[00:00:00] Speaker 00:
First appeal we'll hear this afternoon is Doctrine No. 24-1821, AG 18 v. D.K. Crown Holdings. Mr. McKeever, please begin whenever you're ready.

[00:00:12] Speaker 00:
We will be holding all counsel to their time allotted.

[00:00:16] Speaker 02:
May it please the Court. Patrick McKeever, on behalf of Appellant AG 18, with me is my colleague, Jonathan Peets. There are three topics I plan to address this afternoon. The merits of Claim 17...

[00:00:29] Speaker 02:
the merits of Claim 12, and DraftKings' collateral estoppel argument on appeal.

[00:00:35] Speaker 02:
Starting with Claim 17, the board construed the results calculation module in Claim 17 as a means plus function element with corresponding structure that included an algorithm from the patent specification. But when the board analyzed the prior art, it failed to apply the corresponding structure from its own constructions. Specifically, the board's construction included, as part of the corresponding structure, steps for determining the objectives achieved by the player and the competitors.

[00:01:06] Speaker 02:
At Appendix 72, the board stated, we agree with this additional component of the algorithm.

[00:01:14] Speaker 02:
By including those steps...

[00:01:24] Speaker 02:
Yeah, so the 498 patent distinguishes between the objectives and the outcome. I would say the outcome would be the result. I think the term that the 498 patent uses is result. That's the result calculation module. The term outcome, I believe, just comes from the Amatus prior art reference. And what the 498 patent describes is that the result calculation module is perform steps, and those steps include looking at which objectives were achieved by the player and which objectives were achieved by the competitors.

[00:02:01] Speaker 00:
And how is that any different from determining the results of the game and who won, who lost, and who gets paid and who doesn't get paid?

[00:02:11] Speaker 02:
Well, so the result in the context of the patent is based on the objectives that are achieved by the different players.

[00:02:19] Speaker 00:
So then wouldn't the objectives achieved as you would have it necessarily be resolved in order to figure out the results?

[00:02:27] Speaker 02:
I don't think so. And if you look at the Amethyst prior art, I think it actually disproves that notion.

[00:02:34] Speaker 00:
Ametis says that... Where below did you really make it clear to the board that objectives achieved is a very different animal from the actual results and outcome of a game?

[00:02:50] Speaker 00:
I didn't see that.

[00:02:52] Speaker 00:
I didn't see it in your blue brief. So I could understand, perhaps, why the board might have been left to wonder, is there really anything to this in terms of a real distinction between objectives achieved and results gained, especially in light of, say, I don't know, is it figure six?

[00:03:14] Speaker 00:
incredibly simple-looking flowchart, which, to me, when it talks about objectives achieved, it really feels like it's being used interchangeably with the results of the game.

[00:03:27] Speaker 02:
Well, so Amethyst talks about how the gaming server in Amethyst determines an outcome, and it gives us an example for how you would determine... Let me answer the question first.

[00:03:38] Speaker 00:
The question was, did you make the argument below it?

[00:03:42] Speaker 00:
So I think you should be identifying where you made the argument below.

[00:03:52] Speaker 02:
Yes, Your Honor.

[00:04:08] Speaker 02:
I'm looking at...

[00:04:11] Speaker 02:
The patent owner response, which begins at Appendix 378. 408 or 409?

[00:04:15] Speaker 00:
Yes, Your Honor, that's where I'm looking.

[00:04:31] Speaker 02:
So in 408, we cited the disclosure from the 498 patent in column 12, which is describing figure 6, and then obviously we have excerpted figure 6 there as well.

[00:04:43] Speaker 00:
A very simple flow chart.

[00:04:45] Speaker 02:
Right.

[00:04:48] Speaker 02:
And I think that's – at this point, Your Honor, the main point we were arguing was that this algorithm is corresponding structure because – DraftKings' position in its petition and what its expert addressed was simply that the corresponding structure was only a server. So we were pointing to this to identify this is disclosure of an algorithm in a patent specification that should be included as part of the corresponding structure. There hadn't really been a dispute at this point about the difference between objectives and... I mean, the way...

[00:05:29] Speaker 00:
this proceeding evolved, it seemed like the patent owner was saying, well, part of an algorithm, assuming there is an algorithm here, I have doubts about that, part of the algorithm is determining objectives achieved by a given player. And that language is different from determining the results for a given player.

[00:05:55] Speaker 00:
And the other side was saying, no, Figuring out the outcome for each individual player encompasses objectives achieved by a player.

[00:06:06] Speaker 00:
And then it became a fact-finding call for the board. And the board, as far as I can tell, wasn't presented with any real explanation why objectives achieved must be something separate, independent, and unrelated to results and outcomes for a given player playing one of these betting games. And so therefore found that Amidus in fact discloses this by having its gaming server determining the results and outcome for all the players and then determining what the payout should be for all the different players, if any.

[00:06:43] Speaker 00:
So therefore it feels very much like a substantial evidence question.

[00:06:49] Speaker 00:
Where would you say that I'm off base here?

