DCT
1:21-cv-20148
Beteiro LLC v. DraftKings Inc
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Beteiro, LLC (Florida)
- Defendant: DraftKings, Inc. (Delaware, with a principal place of business in New Jersey)
- Plaintiff’s Counsel: Kluger Healey, LLC; Garteiser Honea, PLLC
- Case Identification: 1:21-cv-20148, D.N.J., 11/22/2021
- Venue Allegations: Venue is based on Defendant's principal place of business, physical offices, and employees within the District of New Jersey, which Defendant promotes as the headquarters for its Sportsbook Team.
- Core Dispute: Plaintiff alleges that Defendant’s online sports wagering platform infringes four patents related to systems and methods for facilitating remote gambling activities by using geolocation data to ensure compliance with jurisdictional laws.
- Technical Context: The technology at issue involves using a user's geographical location, determined by a mobile device's global positioning system, to authorize or disallow online wagers, a critical function for the regulated U.S. mobile sports betting market.
- Key Procedural History: The complaint emphasizes that during the prosecution of all four asserted patents, the patent examiner specifically considered their eligibility under 35 U.S.C. § 101 in view of the Supreme Court’s Alice Corp. v. CLS Bank Int'l decision and found the claims patent-eligible, framing them as a technological solution rather than an abstract idea.
Case Timeline
| Date | Event |
|---|---|
| 2002-05-31 | Priority Date for all Asserted Patents |
| 2018-03-16 | ’920 Patent Notice of Allowability |
| 2018-05-08 | ’920 Patent Issued |
| 2018-06-11 | ’341 and ’266 Patents Notice of Allowability |
| 2018-08-07 | ’341 Patent Issued |
| 2018-12-04 | ’266 Patent Issued |
| 2019-04-09 | ’755 Patent Issued |
| 2021-11-22 | Complaint Filed |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 9,965,920 - "Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity"
- Patent Identification: U.S. Patent No. 9,965,920, "Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity," Issued May 8, 2018.
The Invention Explained
- Problem Addressed: The patent’s background section notes that while many people enjoy gambling, they often lack physical access to gaming venues and to information that would enhance their experience (Compl. ¶30; ’920 Patent, col. 1:44-52). Prior art systems failed to provide a way to conduct remote wagering while also complying with the laws of different jurisdictions (Compl. ¶31; ’920 Patent, col. 1:53-58).
- The Patented Solution: The invention is an apparatus, including a specially programmed processor, that detects when a sporting event is available for betting, generates and transmits a notification to a user's communication device, receives a bet message from the user, and transmits video or audio information from the event back to the user's device (Compl. ¶21; ’920 Patent, Abstract). This system was designed to provide a technological solution for remote wagering that could "utilize global positioning technology in order to ascertain the jurisdiction in which or from which a bet is placed" (’920 Patent, col. 26:14-18).
- Technical Importance: The invention describes a technical framework for remote, interactive wagering that addresses the core problem of geographical restriction, which was a significant barrier to online gambling at the time of invention (Compl. ¶32, ¶34).
Key Claims at a Glance
- The complaint asserts at least independent Claim 16 (Compl. ¶117).
- Essential elements of Claim 16 include:
- An apparatus comprising a computer with a processor specially programmed for specific functions.
- Detecting a posting of information regarding a sporting event for which a bet can be placed and generating a notification message.
- Initiating a communication link and transmitting the notification to a first user communication device.
- A receiver for receiving a bet message from a user communication device.
- A transmitter for transmitting video or audio information regarding, and obtained at, the sporting event to a user communication device.
- The complaint does not explicitly reserve the right to assert dependent claims.
U.S. Patent No. 10,043,341 - "Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity"
- Patent Identification: U.S. Patent No. 10,043,341, "Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity," Issued August 7, 2018.
The Invention Explained
- Problem Addressed: The patent identifies the same core problem as the ’920 Patent: the lack of an effective way to administer and regulate electronic and online wagering across different legal jurisdictions, which limited remote participation (Compl. ¶35; '341 Patent, col. 1:44-58).
- The Patented Solution: The invention is an apparatus with a computer that detects a gaming event, sends a notification, and receives a bet message from a user's device that includes a "global positioning device" (’341 Patent, Abstract). The bet message itself contains information regarding the user's position, which the computer then uses to determine if the bet is "allowed or disallowed" (’341 Patent, Abstract). This solution directly integrates geolocation data into the bet authorization process to facilitate legal compliance ('341 Patent, col. 8:14-24).
- Technical Importance: This technology provided a basis for legally compliant remote wagering by creating a system that could assess the legality of a proposed wager in real-time based on the user's physical location (Compl. ¶29, ¶35).
Key Claims at a Glance
- The complaint asserts at least independent Claim 13 (Compl. ¶76).
- Essential elements of Claim 13 include:
- An apparatus comprising a computer with a processor specially programmed for specific functions.
- Detecting a posting of information regarding a sporting event and generating a notification message.
- Initiating a communication link and transmitting the notification to a first device.
- Receiving a bet message from a first or second communication device which comprises a global positioning device.
