[00:00:00] Speaker 04:
Our next case is number 22-22-75, the Terrell RLC versus Draft Kings Inc.

[00:01:13] Speaker 04:
Okay, Mr. Fuller.

[00:01:30] Speaker 01:
Good morning.

[00:01:31] Speaker 01:
If it pleases the court, Scott Fuller on behalf of the plaintiff appellant, Patero LLC.

[00:01:37] Speaker 01:
We're here, of course, on a motion to dismiss

[00:01:43] Speaker 01:
one-on-one motion on four patents that were asserted in the district court below.

[00:01:47] Speaker 01:
We think we've clearly shown in our briefing and of course in our argument below that under both step one and step two of the eligibility analysis we think these claims should be held patent eligible and at minimum the motion to dismiss that was filed below should be rejected and the case should be remanded for further proceedings.

[00:02:09] Speaker 01:
I will point out something that's

[00:02:12] Speaker 01:
not in the record, but which just came up yesterday, the PTAB in the four pending IPRs that were followed by the defendants as to the

[00:02:25] Speaker 01:
the four asserted patents were all held to be patent eligible or patentable over the prior art.

[00:02:36] Speaker 01:
They were deemed to be not anticipated and not obvious.

[00:02:40] Speaker 01:
Now obviously we understand the distinction between 102 and 103 and we're not suggesting that the PTAB's finding is binding in any respect on this Court on 101.

[00:02:52] Speaker 01:
we do find it to be compelling evidence of what we have argued below and what we're arguing now, certainly the facts that are laid out in the complaint, and that is simply that the inventions that are captured in the asserted claims at the time of patenting were unconventional, and the fact that they are non-obvious we think is good evidence in support of that.

[00:03:14] Speaker 01:
So moving on to the argument as to step one, we think the proper approach

[00:03:20] Speaker 01:
were it taken by the district court, it never would have even reached step two.

[00:03:24] Speaker 01:
We don't believe there's an abstract idea embodied in these patents.

[00:03:29] Speaker 01:
The question at step one is not, what is the abstract idea?

[00:03:34] Speaker 01:
The question at step one is to determine, under TechSec and others, what is the focus of the invention?

[00:03:42] Speaker 01:
Read the specification.

[00:03:44] Speaker 01:
Read the claims.

[00:03:45] Speaker 01:
identify what the focus is.

[00:03:46] Speaker 01:
What do these claims identify?

[00:03:49] Speaker 03:
What do you say the focus is?

[00:03:50] Speaker 03:
Because if I understood from your briefing, it seemed awfully abstract even what you say the focus is.

[00:03:55] Speaker 03:
So tell us what the focus is.

[00:03:57] Speaker 01:
The focus of the claims has to include the unique aspects of the claims.

[00:04:03] Speaker 01:
And that is there is a remote yet legally compliant way for waiters to be placed

[00:04:13] Speaker 01:
to have legal compliance to a remote wagering platform.

[00:04:18] Speaker 01:
And that access includes, at minimum, the user communication device, the bet message, the use of the GPS, location information for the purposes of fulfilling or not fulfilling the wager, and of course the notification message on the front end.

[00:04:34] Speaker 01:
So that, however it is formulated, linguistically,

[00:04:42] Speaker 01:
is a specific solution to a problem.

[00:04:44] Speaker 01:
It's not an abstract statement of a problem.

[00:04:48] Speaker 03:
I guess we could argue about that.

[00:04:50] Speaker 03:
It sounded abstract to me when you said it.

[00:04:52] Speaker 03:
But the district court analogized to gambling institutions always having to know, are you in the right place?

[00:05:03] Speaker 03:
Some of these casinos, I guess, cross state lines, and half of it's legal, half of it's not legal.

[00:05:09] Speaker 03:
We've said that kind of real world analogy is a proper method of reasoning under Alice, at least, step one.

[00:05:21] Speaker 03:
Where does the district court err here?

[00:05:24] Speaker 01:
Numerous problems with that analogy.

