for "Internet Access" and "Sweepstakes Entry Revealer" (Compl. p. 11). The outcome is pre-determined and drawn from a finite pool of entries; the "amusement game" (e.g., a simulated poker game) is merely an entertaining vehicle to display that pre-set result and the player's interaction does not affect the outcome (Compl. ¶¶69, 70). A visual shows a screen to "Select A Sweepstakes Entry Revealer" from several casino-style game icons (Compl. p. 12).
IV. Analysis of Infringement Allegations
'082 Patent Infringement Allegations
| Claim Element (from Independent Claim 10) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| a gaming piece, said gaming piece including a code which includes data indicating whether a player wins or loses the lottery game and an amusement game... | The customer's magnetic stripe account card, which is linked to a server-side account holding pre-determined sweepstakes entries that function as the "code." | ¶¶61, 63 | col. 3:8-14 |
| a processor for receiving said code input by the player... | The computer terminal and its card reader, which receives the account information when the card is swiped, thereby accessing the code. | ¶63 | col. 2:17-18 |
| said processor generating the amusement game on a display for play by the player | The terminal's software presents a "Sweepstakes Entry Revealer" game, such as a simulated casino game, on the monitor for the user to play. | ¶¶67, 68 | col. 4:22-31 |
| said processor determining whether the player will win or lose the amusement game based upon said code | The system's central server retrieves the pre-defined sweepstakes outcome associated with the player's account and dictates the outcome of the amusement game to match it. | ¶70 | col. 2:20-24 |
| a display for providing an indication to the player of the amusement game win or loss based upon said code | The terminal's monitor displays the final result of the interactive amusement game, thereby revealing the pre-determined sweepstakes outcome. | ¶69 | col. 2:23-24 |
'603 Patent Infringement Allegations
| Claim Element (from Independent Claim 7) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| a gaming piece, said gaming piece including a programmable memory for storing a code... | The magnetic stripe account card, which stores a customer identifier. This is alleged to be a "programmable memory" that "stores" the code by linking to it on a server. | ¶63 | col. 13:20-25 |
| a processor for reading said code from said memory... | The card reader on the computer terminal, which reads the account identifier from the magnetic stripe to access the associated sweepstakes entries (the code) from the server. | ¶63 | col. 13:26-31 |
| said processor generating the amusement game on a display for play by the player | The terminal's software presents a "Sweepstakes Entry Revealer" game on the monitor. | ¶¶67, 68 | col. 4:45-50 |
| said processor determining whether the player will win or lose the amusement game based upon said code | The central server uses the pre-defined outcome associated with the account to control the result of the amusement game. | ¶70 | col. 2:25-29 |
| a display providing an indication to the player of the amusement game win or loss... | The terminal's monitor displays the result of the amusement game, revealing the sweepstakes win or loss. | ¶69 | col. 2:29-31 |
Identified Points of Contention
- Scope Questions: A primary point of dispute may be whether a customer account card, which serves as a key to access a code stored on a remote server, meets the claim requirement of a "gaming piece including a code." The defense may argue the code is not on the piece itself, but on the server.
- Technical Questions: For the '603 patent, a key question is whether the magnetic stripe on an account card qualifies as a "programmable memory for storing a code." The patent's specification appears to contemplate a more sophisticated device, like an integrated circuit chip that can be electronically rewritten, rather than a card with a static identifier that points to a server (’603 Patent, FIG. 15).
V. Key Claim Terms for Construction
The Term: "gaming piece"
- Context and Importance: The definition of this term is fundamental, as the infringement theory hinges on the customer's account card meeting this limitation. The dispute will likely center on whether the "piece" must physically contain the win/loss code or if it can simply be a token that provides access to the code stored elsewhere.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification uses the general term "Game Medium" and notes it can involve "magnetic or laser techniques," which a plaintiff could argue is broad enough to cover a server-linked magnetic stripe card system (’082 Patent, col. 3:11-13).
- Evidence for a Narrower Interpretation: The patent’s detailed description focuses on embodiments where the "Destiny Code" is physically located on the piece, such as printed on paper or stored in a self-contained memory chip, suggesting the piece itself is the container of the outcome data (’082 Patent, col. 3:8-10; ’603 Patent, FIG. 15).
The Term: "programmable memory for storing a code" (from '603 Patent, Claim 7)
- Context and Importance: This term is a key limitation in the '603 patent, and its construction is critical to determining infringement. Practitioners may focus on this term because the accused instrumentality is a simple magnetic stripe card, whereas the patent specification depicts a more complex integrated circuit.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: A plaintiff might argue that because the central system can associate the static ID on the card with different sweepstakes entries (codes) over time, the card-and-server system as a whole functions as a "programmable" system, and the card's memory is an integral part of it.
- Evidence for a Narrower Interpretation: The specification's depiction of a gaming piece with an integrated circuit, CPU, and erasable memory suggests the "programmable memory" is a rewritable data-storage medium located on the gaming piece itself, not just a static identifier pointing to a remote, programmable server (’603 Patent, FIG. 15, col. 13:20-31).
VI. Other Allegations
- Indirect Infringement: The complaint alleges inducement by Defendants licensing the infringing systems to internet cafe operators and contributory infringement by providing patrons with access to those systems (Compl. ¶¶121, 139).
- Willful Infringement: Willfulness is alleged based on Defendants' purported knowledge of the patents since "at least 2010" from a notice by the prior exclusive licensee, Gizmo, and their subsequent continued infringement (Compl. ¶¶79, 91, 99).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of technical scope: does a system where a magnetic stripe card acts as an identifier to retrieve a pre-determined outcome from a remote server meet the claim limitations requiring a "gaming piece including a code," particularly the '603 patent's more specific requirement of a "programmable memory for storing a code"? The case may turn on whether storing a pointer to a code is legally equivalent to storing the code itself.
- A dispositive issue will be one of patent validity: given that all asserted claims of both patents were cancelled by the USPTO in post-grant review proceedings that concluded in 2018, the central question for the court is the legal status of the lawsuit itself. The invalidation of the patents renders them unenforceable, which may moot claims for injunctive relief and future damages, leaving only the question of whether damages can be collected for the period of infringement prior to cancellation.