DCT
2:16-cv-00762
Computer Tracking Systems LLC v. Churchill Downs Inc
Key Events
Complaint
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Computer Tracking Systems LLC (Texas)
- Defendant: Churchill Downs, Inc. (Kentucky)
- Plaintiff’s Counsel: DEVLIN LAW FIRM LLC
- Case Identification: 2:16-cv-00762, E.D. Tex., 07/12/2016
- Venue Allegations: Plaintiff alleges venue is proper in the Eastern District of Texas because Defendant conducts business in the district, the alleged acts of infringement occurred in the district, and the claims arise from Defendant’s business contacts within the district.
- Core Dispute: Plaintiff alleges that Defendant’s online horse racing wagering platform infringes two patents related to computerized systems for tracking player purchases in games of chance and allocating a portion of those proceeds to a registered player account.
- Technical Context: The technology at issue involves systems and methods for implementing player loyalty and rewards programs in the gaming industry, particularly for tracking player spending and creating associated financial or rewards accounts.
- Key Procedural History: The complaint does not mention any prior litigation or post-grant proceedings involving the patents-in-suit. U.S. Patent No. 6,872,138 is a divisional of the application that matured into U.S. Patent No. 6,666,768, indicating a close relationship and shared specification between the two patents.
Case Timeline
| Date | Event |
|---|---|
| 2001-03-06 | Priority Date for '768' Patent and '138' Patent |
| 2003-12-23 | Issue Date for U.S. Patent No. 6,666,768 |
| 2005-03-29 | Issue Date for U.S. Patent No. 6,872,138 |
| 2016-07-12 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 6,872,138 - "System and Method for Tracking Game of Chance Proceeds"
- Patent Identification: U.S. Patent No. 6,872,138 (“System and Method for Tracking Game of Chance Proceeds”), issued March 29, 2005 (Compl. ¶9).
The Invention Explained
- Problem Addressed: The patent describes a market where state-sponsored games of chance, such as lotteries, are largely anonymous and face increasing competition from other forms of legal gaming like casinos and online racing (’138 Patent, col. 1:12-23, 1:49-54). This anonymity prevents sponsors from tracking, understanding, and rewarding individual players to build loyalty (’138 Patent, col. 1:55-57).
- The Patented Solution: The patent discloses a computerized method for establishing a registered player account and a corresponding "set aside" amount. The method involves receiving and validating a player's identification, obtaining authorization, and registering the player to create an account (’138 Patent, col. 11:1-12). A portion of the registered player's purchases is then allocated to the "set aside," which is subsequently transferred to the player's account once it reaches a predefined threshold within a specific time period (’138 Patent, col. 11:13-20).
- Technical Importance: This approach aimed to increase the competitiveness and social acceptance of sponsored gaming by enabling loyalty tracking and allowing a portion of player purchases to be directed into dedicated accounts, such as personal retirement or savings accounts (’138 Patent, col. 2:1-15).
Key Claims at a Glance
- The complaint asserts independent claim 1 and dependent claims 3 and 6 (Compl. ¶16).
- Independent Claim 1 recites essential elements including:
- In a computer environment, a method for establishing a registered player set aside and registered player account, comprising:
- receiving identification from a player;
- determining whether the identification is valid;
- obtaining the player's authorization to establish a registered player account;
- registering the player;
- establishing a registered player set aside; and
- establishing a registered player account, the registered player set aside increased by a predetermined portion of a registered player's purchase, the registered player set aside transferred to the registered player account, once the registered player’s set aside amount reaches a predetermined threshold level in a predetermined period of time.
U.S. Patent No. 6,666,768 - "System and Method for Tracking Game of Chance Proceeds"
- Patent Identification: U.S. Patent No. 6,666,768 (“System and Method for Tracking Game of Chance Proceeds”), issued December 23, 2003 (Compl. ¶30).
The Invention Explained
- Problem Addressed: Similar to the ’138 Patent, the ’768 Patent addresses the need for sponsors of games of chance to track player activity to compete effectively and overcome negative public perceptions of gaming (’768 Patent, col. 1:12-34).