[00:05:26] Speaker 01:
I'll begin with the fact that the analogy is

[00:05:33] Speaker 01:
is the exact embodiment and the exact state of the art that these claims were designed to overcome.

[00:05:42] Speaker 01:
Namely, in the prior art and in the face-to-face state line analogy or any in-person casino analogy, it is the casino itself that is geo-located.

[00:05:52] Speaker 01:
The casino doesn't move.

[00:05:53] Speaker 01:
The casino is located in a specific, fixed place.

[00:05:57] Speaker 01:
That's why, in a face-to-face casino environment,

[00:06:01] Speaker 01:
gamblers have to come to the casino.

[00:06:03] Speaker 03:
The casino doesn't... What I hear you saying is, yes, this is something that's long been done in the real world, but we're now going to do it on a computer.

[00:06:13] Speaker 03:
Isn't that what you're saying?

[00:06:15] Speaker 01:
That's not what I'm saying.

[00:06:16] Speaker 01:
What is done in the real world has no analogy to these claims, and because

[00:06:22] Speaker 01:
The real world required a face-to-face meeting.

[00:06:26] Speaker 01:
Now it's face-to-computer.

[00:06:28] Speaker 01:
It's face-to-computer in which you have no idea where the computer is.

[00:06:34] Speaker 01:
Under the gambling laws, we have to know that.

[00:06:38] Speaker 01:
The incorporation of a communication device, which is what the casino is now engaging with,

[00:06:48] Speaker 01:
into the claims was not conventional at the time.

[00:06:51] Speaker 01:
iPhones didn't even exist until 2007, and these claims over 2000 is to your priority.

[00:06:55] Speaker 04:
It seems to me to be a problem because if iPhones didn't exist until 2007 and you have to use an iPhone, how is this patent telling you how to do this?

[00:07:07] Speaker 01:
You don't have to use an iPhone.

[00:07:09] Speaker 04:
The claims are directed to a communication device, but the fact that the technology... You make much in your brief about the fact that this technology

[00:07:17] Speaker 04:
that enabled this to be done didn't exist at the time of Pat McShonnell, right?

[00:07:25] Speaker 01:
There were certainly iPhones didn't exist.

[00:07:28] Speaker 01:
The technology to carry out a computerized interaction existed, for sure.

[00:07:36] Speaker 01:
But the implication that the real world use and explosion in use didn't exist until several years later.

[00:07:45] Speaker 01:
I think that's the point of

[00:07:46] Speaker 01:
of what's laid out in the complaint, and specifically the facts that are laid out in the complaint.

[00:07:51] Speaker 04:
I guess the point is that your specification doesn't tell you how to do this.

[00:07:57] Speaker 04:
It seems like an abstract idea of figuring out where the computer is located and taking into account state gambling laws, but it doesn't tell you how to write the software to do that, right?

[00:08:09] Speaker 01:
It doesn't tell you how to write the software to do it, no.

[00:08:12] Speaker 01:
It's a system that incorporates

[00:08:15] Speaker 01:
geolocation as an input into the system, which is then used to carry out the backend of the method and the system claims, which says, okay, we're going to either carry out or not carry out based on the content of the VET message, part of which, one aspect of which, is the geolocation information.

[00:08:36] Speaker 01:
So that's what the claims require.

[00:08:39] Speaker 01:
And as of the date of patent 2002,

[00:08:44] Speaker 01:
As is laid out in the complaint, and again, which must be taken as true, there are a laundry list of facts which identify and illustrate and lead to the inference of unconventionality.

[00:08:55] Speaker 01:
All of those facts are in the pleading and we've cited to them.

[00:08:59] Speaker 01:
It's basically paragraphs, I think it's 16 through 37 of the complaint.

[00:09:03] Speaker 01:
So those facts illustrate that the conventional approach at the time was certainly not to use GPS at the time.

[00:09:13] Speaker 03:
It doesn't have to be taken as true where it contradicts the patent.

[00:09:16] Speaker 03:
Would you agree with that?