- The bet message contains information regarding the bet and information regarding the position or location of the device.
- Determining if the bet is allowed or disallowed using the position or location information.
- The complaint does not explicitly reserve the right to assert dependent claims.
U.S. Patent No. 10,147,266 - "Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity"
- Patent Identification: U.S. Patent No. 10,147,266, "Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity," Issued December 4, 2018.
- Technology Synopsis: This patent describes an apparatus with a computer that detects a gaming or sporting event and generates a notification message (Compl. ¶23). The computer sends the notification to a user's communication device, which includes a global positioning device, and then receives a bet message back from the user; the system then uses the position information to determine whether the bet is allowed or disallowed and processes it accordingly (Compl. ¶23).
- Asserted Claims: At least Claim 1 (Compl. ¶91).
- Accused Features: The complaint alleges that the DraftKings Wagering Platform infringes by using geolocation to allow or disallow wagers, thereby practicing the claimed invention (Compl. ¶92, ¶95, ¶97).
U.S. Patent No. 10,255,755 - "Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity"
- Patent Identification: U.S. Patent No. 10,255,755, "Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity," Issued April 9, 2019.
- Technology Synopsis: This patent claims a method and apparatus for detecting a posting of information about a gaming or sporting event, generating and transmitting a notification, and receiving a bet message from a communication device that has a global positioning device (Compl. ¶24). The system then determines if the bet is allowed or disallowed using the position or location information from the user's device (Compl. ¶24).
- Asserted Claims: At least Claim 2 (Compl. ¶104).
- Accused Features: The complaint accuses the DraftKings Wagering Platform of infringing by performing the claimed method of using a user's geolocation to approve or deny wagers (Compl. ¶105, ¶108, ¶110).
III. The Accused Instrumentality
Product Identification
- The accused instrumentalities are Defendant’s "branded Mobile Wagering Platform," which includes the DraftKings Sportsbook, associated state-specific websites (e.g., sportsbook.draftkings.com/nj), and associated mobile applications (Compl. ¶22, ¶55).
Functionality and Market Context
- The platform is a system of hardware (including servers) and software that allows users to place wagers on sporting events (Compl. ¶6, ¶77). A core alleged functionality is the collection and use of location information from the user's device to ensure compliance with jurisdictional gambling laws (Compl. ¶56). The complaint alleges that users are required to enable location services, which may involve installing a third-party plugin like GeoComply, to "pinpoint your physical location via your wireless internet connection." (Compl. p. 28, Figure Group B). The complaint presents a map from Defendant's website illustrating the states where its mobile betting services are live, indicating its significant market presence (Compl. p. 23, Figure Group A).
IV. Analysis of Infringement Allegations
’920 Patent Infringement Allegations
| Claim Element (from Independent Claim 16) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| An apparatus, including a computer including a processor... specially programmed for... processing information for providing for a placement of a bet on or regarding a sporting event | The Accused Instrumentalities comprise a system of hardware (servers) and software specially programmed for offering, accepting, monitoring, and fulfilling wagers on sporting events. | ¶118 | col. 36:1-14 |
| the processor... detects a posting of information regarding a sporting event for which a bet can be placed, and generates notification messages regarding such sporting events | The platform’s processor detects postings of sporting event schedules, odds, and status, and upon detection, delivers notification messages, such as updated odds for specific wagers. | ¶119 | col. 9:1-13 |
| the computer of the apparatus initiates a communication link with a first user communication device and transmits the notification message to the first user communication device via the communication link | Notifications are delivered to users when the system initiates a communication link with the user’s browser or mobile application, which then assembles and displays the updated data. | ¶119 | col. 9:25-34 |
| a receiver which receives a bet message, containing information regarding a bet on or regarding the sporting event, transmitted from the first user communication device or a second user communication device | The platform is configured to receive "bet messages" from users' communication devices, which are transmitted via the internet to Defendant’s servers for fulfillment. | ¶120 | col. 10:27-31 |
| a transmitter which transmits video information or audio information regarding, and obtained at, the sporting event to the first user communication device, the second user communication device, or a third user communication device | The platform’s transmitters transmit video and/or audio information to users in the form of real-time game status and odds updates, as shown in the platform's live in-game betting interface. | ¶124, ¶120 | col. 8:1-7 |
’341 Patent Infringement Allegations
| Claim Element (from Independent Claim 13) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| An apparatus, including a computer including a processor... specially programmed for... processing information for providing for a placement of a bet on or regarding a sporting event | The Accused Instrumentalities are a system of hardware (servers) and software programmed to offer, accept, monitor, and fulfill wagers on sporting events. A screenshot shows the interface for placing a bet. (Compl. p. 34, Figure Group C). | ¶77 | col. 8:50-54 |
| the processor... detects a posting of information regarding a sporting event for which a bet can be placed, and generates a notification message containing information regarding the sporting event | The platform’s processor detects postings of sporting event data, such as updated odds, and generates notification messages that are displayed to the user. | ¶80 | col. 9:1-13 |
| the computer of the apparatus initiates a communication link with a first communication device and transmits the notification message to the first communication device... | The notifications are delivered to users when the system initiates a communication link with the user’s browser or mobile application. | ¶80 | col. 9:25-34 |
| receiving a bet message transmitted from the first communication device or from a second communication device, wherein the first communication device or the second communication device comprises a global positioning device | The platform receives "bet messages" from user devices and requires all users to enable global positioning software (e.g., GeoComply) on their devices to participate in wagering. | ¶81, ¶82 | col. 14:13-24 |
| wherein the bet message contains information regarding a bet to be placed... and information regarding the position or location of the first device or the second device at a time of a transmission of the bet message... | The platform is configured such that the global positioning data of the user's device is transmitted contemporaneously with the bet message and is contained as part of the bet message. | ¶83 | col. 42:25-42 |
| determining if the bet is allowed or disallowed using the position or location information of the first device or the second device | The platform’s computer/processor processes incoming bet messages to allow or disallow the wagers based on the global position of the device from which the bet message originated, to comply with regulatory requirements. | ¶84 | col. 42:43-52 |
- Identified Points of Contention:
- Scope Questions: A primary question for the ’920 Patent infringement analysis may be whether the "real-time game status and odds updates" (Compl. ¶124) alleged to be transmitted by the accused platform constitute "video information or audio information regarding, and obtained at, the sporting event" as required by claim 16. Defendant may contend that numerical data feeds do not meet the plain meaning of "video" or "audio" "obtained at" the event.
