DCT
1:23-cv-02746
Vetnos LLC v. Sideprize LLC
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Vetnos, LLC (Delaware)
- Defendant: SidePrize LLC d/b/a PrizePicks (Georgia)
- Plaintiff’s Counsel: Greenberg Traurig, LLP
- Case Identification: 1:23-cv-02746, N.D. Ga., 06/20/2023
- Venue Allegations: Plaintiff alleges venue is proper because Defendant resides and has a regular and established place of business in the Northern District of Georgia.
- Core Dispute: Plaintiff alleges that Defendant’s daily fantasy sports platform infringes patents related to fixed-odds gaming systems and was developed using misappropriated trade secrets.
- Technical Context: The daily fantasy sports industry offers skill-based games to sports fans, representing a significant and growing segment of the global sports and entertainment market.
- Key Procedural History: The complaint alleges that Defendant had extensive pre-suit knowledge of the patents-in-suit and underlying technology. Allegations include direct communications in 2018 between a Vetnos co-inventor and Defendant’s CEO, in which the CEO allegedly stated an intent to copy the technology; repeated warnings that patent applications were pending; and Defendant’s hiring of a former employee of Plaintiff’s predecessor who allegedly possessed confidential information. Plaintiff also alleges sending formal notice letters prior to filing suit.
Case Timeline
| Date | Event |
|---|---|
| 2014-09-08 | Earliest Priority Date for ’543, ’147, and ’754 Patents |
| 2014-11-01 | Plaintiff's predecessor (GSN) allegedly launches "HotRoster" daily fantasy sports game |
| 2015-09-18 | GSN hires Steven Kerstein |
| 2017-06-19 | GSN lays off Steven Kerstein |
| 2018-07-01 | Alleged call between Vetnos co-inventor and PrizePicks CEO about Vetnos technology |
| 2018-10-01 | PrizePicks allegedly hires Steven Kerstein as "Risk Management Advisor" |
| 2018-10-04 | Accused PrizePicks product launch announced |
| 2019-07-16 | ’543 Patent Issued |
| 2021-10-26 | ’147 Patent Issued |
| 2021-12-01 | Vetnos co-inventor allegedly reiterates infringement warning to PrizePicks CEO |
| 2023-02-14 | ’754 Patent Issued |
| 2023-03-22 | Vetnos counsel sends letter to PrizePicks concerning patent infringement and trade secrets |
| 2023-05-08 | Vetnos sends follow-up letter to PrizePicks |
| 2023-06-20 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 10,353,543 - "Method and system for presenting and operating a skill-based activity"
The Invention Explained
- Problem Addressed: The patent’s background section describes traditional fantasy sports as time-consuming due to their season-long format, which can deter casual fans. It also notes that such games are often based on a pari-mutuel format, where winnings depend on the number of participants and their wagers, creating prize uncertainty for players. (’543 Patent, col. 2:19-37).
- The Patented Solution: The invention is a system for a skill-based game that presents users with a series of "matchups" between sports participants (e.g., athletes). An activity server communicates with user computing devices, serving these matchups along with pre-determined, "fixed-payout odds." A user's success is based solely on their own selections against these fixed odds, not on the performance or wagers of other users in a pool. The system is designed to use historical performance data to help an operator create balanced matchups. (’543 Patent, Abstract; col. 3:56-4:16).
- Technical Importance: This fixed-odds approach against the "house" simplifies the gaming experience and provides prize certainty, distinguishing it from traditional pari-mutuel fantasy sports pools. (Compl. ¶11-13).
Key Claims at a Glance
- The complaint asserts independent claim 1. (Compl. ¶101).
- The essential elements of Claim 1 of the ’543 Patent include:
- A system with a non-transitory storage medium and at least one activity server system that communicates over a network with multiple user presentation devices.
- The server serves a "set of matchups of participants along with associated fixed-payout odds based on winning user matchup selections."
- The system receives "user roster data" characterizing user-selected winners for the matchups.
- The system updates event data and calculates payouts, where the determination of a winner or loser is "based solely upon the given user's selections and not on those of other users."
- The system further performs computer processes for receiving schedule and player information, and "ranking... the athletes using historical fantasy point performance values... based at least upon calculated expected fantasy point performance values."
- The system causes a graphical user interface to display the athletes according to their expected performance values, allowing a "matchmaker" to select players for a matchup.
- The complaint reserves the right to assert dependent claims 2–6 and 15–18. (Compl. ¶100).
U.S. Patent No. 11,157,147 - "Method and system for presenting and operating a skill-based activity"
The Invention Explained
- Problem Addressed: The patent addresses the same drawbacks of traditional fantasy sports as the parent ’543 Patent, namely the high time commitment and the prize uncertainty associated with pari-mutuel formats. (’147 Patent, col. 2:20-42).
