Fanduel, Inc. v. Interactive Games LLC

• Decision Date: 29 July 2020
• Docket Number: 2019-1393
• Parties: FANDUEL, INC., Appellant v. INTERACTIVE GAMES LLC, Appellee
• Court: U.S. Court of Appeals — Federal Circuit

966 F.3d 1334

FANDUEL, INC., Appellant

v.INTERACTIVE GAMES LLC, Appellee

2019-1393

United States Court of Appeals, Federal Circuit.

Decided: July 29, 2020

Eric Allan Buresh, Erise IP, P.A., Overland Park, KS, argued for appellant. Also represented by Megan Joanna Redmond.

James R. Barney, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Washington, DC, argued for appellee. Also represented by Scott A. Allen, Joshua Goldberg, Robert Shaffer.

Before Dyk, Moore, and Hughes, Circuit Judges.

Opinion concurring in part and dissenting in part filed by Circuit Judge Dyk.

Hughes, Circuit Judge.

This is a patent case involving a system for remote gambling. FanDuel, Inc., appeals the final written decision of the Patent Trial and Appeal Board in an inter partes review of claims 1, 6–9, and 19 of U.S. Patent No. 8,771,058, which found unpatentable all challenged claims except claim 6. FanDuel, Inc. v. Interactive Games LLC , No. IPR2017-01491, 2018 WL 6112966 (P.T.A.B. Nov. 20, 2018) ( Board Decision ). The Board found that FanDuel, as petitioner, had failed to prove that claim 6 was obvious in view of the asserted prior art. On appeal, FanDuel argues that the Board violated the Administrative Procedure Act by basing this finding on obviousness issues that the patent owner did not raise in its responses. FanDuel also challenges the Board's factual findings regarding claim 6. Because the Board complied with the APA and its obviousness findings are supported by substantial evidence, we affirm.

I

A

Appellee Interactive Games LLC owns the ’058 patent, which describes a gaming system wherein a gaming service provider—such as a casino—wirelessly communicates with users’ mobile devices, allowing them to gamble remotely. The gaming system stores rules to determine the "game configuration" based on the location of a user's "mobile gaming device." ’058 patent col. 6 ll. 16–19, col. 12 ll. 15–17. The specification explains that the gaming system associates different gaming configurations with different locations by using a "lookup table" that

may include an ordered list of locations. For example, locations may be listed from East to West, in alphabetical order, or in any other fashion. Associated with each location may be one or more game configurations. The [casino's gaming system] may receive an indication from a mobile gaming device that the mobile gaming device has moved to a new location. ... [and, after] look[ing] up the new location in its lookup table[,] ... may determine an associated game configuration. ... [that is then transmitted] to the mobile gaming device.

’058 patent col. 12 ll. 18–28. Independent claim 1, which is not at issue in this appeal, generally describes altering a user's "game outcome" based on the gaming configuration associated with the location of the user's mobile gaming device. Id. col. 60 ll. 1–28.

Claim 6, which depends from claim 1, describes the gaming system's use of the look-up table when associating game configurations with locations:

6. The method of [claim] 1, in which determining the first game configuration includes:

accessing a lookup table which contains an ordered list of locations and associated game configurations ;

finding within the lookup table the first location; and determining that the first game configuration is associated with the first location.

Id. col. 60 ll. 45–51 (emphasis added).

B

FanDuel petitioned for inter partes review (IPR) of the ’058 patent on several grounds of obviousness. As relevant to this appeal, FanDuel challenged claim 6's validity based on the combination of three references: U.S. Patent App. Pub. 2002/0147049 (Carter) ; U.S. Patent App. Pub. 2004/0005919 (Walker) ; and an archived copy of a webpage (the Slot Payouts Webpage).

Carter describes a "location[-]based mobile wagering system" "capable of determining a gambler[’]s location and, thereby restrict[ing] access to the gaming controller based on the gambling laws where the gambler is located." Carter, title, ¶ 0010. To perform this function, Carter's system uses a "database" that may "contain distinct location information correlative to the physical location of [a] gaming unit and the gaming opportunities permitted in the jurisdiction in which the unit is located." Id. ¶ 0031 (numerical identifiers omitted). The database is maintained on a server and contains "jurisdictional profile[s] (e.g., jurisdictionally permitted gaming opportunities)." Id. ¶¶ 0012, 0037. Carter states that this system "may employ various integrated circuit (IC) components," such as "memory elements, processing elements, logic elements, look-up tables , and the like, which may carry out a variety of functions." Id. ¶ 0020 (emphasis added).