- Technical Questions: For the ’341 Patent, a key factual question may be whether the accused platform's "bet message" actually "contains" the "position or location information." Defendant may argue that location verification is a prerequisite condition performed separately from the transmission of the wager data itself, whereas Plaintiff alleges the location data is "transmitted contemporaneous with the bet message, and is otherwise contained as part of the bet message" (Compl. ¶83).
V. Key Claim Terms for Construction
The Term: "bet message" (’341 Patent, Claim 13)
Context and Importance: The definition of this term is critical because infringement of Claim 13 requires the "bet message" to contain both wager information and location information. Practitioners may focus on this term because the architecture of the accused system—which may perform location checks as a distinct step before accepting a wager—could create a dispute over whether the location data is truly "contained" within the message that communicates the bet itself.
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent specification does not narrowly define "bet message." It describes a user transmitting a request to place a bet and the system processing that request, which could be interpreted to encompass all data necessary for a legally compliant transaction, including location data transmitted contemporaneously ('341 Patent, col. 9:25-34, col. 10:27-31).
- Evidence for a Narrower Interpretation: The claim requires the location information to be "contain[ed]" in the message. An embodiment describes the user device "automatically transmitting position data... to the respective central processing computer," which could be construed as a transmission separate from the user’s selection of a wager ('341 Patent, col. 14:13-24).
The Term: "video information or audio information regarding, and obtained at, the sporting event" (’920 Patent, Claim 16)
Context and Importance: This term's construction will likely be dispositive for infringement of the ’920 Patent. Plaintiff’s theory relies on real-time score and odds data meeting this limitation. Practitioners may focus on this term because there is a potential mismatch between the plain meaning of "video" and "audio" and the data feeds shown in the complaint's evidence (Compl. p. 55, Figure Group D).
Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent has a 2002 priority date, and its specification discusses providing users with information to enhance their experience remotely ('920 Patent, col. 1:44-52). A party might argue that in the context of the invention's purpose, any real-time data "regarding" the event should be covered.
- Evidence for a Narrower Interpretation: The plain language of "video" and "audio" suggests more than numerical or textual data. The phrase "obtained at, the sporting event" suggests a direct sourcing from the physical venue, which a simple data feed of scores and odds may not represent ('920 Patent, col. 51:40-46).
VI. Other Allegations
- Indirect Infringement: The complaint does not plead separate counts for indirect infringement.
- Willful Infringement: The complaint alleges willful infringement for all asserted patents based on Defendant’s continued infringement after receiving actual notice of the patents via the service of the complaint (Compl. ¶86, ¶99, ¶112, ¶126).
VII. Analyst’s Conclusion: Key Questions for the Case
- A central issue will be one of claim scope and technical equivalence: Does the transmission of numerical, real-time game status and odds data by the DraftKings Sportsbook platform meet the ’920 Patent’s requirement for transmitting "video information or audio information regarding, and obtained at, the sporting event"? The case may turn on whether a data stream can be construed as the functional equivalent of video or audio in the context of the patent.
- A second core issue will be one of claim construction and system architecture: For the geo-location patents (e.g., the ’341 Patent), does the accused platform's method of verifying a user's location satisfy the claim requirement that the "bet message" itself "contains... information regarding the position"? This question will likely require a detailed analysis of how and when DraftKings' system transmits location data relative to wager data.
- A third key question will be one of patent eligibility: Despite the examiner's allowance over an Alice rejection during prosecution, the court will have to determine whether the claims are directed to a patent-eligible technological improvement for implementing remote, location-based wagering, or to the abstract idea of wagering based on geographic rules.