- The Patented Solution: The ’147 Patent describes a similar server-based system for presenting skill-based matchups with fixed payouts. A key distinction in its representative claim is the explicit link between the payout odds and the quantity of matchups a user chooses to play. The claim recites that the game is displayed with "fixed-payout odds associated with the number of matchups selected by the given user for the game." (’147 Patent, col. 38:21-25; Fig. 9).
- Technical Importance: This patent family aims to provide a technical framework for a more accessible form of daily fantasy sports that offers predictable, fixed-odds prizes. (Compl. ¶11-13).
Key Claims at a Glance
- The complaint asserts independent claim 1. (Compl. ¶120).
- The essential elements of Claim 1 of the ’147 Patent are substantially similar to those of the ’543 Patent’s Claim 1, including the server system, user devices, serving of matchups, receiving user selections, and ranking athletes based on historical data. It adds the specific limitation that:
- The skill-based game is displayed with "fixed-payout odds associated with the number of matchups selected by the given user for the game."
- The complaint reserves the right to assert dependent claims 2–6 and 12–18. (Compl. ¶119).
U.S. Patent No. 11,579,754 - "Method and system for presenting and operating a skill-based activity"
- Technology Synopsis: As a continuation in the same family, the ’754 Patent also describes a system to overcome the limitations of traditional fantasy sports with a fixed-odds, skill-based game. Its claims specifically recite matchup types offered to a user, including both a head-to-head matchup where a user projects one set of participants to outperform another, and an "over/under" matchup where a user projects a participant's score to be over or under a score projected by the activity server system. (’754 Patent, col. 46:10-22).
- Asserted Claims: Independent claim 1 is asserted. (Compl. ¶139).
- Accused Features: The complaint accuses the PrizePicks product’s system of offering users "over-under" style predictions for athletes against a server-generated projected fantasy score, with associated fixed-payout odds. (Compl. ¶143, 145-146).
III. The Accused Instrumentality
Product Identification
- The "PrizePicks product," a daily fantasy sports game and system offered through the PrizePicks website and mobile applications. (Compl. ¶33, 91).
Functionality and Market Context
- The PrizePicks product is a "fixed-odds format" game where users do not compete against each other in a pari-mutuel pool. (Compl. ¶102, 108). Instead, the system "curates a board of players to select from on a daily basis," and users predict whether selected players will go "over or under their projected fantasy score." (Compl. ¶106, 143).
- Payouts are predetermined multipliers based on the number of correct predictions in an entry (e.g., "4-Pick Power Play," "3-Pick Power Play"). (Compl. ¶105, 108). The user can see potential payouts before finalizing their entry. (Compl. ¶105). The complaint alleges that PrizePicks uses historical performance values to calculate the projected fantasy scores, or "Lines," against which users make their predictions. (Compl. ¶110).
- The complaint alleges that PrizePicks' use of this technology has allowed it to "capture a significant share of the market for fixed-odds daily fantasy sports gaming." (Compl. ¶74).
No probative visual evidence provided in complaint.
IV. Analysis of Infringement Allegations
U.S. Patent No. 10,353,543 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| A system for presenting a skill-based game, the system comprising: a non-transitory storage medium... at least one activity server system... and a device storage system... | The PrizePicks product is a system that uses a server to communicate with user computing devices (computers, smartphones) over the internet via its website and mobile apps, and it stores user and event data. | ¶102-104 | col. 3:56-65 |
| serving... a set of matchups of participants along with associated fixed-payout odds based on winning user matchup selections... | The PrizePicks system delivers matchups to end-user devices that are associated with fixed-payout odds, offering users an opportunity to play the skill-based game. | ¶105 | col. 4:5-9 |
| receiving, separately, from the presentation devices... user roster data characterizing... a set of user-selected winners... | PrizePicks receives users’ selections of players and their over/under predictions on a daily basis. | ¶106 | col. 4:9-13 |
| determination of whether a given user is a winner or loser is based solely upon the given user's selections and not on those of other users... | Payouts in the PrizePicks system are based on how many picks are correct in a user's own entry, as opposed to the picks or performance of other users. | ¶108 | col. 4:40-43 |
| ranking by the activity server system the athletes using historical fantasy point performance values for the athletes based at least upon calculated expected fantasy point performance values... | PrizePicks allegedly uses historical fantasy point performance values to rank athletes and calculate the expected fantasy point performance values (the "Line" or projection) to be scored in their next game. | ¶110 | col. 4:61-65 |
| causing display by the activity server system in a graphical user interface identities of the athletes according to their expected fantasy point performance values wherein the graphical user interface allows a matchmaker to select players to assign to a matchup. | The complaint alleges that PrizePicks has tools for ranking players on the server side based on expected fantasy point performance, which are used to generate the "Lines" for the game's matchups. | ¶110 | col. 5:1-5 |
U.S. Patent No. 11,157,147 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| A system for presenting a skill-based game, the system comprising: a non-transitory storage medium... at least one activity server system... and a device storage system... | The PrizePicks product is a system that uses a server to communicate with user computing devices (computers, smartphones) over the internet via its website and mobile apps, and it stores user and event data. | ¶121-123 | col. 37:25-39 |
