FanDuel’s patent arguments ‘strain credulity’, says Fed Circuit

The  US Court of Appeals for the Federal Circuit has backed the Patent Trial and Appeal Board’s handling of a gambling patent review, in a defeat for virtual bookmaker  FanDuel.

FanDuel, a subsidiary of Irish company  Flutter Entertainment, used the inter partes review (IPR) system to challenge the validity of a patent owned by Interactive Games.

The patent covers a system that wirelessly communicates with users’ mobile devices, allowing them to gamble remotely.

The PTAB found almost all of the challenged claims to be unpatentable, except for claim 6 of the patent. According to the board, FanDuel failed to prove that claim 6 should be invalidated in light of prior art.

But FanDuel said the PTAB had violated the Administrative Procedure Act (APA) by basing this finding on arguments that were not raised by Interactive Games during the proceedings.

In yesterday’s judgment, the Federal Circuit ruled by 2-1 majority to affirm the PTAB’s original decision, finding that it was consistent with the APA and supported by “substantial evidence”.

FanDuel’s appeal was based on a provision in the APA requiring the PTAB to “timely inform” the parties about the matters of fact and law asserted in IPR proceedings.

The Irish-owned brand said the PTAB failed to do this when it based its claim 6 decision on a combination of prior art not addressed by Interactive Games in its responses. This was akin to introducing a “new theory” of obviousness without properly informing the parties, FanDuel claimed.

Specifically, FanDuel argued that because the PTAB found enough evidence to institute a review of claim 6, and that there was “no further record development” on the issues raised, then it was entitled to notice before the PTAB ruled against it.

But in the words of Circuit Judge Todd Hughes, “FanDuel’s argument that it lacked notice that the board might address and reject the obviousness arguments made in FanDuel’s own petition strains credulity”.

Hughes said there was no inconsistency in the PTAB finding sufficient evidence for the obviousness of claim 6 to institute review, but then ruling in favour of the patent owner.

That’s because the standards of proof required to institute are less than that required to invalidate a patent for obviousness, Hughes emphasised.

The judge wrote: “There is nothing inherently inconsistent about the board instituting IPR on obviousness grounds and then ultimately finding that the petitioner did not provide preponderant evidence that the challenged claim was obvious. This happens with some frequency.”

But in a dissenting opinion, Circuit Judge Timothy Dyk said the PTAB had used the wrong standard for obviousness. According to Dyk, the PTAB’s decision on claim 6 was based on an “impermissibly rigid view of the prior art” which requires too much of a person of ordinary skill in the art.

FanDuel was acquired by Dublin-based Flutter in 2018, which also owns brands like Paddy Power, Betfair, and FOX Bet.

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