- The Patented Solution: The patent describes a tracking system comprising at least one player communication device (e.g., a personal computer) and a sponsor computer (’768 Patent, col. 12:10-14). The player device facilitates purchases and sends purchase information to the sponsor computer, which then calculates a "set aside amount" based on the purchase. Crucially, the availability of this set aside amount is not dependent on the outcome of the game (’768 Patent, col. 12:15-25).
- Technical Importance: The system provided a technical framework for sponsors to collect player data for targeted marketing and product development, while also offering players a tangible, non-gambling-related benefit derived from their play (’768 Patent, col. 2:56-65).
Key Claims at a Glance
- The complaint asserts independent claims 13, 26, and 31, along with numerous dependent claims (Compl. ¶37).
- Independent Claim 13 (a system claim) recites essential elements including:
- at least one player communication device adapted to facilitate registered player purchases and communicate purchase information; and
- a sponsor computer adapted to receive and store the purchase information and calculate a set aside amount based on the purchase, where the availability of the set aside is not dependent on the game's result.
- Independent Claim 26 (a method claim) recites steps including:
- receiving player identification, a player selecting and purchasing a sponsor game of chance item, and determining if the player is registered; and
- increasing a registered player's current set aside amount with a predetermined amount of a purchase amount, where availability is not dependent on the game's result.
- Independent Claim 31 recites a computer-readable medium with instructions for performing the steps of method claim 26.
III. The Accused Instrumentality
Product Identification
- The accused instrumentalities are Defendant's "Oaklawn Anywhere online racing gaming products" and associated services, which are allegedly available through the website www.oaklawnanywhere.com (Compl. ¶16, ¶37).
Functionality and Market Context
- The complaint alleges the accused products provide an "interactive website" for online horse race gaming (Compl. ¶16). The platform allegedly allows users to register, be identified, and have their purchases (wagers) tracked (Compl. ¶16, ¶37). A core accused feature is a system that sets aside a "predetermined amount of a player's electronic purchases to be deposited into a registered player's account based on predetermined conditions" (Compl. ¶16). The complaint specifically points to a rewards program in connection with its infringement allegations (Compl. ¶18). No probative visual evidence provided in complaint.
IV. Analysis of Infringement Allegations
’138 Patent Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| receiving identification from a player; determining whether the identification is valid; obtaining the player's authorization to establish a registered player account; registering the player; | The complaint alleges the accused method includes the steps of receiving identification from a player, determining its validity, obtaining authorization, and registering the player to establish an account. | ¶17 | col. 9:27-39 |
| establishing a registered player set aside; | The accused method is alleged to establish a "registered player set aside." | ¶17 | col. 9:40-41 |
| and, establishing a registered player account, the registered player set aside increased by a predetermined portion of a registered player’s purchase... | The complaint alleges the set aside increases by a predetermined portion based on a player's purchase. | ¶17 | col. 2:21-23 |
| ...the registered player set aside transferred to the registered player account, once the registered player’s set aside amount reaches a predetermined threshold level in a predetermined period of time. | The complaint alleges that once the set aside amount reaches a predetermined threshold within a predetermined time period, it is transferred to the player's account. | ¶17 | col. 2:23-31 |
- Identified Points of Contention:
- Scope Questions: A primary question will be whether the "Oaklawn Anywhere" rewards program (Compl. ¶18) functions as the claimed "registered player set aside" that is "transferred" to a "registered player account." The nature of the reward (e.g., points, credits, or cash) and the mechanism of its deposit will be central to determining if it meets these limitations.
- Technical Questions: The complaint asserts that the transfer of the set aside occurs after reaching a "predetermined threshold level in a predetermined period of time" (Compl. ¶17). A key factual issue will be whether the accused system's rules for awarding or redeeming loyalty benefits align with this specific temporal and threshold-based limitation.
