Arnold & Porter Secures Win in Patent Infringement Case, Setting Precedent for Online Gaming

An Arnold & Porter team secured a significant victory for our client BetMGM at the United States Court of Appeals for the Federal Circuit on June 21, 2024, ending a three-year-old patent infringement litigation. A patent assertion entity known as Beteiro, LLC had sued most of the industry in the online gaming space, including our client, DraftKings, Fan Duel, UniBet, and others asserting infringement of four patents centered around the usage of GPS technology to verify location in online gaming applications. This area is of utmost importance to the online gaming industry as the legal framework of online gaming remains a patchwork of state-based regulatory regimes.

In the United States District Court for the District of New Jersey, our team won a Rule 12(b)(6) Motion to Dismiss on grounds that the asserted patents were invalid under 35 U.S.C. § 101 as directed towards unpatentable subject matter. The same Arnold & Porter team has won three other similar rulings in the past years, including one based on similar GPS-based patent claims.

Beteiro appealed to the Federal Circuit. After briefing over the past year, the case was argued before the appellate court on May 5, 2024. The precedential ruling handed down today will have wide-ranging implications for our client, the online gaming industry, and for future technology industry defendants in patent lawsuits.

First, the Federal Circuit essentially slammed the door on GPS-based patent claims in the online gaming space, finding the technology to be abstract under the first prong of the familiar Alice analysis. It also made it difficult for these types of claims to survive step two of Alice regarding inventive concepts. Additionally, and perhaps more importantly, Judge Stark, writing for the Federal Circuit panel, addressed Rule 12(b)(6) pleading standards under the auspices of step two of Alice, announcing a defendant-favorable standard for pleading inventive concept that requires patent infringement plaintiffs to tie a complaint’s claims of an inventive concept to language in the patent specification, and instructs courts to be skeptical of such claims in the complaint if they were not reflected in the patent specification.

The major ruling gives patent defendants one of the first positive precedential decisions to rely upon for future Rule 12(b)()(6) motions in years and is bound to be cited in nearly every “Rule 101 Motion” going forward.

The case was handled at the lower Court by Evan Rothstein and Patrick Hall, with assistance from former associate Anna Kaul and associate Estayvaine Bragg. At the Federal Circuit, the same team handled the briefing, and Elisabeth Theodore was brought on to make the winning argument at the Federal Circuit. Stanton Jones and Andrew Tutt also assisted in the preparation for the oral argument.