[00:09:18] Speaker 03:
Sure.

[00:09:19] Speaker 03:
Okay.

[00:09:19] Speaker 03:
So what does the patent tell us about the use of GPS at the relevant time?

[00:09:25] Speaker 03:
If I'm correct, there's just one paragraph at column 80 on GPS.

[00:09:30] Speaker 03:
Is there more than that?

[00:09:32] Speaker 01:
I'm not aware, Your Honor, of specific citations to GPS, but I'll take you at your word.

[00:09:37] Speaker 01:
Certainly, GPS... Hold on.

[00:09:39] Speaker 03:
Are you contending that there's more discussion of GPS?

[00:09:42] Speaker 03:
No.

[00:09:44] Speaker 03:
No, I'm not.

[00:09:45] Speaker 03:
OK.

[00:09:46] Speaker 03:
All right.

[00:09:47] Speaker 03:
So doesn't the fact that you have a 100-column patent that you want to ask Madison, is that about the use of GPS?

[00:09:56] Speaker 03:
All it has is one paragraph, and that's being generous.

[00:09:59] Speaker 03:
It's really kind of like a one-on-sentence or two.

[00:10:03] Speaker 03:
Doesn't that suggest that the author of the patent believes that when it's still in the ad, that he knew all about GPS and how to use it, and therefore it's merely conventional?

[00:10:12] Speaker 01:
GPS as a concept.

[00:10:14] Speaker 01:
was no, for sure.

[00:10:17] Speaker 01:
GPS for the application of the GPS, which the claims, again, use GPS as an input into a system in order to perform this legal compliant wagering, that application of GPS was certainly not conventional at the time.

[00:10:34] Speaker 01:
And again, the complaint points out the fact that those in the industry would have said... Is that discussed in the patent other than column 80?

[00:10:43] Speaker 03:
roughly lines 19 to 33.

[00:10:46] Speaker 01:
The complaint sets forth facts.

[00:10:52] Speaker 03:
Rather than not read your lengthy patent, which doesn't set forth any of that, as essentially contradicting what's in your complaint.

[00:11:04] Speaker 01:
All respect, I don't believe they're contradictory.

[00:11:08] Speaker 01:
The fact that GPS as a technology existed and was known, as the patent specification points out, isn't contradictory to the follow along fact that those in the industry did not view GPS application for purposes of ensuring

[00:11:29] Speaker 01:
compliance with local laws to be a viable or the most viable option because, again, at the time it had its own shortcomings which are laid out in the complaint.

[00:11:42] Speaker 01:
So as a technology which existed, yes, you could geolocate.

[00:11:48] Speaker 01:
The capacity to geolocate at the time is what led those in the industry to say, not really going to do that because it's inefficient

[00:11:59] Speaker 01:
And whereas the patent claims obviously took that divergent approach.

[00:12:05] Speaker 04:
So the argument is that the invention is the idea of using GPS to identify the location of online damage.

[00:12:16] Speaker 01:
That's one aspect of it.

[00:12:19] Speaker 01:
Certainly the threshold point that is made in the claims further requires that

[00:12:28] Speaker 01:
notification message at the front end, the user communication device, which again we suggest based on the complaint that that was not conventional at the time.

[00:12:40] Speaker 01:
So certainly the use of GPS as the means of assuring compliance before the wager was placed is an aspect of the claims without a doubt.

[00:12:54] Speaker 01:
But the claims are not

[00:12:56] Speaker 01:
GPS apply it using a computer.

[00:13:00] Speaker 01:
They require far more than that as I've elaborated.

[00:13:09] Speaker 01:
I think I'm into my rebuttal time unless there are further questions from the panel.

[00:13:22] Speaker 04:
generally don't look with favor on dividing arguments, particularly when you've signed a single brief.

[00:13:29] Speaker 04:
But since you plan to do that, we'll allow it.

[00:13:32] Speaker 04:
Go ahead.

[00:13:34] Speaker 00:
Thank you, Your Honor.

[00:13:35] Speaker 00:
And it may be that we don't end up dividing the argument.