Walker describes a "method and apparatus for enabling a player to select features on a gaming device," where enabled features are stored in a "database." Walker, title, ¶ 0116. Walker describes various "predetermined conditions" that can be required for enabling certain features. Id. ¶¶ 0107, 0124–0125, 0269–0289. One example Walker gives of a predetermined condition is the "location or jurisdiction of a casino (e.g., a feature may be disabled within a first geographic region, such as the state of Nevada, but enabled within a second geographic region, such as an American Indian reservation in the state of Arizona)." Id. ¶ 0284; see also id. ¶ 0264 (adjusting features based on a player's location within a casino).

Finally, the Slot Payouts Webpage is an archived copy of a webpage titled "Slot Payouts by Casino / City / State." J.A. 3623. The webpage displays a chart of slot payout percentages for casinos and cities around the United States. The chart is organized alphabetically by state, with the various cities, regions, and casinos appearing in alphabetical order beneath each state.

C

The dispute here centers on whether the combination of these three references renders obvious claim 6's limitation of determining the "game configuration" by "accessing a lookup table which contains an ordered list of locations and associated game configurations." ’058 patent col. 60 ll. 45–48 (emphasis added).

In its IPR petition, FanDuel challenged claim 6 as obvious over Carter, Walker, and the Slot Payouts Webpage. Specifically, FanDuel argued that (1) Carter, either alone or in combination with Walker, teaches a look-up table of locations and associated game configurations, and (2) it would have been obvious to "store Carter's jurisdictional profiles in a look-up table including an ordered list of locations and associated jurisdictional information." J.A. 2050–51. Relying on the opinion of its expert, Mr. Kitchen, FanDuel asserted that it would have been "an obvious design choice" to store Carter's jurisdictional profiles in alphabetical order—as taught in the chart on the Slot Payouts Webpage—noting that "ordered lists were extremely well-known as a way to organize information for many years prior to the ’058 patent." J.A. 2050–51 (quoting Ex. 1011 ¶¶ 117–18 (Declaration of Mr. Garry Kitchen)).

In its preliminary patent owner response, Interactive Games argued against instituting as to claim 6 for the same reasons that it argued against instituting as to its parent claim 1. J.A. 2133. But the only argument Interactive Games put forth defending the validity of claim 6's unique "lookup table" and "ordered list" limitations was that the Slot Payouts Webpage did not qualify as prior art to the ’058 patent. J.A. 2133–42.

The Board instituted IPR for all the challenged claims on some of the asserted grounds. FanDuel, Inc. v. Interactive Games LLC , No. IPR2017-01491, 2017 WL 6206134, at *1 (P.T.A.B. Nov. 22, 2017) ( Institution Decision ). The Board found enough evidence to institute as to claim 6, rejecting—for purposes of its institution decision only—Interactive Games's evidentiary arguments against accepting the Slot Payouts Webpage as prior art. Institution Decision at *9–11 (finding that FanDuel demonstrated "a reasonable likelihood of prevailing" on its challenge that claim 6 was obvious over Carter, Walker, and the Slot Payouts Webpage).

Following institution, Interactive Games submitted a patent owner response. As in its preliminary response, Interactive Games's only argument specific to claim 6 was that claim 6 could not be obvious over any combination including the Slot Payouts Webpage, because it was not prior art. Interactive Games also submitted an expert declaration, but it did not rely on that declaration to rebut FanDuel's arguments and evidence specific to claim 6. FanDuel then filed a reply. As to the obviousness of claim 6, FanDuel's reply argued exclusively that the Board should maintain its institution decision view that the Slot Payouts Webpage is prior art.¹

The Board issued a final written decision finding claims 1, 7–9, and 19 unpatentable but upholding the patentability of claim 6. Board Decision at *1. The Board found that FanDuel failed to prove claim 6 obvious in view of Carter, Walker, and the Slot Payouts Webpage. Board Decision at *18.

In rejecting FanDuel's obviousness challenge to claim 6, the Board first disagreed with FanDuel's contention that Carter discloses "jurisdictional profiles being stored in a database employing look-up tables." Id. at *17. In the Board's view, Carter only generally references lookup tables as one of many components that might carry out a variety of functions and does not disclose specifically using a look-up table to correlate location information with jurisdictionally permitted gaming opportunities, as recited in claim 6. Id. (citing Carter ¶¶ 0020, 0031). And FanDuel had not explained why it would have been obvious to use a look-up table for this specific function. Id.

As to motivation to combine, the Board rejected as conclusory FanDuel's sole explanation that it would be an "obvious design choice" to apply the alphabetically "ordered list" of the Slot Payouts Webpage to organize Carter's jurisdictional profiles. Id. The Board concluded that FanDuel, again, did not...