DraftKings loses four IP challenges against Colossus Bets over cashout
United States Patent and Trademark Office rejects Boston-based giant’s claims in decision that could have major ramifications
DraftKings has lost four inter partes reviews (IRPs) in relation to long-running disputes over patent infringements with Colossus Bets over cashout products.
In decisions handed down by judges from the United States Patent and Trademark Office, the body did not grant the challenges to the US operator.
Colossus Bets previously challenged DraftKings in December 2021 with the patent infringement lawsuit.
Colossus Bets CEO Bernard Marantelli was one of the first figures in the industry to develop cashout technology, via UK-based Diogenes Limited.
The legal challenges date back to 2016 and cover “specific improvements in computer technologies related to distributed gaming and distributed gaming utilising desktop computers, mobile devices, and specialised kiosks”.
IPRs are used when a third party, typically a person or body who is not the owner of the patent, challenges the patentability of a claim.
In each of the four cases, judges determined that DraftKings failed to show “reasonable likelihood” in its challenges to claims that Diogenes held the patent to cashout technology.
Judges rejected DraftKings’ challenge that cashout technology could be comparable to previous cases in which players effectively ‘cashed out’ from slot machines or video poker machines in bonus rounds.
Judges noted that in this case, known as Dewaal, players made “separate choices at each leg of the bonus game” instead of in real-time.
Citing the Dewaal cases, judges said that a wager in that context is a bet that is set ahead of time of the event. Judges said DraftKings had failed to sufficiently address the limitations of the claims laid out in Dewaal
Colossus Bets and Diogenes argued that DraftKings’ reliance on Dewaal “improperly combine[d] disclosures of multiples embodiments”.
The duo claimed that DraftKings mapped Dewaal to detailed wagers are placed to access bonus events, whereas the pair claimed it should be read as a bet being placed to participate in the primary game only.
Mapping, in this sense, is used to describe how each party arrived at a claim by following the history of previous cases, namely DeWaal.
The pair noted the claim “does not provide requisite reasoning to combine teachings from disparate embodiments”.
The ruling stated: “Nor has Petitioner [DraftKings] explained adequately how DeWaal identifies ‘players eligible to win each of the defined number of legs’ of the bonus game ‘based on the wager’ as required by the challenged claims. Rather, Petitioner again refers to the player’s input for each round of the bonus game.”
The ruling added that judges were “not persuaded” by DraftKings’ mapping in relation to cashout.
The judges said: “DeWaal discloses that, after each round of the bonus game, the central controller may offer advancing players an opportunity to quit the bonus game in exchange for an award.”
This, in turn, means that players themselves making decisions to cashout independently are not covered by DeWaal.
The ruling flies in the face of a decision handed down by the District of Delaware in July 2022 which saw a federal judge side with DraftKings in the case.
The decision could be a severe blow for DraftKings. At the time of the filings in December 2021, Colossus stated it believed its patents applied to all accepted US bets with a cashout feature since the repeal of PASPA in 2018.
The firm noted it was looking to claim damages equivalent to the gross revenue from those bets. That figure could amount to more than $1bn from DraftKings.
At the time, Marantelli said: “We take our intellectual property very seriously. This is the next step towards protecting our rights and income across the industry in the US.”
EGR has contacted DraftKings for comment.