[00:13:40] Speaker 00:
These patents are materially indistinguishable from the patents in Fuji Technology versus FanDuel, where the court summarily affirmed an ineligibility finding.

[00:13:49] Speaker 00:
And the district court correctly found them to be ineligible under ALICE.

[00:13:53] Speaker 00:
At step one, the patents assert that the focus of the claim to advance is obtaining information about a user's location and allowing or disallowing online gambling transactions based on that location information.

[00:14:05] Speaker 00:
This is both a fundamental economic practice and a method of organizing human activity, which are two categories of abstract ideas, and authorizing an economic transaction or not based on whether or not the party is eligible.

[00:14:18] Speaker 00:
is a fundamental, long-prevalent economic practice.

[00:14:23] Speaker 00:
This court has repeatedly held analogous claims to be abstract, which as your honors noted is a key method of determining 101 eligibility.

[00:14:31] Speaker 00:
There's the CJ Technology case, the Capital One Bank case held that customizing web page content based on a user's location is also abstract.

[00:14:43] Speaker 00:
The Universal Secure Registry case held that electronic verification of user identity

[00:14:48] Speaker 00:
to authenticate them for an economic transaction is also abstract.

[00:14:52] Speaker 00:
The Weisner versus Google case held that creating a digital travel log by automatically pulling GPS information from a phone is abstract.

[00:15:02] Speaker 00:
And as the district court noted, casinos have been verifying a prospective betters eligibility and location for as long as they've been around, including in the messenger vetting context and in the other context that we discussed in our brief.

[00:15:17] Speaker 00:
The patents certainly claim no specific improvement in GPS or in any other computer or technological capability.

[00:15:24] Speaker 00:
They don't intend to solve a computer problem at all.

[00:15:33] Speaker 00:
Which is another question this court asks at the step one inquiry.

[00:15:42] Speaker 00:
At step two, similarly, the patents just claim routine conventional activity.

[00:15:51] Speaker 00:
The use of GPS is routine.

[00:15:53] Speaker 00:
GPS is used in its routine way to pull location information.

[00:15:58] Speaker 00:
And as I noted, this court has repeatedly held that analogous, identical use of GPS is not

[00:16:07] Speaker 00:
an inventive concept.

[00:16:08] Speaker 03:
How do we know on this record that the use of GPS at this time is merely conventional?

[00:16:13] Speaker 03:
Because the complaint expressly alleges otherwise.

[00:16:16] Speaker 00:
Right.

[00:16:16] Speaker 00:
So I have a couple of responses on that.

[00:16:19] Speaker 00:
First of all, if you look at the patent examiner decision, which the other side has invoked and cited in their complaint, that decision specifically says that the Alcorn patent

[00:16:33] Speaker 00:
discloses the use of GPS to enable online remote gambling.

[00:16:40] Speaker 00:
Yes, I do.

[00:16:41] Speaker 00:
I think that it is JA676.

[00:16:45] Speaker 00:
Let me just confirm that.

[00:16:51] Speaker 00:
Yes, JA676.

[00:16:53] Speaker 00:
And what the notice of allowability says is that the only thing the Alcorn patent doesn't teach is

[00:17:03] Speaker 00:
things like the notification message, which don't have anything to do with the use of GPS and which are not even plausibly conventional.

[00:17:11] Speaker 00:
And I'll note that the IPR decision that my friend referenced that came out yesterday, which of course only talked about obviousness and not about eligibility, that IPR decision or the four of them specifically said that the prior patents did disclose the use of GPS to verify

[00:17:31] Speaker 00:
location for online gambling.

[00:17:32] Speaker 00:
The only things that the IPR decision said were not obvious were the initiation of a transmission of a communication link, which is obviously not described in any non-conventional way in these patents, and then the fact that the so-called bet message contains two pieces of information simultaneously, namely the I want to place a wager and the location information.