’768 Patent Infringement Allegations
| Claim Element (from Independent Claim 13) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| at least one player communication device adapted to facilitate registered player purchases... | The accused system is alleged to use a player communication device (e.g., a personal computer, as asserted for dependent claim 14) to facilitate player purchases of game of chance items. | ¶38, ¶40 | col. 6:7-14 |
| and further adapted to electronically communicate registered player purchase information... | The player's device allegedly communicates purchase information electronically. | ¶38 | col. 6:11-14 |
| a sponsor computer adapted to electronically receive registered player purchase information, store the registered player purchase information... | A "sponsor computer" allegedly receives and stores the registered player's purchase information. | ¶38 | col. 6:17-20 |
| and calculate a set aside amount based upon the registered player's purchase information... | The sponsor computer allegedly calculates a set aside amount from the player's purchase information. | ¶38 | col. 6:20-21 |
| ...wherein availability of the set aside amount is not dependent upon a result of the game of chance item. | The complaint specifically alleges that the availability of the set aside amount is based on the player's purchases rather than the result of the game. | ¶38 | col. 12:21-25 |
- Identified Points of Contention:
- Scope Questions: The case may turn on whether a "wager" on a horse race constitutes a "purchase of [a] game of chance item" as the term is used in the patent. While the specification mentions "racing" (’768 Patent, col. 1:22), its detailed examples focus on "lottery tickets," which may support an argument for a narrower scope (’768 Patent, col. 2:11).
- Technical Questions: Claim 13 requires a specific two-part architecture: a "player communication device" and a "sponsor computer." An evidentiary question will be whether the accused web-based platform is organized in this distinct manner or as a more integrated system that does not map onto the claimed components.
V. Key Claim Terms for Construction
The Term: "set aside amount" (asserted in claims of both patents)
- Context and Importance: This term is the core of the patented concept. Its construction will determine whether a system of loyalty points, account credits, or other non-cash benefits falls within the scope of the claims, or if the term is limited to a segregated monetary value.
- Intrinsic Evidence for a Broader Interpretation: The specification describes the amount simply as a "predetermined portion of the registered player's purchase (e.g., ten percent)" (’768 Patent, col. 2:21-23), which could be argued to encompass any value derived from and proportional to a purchase.
- Intrinsic Evidence for a Narrower Interpretation: The specification consistently describes the purpose of the player account as holding funds for specific, long-term financial goals, such as a "personal retirement account, medical savings account, real estate investment account, small business investment account and/or educational savings account" (’768 Patent, col. 2:26-31). This could support a construction limiting the "set aside amount" to a monetary sum intended for such formal, segregated accounts.
The Term: "game of chance item" (asserted in claims of both patents)
- Context and Importance: The accused instrumentality is an online horse racing wagering platform. Whether placing a "wager" is equivalent to purchasing an "item" is critical to the infringement analysis.
- Intrinsic Evidence for a Broader Interpretation: The background section notes that state-run lotteries compete with "online gaming and/or racing," suggesting the inventor contemplated the invention's applicability to this field (’768 Patent, col. 1:21-23).
- Intrinsic Evidence for a Narrower Interpretation: The patent repeatedly uses "lottery tickets" as the primary embodiment of a "game of chance item" (’768 Patent, col. 2:11, 4:2). A defendant may argue that the word "item" itself implies a discrete good or product, which is distinct from the act of placing a wager in a pari-mutuel pool.
VI. Other Allegations
- Indirect Infringement: The complaint alleges inducement of infringement under 35 U.S.C. § 271(b). The factual basis alleged is that Defendant provides "instruction materials, training, and services" and advertises and distributes the accused products, thereby actively aiding and abetting its partners, customers, and end users to directly infringe the patents (Compl. ¶25-26, ¶64-65).
- Willful Infringement: The complaint alleges that Defendant had knowledge of both the ’138 and ’768 patents "at least as early as the filing of this Complaint" (Compl. ¶24, ¶63). This forms the basis for a claim of post-suit willful infringement.
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of definitional scope: can the patents’ central concept of a "set aside amount", which the specification links to funding formal savings or investment accounts, be construed to read on the loyalty rewards program of the accused online horse racing platform?
- A second key question will address the applicability of the claimed technology: does placing a wager on a horse race constitute the "purchase" of a "game of chance item" as contemplated by the patents, which heavily feature lottery tickets as their primary embodiment?
- A final dispositive issue will likely be one of factual correspondence: does the accused system's method for crediting rewards to a player's account meet the specific limitations of ’138 Patent Claim 1, which requires the "set aside" to be "transferred" only after it "reaches a predetermined threshold level in a predetermined period of time"?