| serving over the wide area network... a set of matchups of participants along with associated fixed-payout odds based on winning user matchup selections... | The PrizePicks system delivers matchups to user devices that are associated with fixed-payout odds. | ¶124 | col. 38:1-6 |
| wherein the skill based game on the presentation device of any given user is displayed with fixed-payout odds associated with the number of matchups selected by the given user for the game... | PrizePicks’ “standard payouts” provide a payout multiplier (e.g., 10x for a 4-pick Power Play) that is based on how many picks are correct in an entry. | ¶127, 105 | col. 12:43-54 |
| receiving, separately, from the presentation devices... user roster data characterizing... a set of user-selected winners... | PrizePicks receives users’ selections of players and their over/under predictions on a daily basis. | ¶125 | col. 38:26-30 |
| determination of whether a given user is a winner or loser is based solely upon the given user's selections and not on those of other users... | Payouts in the PrizePicks system are based on a multiplier determined by the number of correct picks in a user's own entry, not on the outcomes of other users. | ¶127 | col. 38:36-40 |
| ranking by the activity server system the athletes using historical fantasy point performance values... | PrizePicks allegedly uses historical fantasy point performance values to rank athletes and to calculate expected performance values ("Lines") for its matchups. | ¶129 | col. 39:19-24 |
- Identified Points of Contention:
- Scope Questions: The ’543 and ’147 patents claim a system for serving "a set of matchups of participants." The complaint describes the accused product as primarily offering users "over/under" predictions against a server-generated "projected fantasy score." (Compl. ¶106). This raises the question of whether a "matchup of participants" as claimed can be construed to cover a single player's performance being compared to a static, server-generated projection, or if it requires a contest between at least two human participants.
- Technical Questions: The asserted claims require a process of "ranking... the athletes using historical fantasy point performance values" to calculate "expected fantasy point performance values" that are then used to create matchups. (Compl. ¶101, 120). A factual question for the court may be what evidence shows that the accused product's "Lines" are generated using the specific ranking and calculation methodology recited in the claims, as opposed to being derived from an alternative method or a third-party data source.
V. Key Claim Terms for Construction
- The Term: "a set of matchups of participants" (from Claim 1 of ’543 and ’147 Patents)
- Context and Importance: This term's construction is central to the infringement analysis for the ’543 and ’147 patents. The accused product is primarily described as an "over/under" game, where a user predicts a single athlete's performance relative to a server-generated number. (Compl. ¶106). Practitioners may focus on this term because Defendant could argue that a "matchup of participants" requires a contest between at least two distinct human participants, not one participant versus a projection.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification describes matchups as including "at least one participant of an event (e.g. a player in a professional sporting event)." (’543 Patent, col. 2:50-52). This language does not explicitly require two distinct human participants on opposing sides of a matchup.
- Evidence for a Narrower Interpretation: The patent figures consistently depict matchups as contests between two different athletes (e.g., "T. Brady vs B. Roethlis..."). (’543 Patent, Fig. 2). The specification also describes matchups that "pair one or more players, wherein a fan attempts to pick the player(s) of the matchup who they believe will be the winner." (’543 Patent, col. 3:6-9). This language may suggest a direct contest between opposing player participants.
VI. Other Allegations
- Indirect Infringement: The complaint alleges that Defendant induces infringement by encouraging users and business partners to use the PrizePicks product in a manner that directly infringes the asserted patents. (Compl. ¶99, 118, 137).
- Willful Infringement: The complaint alleges a basis for willful infringement based on extensive pre-suit knowledge. The allegations include a July 2018 conversation in which Defendant’s CEO was allegedly informed of the technology and pending patents and stated an intent to copy it; an in-person warning in December 2021; and formal notice letters in 2023. (Compl. ¶40-43, 111). The complaint further alleges that Defendant hired a former employee of Plaintiff's predecessor who had specific knowledge of the proprietary technology. (Compl. ¶45-46).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of definitional scope: can the term "matchups of participants," which is primarily exemplified in the patents as a contest between two athletes, be construed to cover the accused product's "over/under" format, which compares a single athlete's performance to a server-generated statistical projection?
- A key evidentiary question will concern infringement: what proof can Plaintiff offer that the accused product's method for generating player projections (its "Lines") practices the specific multi-step process of ranking and calculation recited in the claims, versus using a non-infringing methodology or third-party data?
- Given the complaint’s detailed allegations of pre-suit notice, direct copying, and the hiring of a knowledgeable former employee, a central focus will be on willfulness: should infringement be found, the court will need to determine whether Defendant’s alleged conduct was sufficiently egregious to warrant an award of enhanced damages.