Activision Blizzard Inc v. Milestone Entertainment LLC

1. Case Identification

• Case #: IPR2025-00713
• Patent #: 11,501,607
• Filed: March 26, 2025
• Petitioner(s): Activision Blizzard, Inc.
• Patent Owner(s): Milestone Entertainment, LLC
• Challenged Claims: 1, 2, 4, 6, 7, 11, 15, and 19

2. Patent Overview

• Title: System and Method for Effecting User Experience in an Electronic Game Environment
• Brief Description: The ’607 patent describes a networked gaming system designed to enhance player participation. The system uses a server to store pre-set "mandated parameters" (e.g., overall prize payout rates) and dynamically modifies "variable parameters" (e.g., game difficulty, prizing structure) to ensure the mandated parameters are met while optimizing the player's experience, including through the use of virtual currency ("vCoins").

3. Grounds for Unpatentability

Ground 1: Obviousness over Kelly683 - Claims 1, 2, 7, 11, 15, and 19 are obvious over Kelly683 alone or in view of the knowledge of a POSITA.

• Prior Art Relied Upon: Kelly683 (Patent 8,172,683).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner argued that Kelly683 discloses every limitation of the challenged claims. Kelly683 teaches a networked gaming system with a central server that allows an operator to set "mandated parameters" such as a "global payout percentage" and "win ratios." To achieve these targets, the Kelly683 system modifies "variable parameters" by adjusting game structure (e.g., speed of objects, difficulty of questions) and prizing structure (e.g., prize costs, availability). Petitioner asserted this directly maps to the ’607 patent’s core concept of using mandated and variable parameters. Kelly683 also discloses using game credits as virtual money that can be purchased, mapping to the "vCoins" limitations.
  • Motivation to Combine (for §103 grounds): As a single-reference ground, the motivation focused on combining various disclosed embodiments within Kelly683 itself. Petitioner argued that Kelly683 explicitly teaches that its features are options that can be combined, which would have motivated a person of ordinary skill in the art (POSITA) to arrive at the claimed invention. For elements not expressly combined, such as storing payment information on the same server as registration information, Petitioner contended this was a known and obvious design choice for consolidating functions and creating redundancy.
  • Expectation of Success (for §103 grounds): A POSITA would have had a high expectation of success because combining the disclosed features of Kelly683 involved predictable programming modifications and the application of known server architecture principles.

Ground 2: Obviousness over Kelly683 and Paulsen - Claims 4 and 6 are obvious over Kelly683 in view of Paulsen.

• Prior Art Relied Upon: Kelly683 (Patent 8,172,683) and Paulsen (Application # 2005/0153768).
• Core Argument for this Ground:
  • Prior Art Mapping: This ground built upon Ground 1, adding Paulsen to teach the limitations of dependent claims 4 and 6, which require a server that includes "player's club information" and tracking of "non-cash amounts." Petitioner argued that while Kelly683 teaches player accounts, Paulsen explicitly discloses modern player tracking systems that use club cards and loyalty programs to provide "rewards, or 'comps'" and track non-cash points based on patronage and play frequency.
  • Motivation to Combine (for §103 grounds): A POSITA would combine Paulsen's player tracking system with Kelly683's dynamic game adjustment system for several reasons: to promote player engagement and retention, to increase revenue by incentivizing continued play, and to improve the overall user experience by offering loyalty rewards. These motivations aligned with the stated goals of both references.
  • Expectation of Success (for §103 grounds): Success was predictable because both references already involved tracking player-specific data. Integrating Paulsen's loyalty program data into Kelly683's existing player account framework was presented as a straightforward database and programming task, merely adding another layer of known functionality.

Ground 3: Obviousness over Walker and Schneier143 - Claims 1, 2, 4, 6, 7, 11, 15, and 19 are obvious over Walker in view of Schneier143.

• Prior Art Relied Upon: Walker (Application # 2004/0002369) and Schneier143 (Patent 5,970,143).
• Core Argument for this Ground:
  • Prior Art Mapping: Petitioner asserted that Walker discloses a system that adjusts a game to ensure results satisfy "predetermined criteria" (the ’607 patent’s mandated parameters) by modifying "game parameters" like difficulty, rules, or duration (the ’607 patent’s variable parameters). To the extent Walker does not explicitly disclose using virtual currency during gameplay (e.g., to buy items or lives), Petitioner argued that Schneier143 remedies this. Schneier143, which shares inventors with Walker, expressly teaches earning credits during gameplay and using those credits to purchase in-game items or access new levels.
  • Motivation to Combine (for §103 grounds): A POSITA seeking to improve the system in Walker would have naturally looked to other work by the same inventors. The combination was also motivated by the desire to enhance user experience; adding Schneier143’s in-game credit system would prevent less-skilled players from becoming frustrated and make the game more interesting for advanced players.
  • Expectation of Success (for §103 grounds): Petitioner argued for a high expectation of success because the systems in Walker and Schneier143 are substantially similar in structure and function, and both relate to the use of game credits. Implementing the more detailed credit functionality of Schneier143 into Walker's framework was a predictable extension of existing features.

4. Arguments Regarding Discretionary Denial

• Petitioner argued that institution is appropriate under §325(d) because the primary prior art references (Kelly683, Walker, Paulsen, and Schneier143) and the asserted combinations were never presented to or considered by the USPTO during prosecution of the ’607 patent.
• Petitioner also argued that discretionary denial under Fintiv is inapplicable because the parallel district court litigation is currently stayed and no trial date is scheduled, meaning an IPR would resolve the patentability issues more efficiently.

5. Relief Requested

• Petitioner requests institution of an inter partes review and cancellation of claims 1, 2, 4, 6, 7, 11, 15, and 19 of the ’607 patent as unpatentable.