[00:17:58] Speaker 00:
And that's also not

[00:18:01] Speaker 00:
plausibly unconventional or invented for a variety of reasons, including that the complaint contains no allegations that the bet message is unconventional, including because it just invokes ordinary generic off-the-shelf technology like sending a message.

[00:18:21] Speaker 03:
I'm not sure if I'm going to move off the GPS yet.

[00:18:25] Speaker 03:
The complaint alleges that the GPS and the use of it with respect to online betting

[00:18:31] Speaker 03:
is unconventional at the relevant time, correct?

[00:18:35] Speaker 03:
It doesn't match that.

[00:18:37] Speaker 03:
And so why not, at best, recent IPR, maybe even examiner statement, other things, other patents you had to point to?

[00:18:48] Speaker 03:
Why isn't that just create a fact dispute that, at a motion to dismiss, we can't resolve, and the case goes forward?

[00:18:55] Speaker 00:
Well, the reason the complaint alleges that the use of geolocation wasn't conventional

[00:19:00] Speaker 00:
for two reasons.

[00:19:01] Speaker 00:
One, it says that online gambling was illegal, and two, it says that GPS wasn't sufficiently precise to do this in 2002.

[00:19:09] Speaker 00:
Those are the things it says about why use of GPS was unconventional.

[00:19:13] Speaker 00:
The patents here don't claim to solve either of those problems.

[00:19:16] Speaker 00:
Nothing in the patent suggests that it's improving on GPS or making it precise.

[00:19:22] Speaker 00:
It just takes GPS as it stood in 2002 as it stands today.

[00:19:26] Speaker 00:
But I'd say more generally, this is confusing the novelty and the unconventionality inquiry because the claim here that the use of GPS in this particular context is

[00:19:39] Speaker 00:
wasn't being done in 2002.

[00:19:40] Speaker 00:
That's just claiming the abstract idea as the inventive concept.

[00:19:46] Speaker 00:
For example, in the Symantec case, the jury had found that a method of identifier matching for email spam filtering was both novel and non-obvious at the time.

[00:19:55] Speaker 00:
The court said it didn't matter because

[00:19:58] Speaker 00:
even if the idea of applying identifier matching to do spam filtering was novel and not obvious, it was still conventional at step two because it just relied on conventional computing function used in their ordinary way.

[00:20:10] Speaker 00:
And the question at step two is not whether someone has applied the generic technology in this particular context before, but whether the way in which the technology is functioning is unconventional.

[00:20:23] Speaker 00:
And here,

[00:20:25] Speaker 00:
there's no allegation that the way in which the GPS technology is functioning is unconventional.

[00:20:30] Speaker 00:
It's doing exactly what GPS technology ordinarily does, which is providing a location.

[00:20:38] Speaker 00:
So I think the allegations in the complaint don't get to the relevant question at step two.

[00:20:46] Speaker 00:
But even if they did, certainly the court is not required to accept conclusory allegations as true where there

[00:20:53] Speaker 00:
controverted by evidence that is attached to the complainers that's cited in the complaint.

[00:21:01] Speaker 00:
And here, the evidence that the other side is asking you to rely on is a patent examiner finding that specifically says that the Alcorn patent, part of the prosecution history, something this court can consider, specifically says that the Alcorn patent does disclose the use of GPS for precisely this purpose before 2002.

[00:21:29] Speaker 00:
All right, and let me turn back to that message, unless the court has any further questions about the use of the GPS.

[00:21:39] Speaker 00:
So on the BET message, again,

[00:21:48] Speaker 00:
The patent just invokes ordinary, generic, off-the-shelf technology.

[00:21:52] Speaker 00:
What it says is inventive is the idea of sending two pieces of data at once together.

[00:21:57] Speaker 00:
But of course, that's something that email messages do all the time.

[00:22:01] Speaker 00:
Email messages contain multiple pieces of data.

[00:22:04] Speaker 00:
They contain your IP address.

[00:22:06] Speaker 00:
They contain your subject matter and content.

[00:22:09] Speaker 00:
People have sent letters for hundreds or thousands of years that contain a return address, which is location information, and substantive content.

