DraftKings and FanDuel Under Fire for Patent Infringement

The internet is changing the way people wager on certain sports. One popular sports betting category comes in the form of online fantasy sports. For those who are not familiar with the game type, in fantasy sports, a player will choose real-life professional athletes to create a virtual team. This team will then compete against another player’s virtual team in a matchup. Based on the performance of the real-life athletes, a score will be given to each particular athlete in that virtual team. The player’s team with the most points will win the matchup. Usually there are a number of virtual teams that compete with each other in a league and payment is administered to the winner of the league at the end of the league’s season.

DraftKings and FanDuel have both become prominent figures in the online fantasy sports industry partly by introducing daily leagues as a new way of playing the game. Instead of being in a season-long commitment with a team, a player may instead create a different team every day and compete in numerous daily leagues Winners of those leagues receive payment the next day.

Recently, DraftKings and FanDuel have been accused by Virtual Gaming Technologies, LLC of infringing federal patents directly and indirectly by having their respective customers use the patented technology without providing compensation. The two patents in question are U.S. Patent 5,860,862 and U.S. Patent 6,193,610. U.S. Patent 5,860,862 involves a “unique computing solution” which allows interaction with the contest system in real time while U.S. Patent 6,193,610 involves technology designed to create an online competition based on a sports event simultaneously being broadcast on television.

According to the U.S Supreme Court’s decision last year in Alice Corp. v. CLS Bank International, mere computerization of a patent-ineligible abstract idea does not create a patent-eligible invention. Virtual Gaming’s legal theory is that the patents provide a solution to a computer-related problem and are not a “patent ineligible abstract idea.”

According to the complaint, Virtual Gaming is seeking a remedy under 35 U.S.C. § 284 which states that the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer.

By: Rolando Cubela, Associate Editor of Sports and Entertainment

Photo credit: via flickr.com cc

Sources Used:

http://www.law360.com/ip/articles/722237/fanduel-draftkings-accused-of-ripping-off-fantasy-patents

Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014)

http://www.forbes.com/sites/darrenheitner/2015/11/04/draftkings-fanduel-and-fox-sports-sued-for-patent-infringement/

https://en.wikipedia.org/wiki/Fantasy_sport