[00:22:16] Speaker 00:
and this court has repeatedly held in cases like BuySafe and others that simply transmitting information on a computer is abstract and conventional.

[00:22:30] Speaker 00:
And then more generally, with respect to the bet message, but also the patent as a whole, everything in this patent is described in completely functional terms with no specificity or technical detail as to how anything's being achieved.

[00:22:42] Speaker 00:
The notion that the user communication device is somehow inventive,

[00:22:47] Speaker 00:
The specification says the user communication device can be an ordinary telephone.

[00:22:55] Speaker 00:
The patent allows you to have one device that has GPS and then to have another device that's an ordinary telephone and to call up and transmit the GPS information and your bet.

[00:23:09] Speaker 00:
It's as far from a specific protocol as you could possibly imagine.

[00:23:12] Speaker 00:
It doesn't say anything about how to do it.

[00:23:15] Speaker 00:
And the same goes for the notification message, which is just generically described as transmitting information from a computer.

[00:23:28] Speaker 00:
Unless the court has any further questions, I would cede the remaining time to my friend.

[00:23:37] Speaker 02:
Thank you, Your Honor.

[00:23:39] Speaker 02:
Yes, beg my indulgence for one moment.

[00:23:41] Speaker 02:
There is one slight difference in the record, which is what I wanted to address.

[00:23:43] Speaker 02:
So in the Draft King's motion to dismiss, we do raise in response to Judge Stark's question three references that the examiner cited to during prosecution, all three of which use GPS to determine location of a gambler.

[00:23:58] Speaker 02:
Those are all in this record.

[00:24:00] Speaker 02:
It's the Elkhorn pattern, which was mentioned in Appendix 767.

[00:24:04] Speaker 02:
the Tyndler publication at Appendix 786, and the Carter publication at Appendix 793, the Carter perhaps most notable for calling the use of GPS for this purpose conventional.

[00:24:18] Speaker 02:
That's all I had here.

[00:24:20] Speaker 04:
Thank you.

[00:24:27] Speaker 01:
Thank you, Your Honor, briefly.

[00:24:30] Speaker 01:
Sounds an awful lot like fact disputes.

[00:24:33] Speaker 01:
which preclude dismissal on the pleadings.

[00:24:38] Speaker 01:
I will point out that this whole conversation about the messenger betting as being some sort of indicator of conventionality at the time is a complete non-starter.

[00:24:50] Speaker 01:
Messenger betting has nothing to do with these claims.

[00:24:53] Speaker 01:
Claims don't address messenger betting.

[00:24:55] Speaker 01:
Messenger betting is a concept that existed long before and still exists today.

[00:25:01] Speaker 01:
The claims don't attempt to address this

[00:25:03] Speaker 01:
messenger betting where one person places a bet on behalf of another.

[00:25:07] Speaker 01:
Whether the wager is geo-located or not, or whether an individual walks into a casino, the messenger betting scenario is still an unknown.

[00:25:19] Speaker 01:
It's a fact that messenger betting is a thing that exists, but that's not what these claims are directed to, and that's not what is

[00:25:28] Speaker 01:
identified in any respect as impacting the eligibility of these claims.

[00:25:36] Speaker 01:
Again, the question of the fundamental longstanding practice, I think I addressed that earlier, it's not a fundamental longstanding practice to remotely identify the location of a wagerer that was not something that was contemplated in the face-to-face brick and mortar scenario.

[00:25:56] Speaker 01:
As for the cases that my friend discussed, we addressed all of those in our brief.

[00:26:02] Speaker 01:
I don't want to argue cases again, but certainly on the record, on a motion to dismiss, we think at minimum there are fact questions that require rule man for further consideration as to what was and was not conventional as of 2002.

[00:26:26] Speaker 04:
Okay?

[00:26:27] Speaker 01:
Thank you.

[00:26:27] Speaker 04:
Thank you.

[00:26:28] Speaker 04:
Thank all counsel.

[00:26:29] Speaker 04:
The case is submitted.