[00:06:52] Speaker 02:
Well, I would say that there really was no substantial evidence equating anything in a matis with the corresponding structure that the Board adopted in its construction. Now, the Board's construction has not been challenged on appeal.

[00:07:10] Speaker 02:
And although DraftKings made an argument in its reply brief below that even if this corresponding structure is required, which the Board ultimately found that it was, that Amethyst still discloses the limitation, but simply by pointing to Amethyst's bare disclosure of determining an outcome. Now, their expert, they could have had, at that point in time, their expert explain why determining an outcome is the same as determining which objectives are achieved.

[00:07:41] Speaker 02:
They didn't do that.

[00:07:42] Speaker 00:
Did their expert say anything about this? Oh, objectives achieved in our claimed algorithm is a very different species from... whatever Midas is teaching about determining the results and outcome of the game for the players and determining who won or lost and how much the payoff would be.

[00:08:01] Speaker 02:
Right. I think he addressed the disclosure of the algorithm and said that it was required corresponding structure, but I don't think he got into construing what the objectives are as opposed to the outcome.

[00:08:14] Speaker 00:
You're running out of time. Are there other arguments you want to present?

[00:08:18] Speaker 02:
Yeah. I'll shift to...

[00:08:21] Speaker 02:
argument 12, or sorry, the argument for claim 12, Your Honor.

[00:08:28] Speaker 02:
So the board erred in its analysis of claim 12 by conflating evidence of transmitting with a requirement in the claim for receiving. Claim 12 requires a system with at least one processor that executes instructions from a memory to perform a number of different functions.

[00:08:47] Speaker 02:
The system also includes at least one communication interface, and three of the claimed functions involve using that communication interface to send certain information or receive certain information from other devices. The key one that's disputed here, Your Honors, is limitation 12M, which recites receiving data about the game from the gaming server through the communication interface. Now, DraftKings said that it was relying on the network interface of the gaming server in Amatis to disclose all three limitations, communication interface limitations, in claim 12.

[00:09:25] Speaker 02:
And here's what DraftKings actually argued below.

[00:09:29] Speaker 02:
The network interface of Amatis' gaming server facilitates... the gaming client's reception of data about the game from the gaming server as recited under limitation 12M.

[00:09:43] Speaker 02:
In other words, the gaming server's transmission of data about the game to the gaming client satisfies limitation 12M because that data is transmitted through the communication interface of a Matus's gaming server. That's appendix 441. So DraftKings effectively said the server transmitting data to the clients through its communication interface counts as receiving game data through that server interface. But this argument has no merit because transmitting and receiving are clearly not the same thing.

[00:10:18] Speaker 02:
We don't pretend a pitcher receives the baseball when he facilitates receipt by the catcher by throwing the ball to the catcher.

[00:10:27] Speaker 00:
My understanding of the petition and the board's decision is when there is a transmission from X to Y and that data transmission...

[00:10:40] Speaker 00:
necessarily goes through a series of components before it arrives at Y, then necessarily the Y is receiving the data through each of those components. The data passes through each of those components, and so therefore it could be said reasonably that the device Y is receiving the data through any and all of those components. What's wrong with that?

[00:11:07] Speaker 02:
Because it conflates receiving with transmitting. Again, if I drop a birthday card for my niece in the mailbox, she doesn't start receiving it the moment I drop it in the mailbox. She receives it when it actually arrives to her.

[00:11:22] Speaker 00:
And so the idea that... What if I'm a company in Japan, in Tokyo, and I've got a big manufacturing plant, and I say, I need and consume a lot of crude oil, and I receive my oil through the Strait of Hormuz.

[00:11:41] Speaker 00:
Is there anything wrong with saying it like that?

[00:11:46] Speaker 02:
I think it would depend on the facts. If they actually took title to that oil when the oil left wherever it was coming from, then I think it would be fair to characterize that part.

[00:11:57] Speaker 00:
It seems like a reasonable thing to say. I received my oil through the Strait of Hormuz.

[00:12:05] Speaker 02:
I think in this instance where we're talking about a communication interface or a network interface of two different computing devices, a person of skill in the art, and Dr. Lane did address this, and I can point to that, a person of skill in the art would recognize that those two devices have their own communication interfaces, and the transmitting happens at the communication interface, the network interface of the device that's sending the data, And the receiving happens at the network interface of the device that's receiving the data.

[00:12:38] Speaker 00:
Mr. Kiefer, you're in your rebuttal. Do you want to save it or do you want to keep going?

[00:12:48] Speaker 02:
I'll reserve what's left.

[00:12:50] Speaker 00:
Okay.

[00:12:51] Speaker 02:
Thank you, Ron.

[00:12:51] Speaker 00:
Let's hear it from the other side.

[00:13:03] Speaker 01:
Thank you, Your Honor. And may it please the Court. With respect to Claim 17, The board made a factual finding that the algorithm that is disclosed in the 498 patent, such as it is, would be practiced in the combination involving midas. That's all the board had to do. So the claim structure here is the algorithm, the algorithm which is described in Figure 6, as Judge Chen, you already noted. There's not much more in the specification about that. I mean, the specification recites essentially the same thing. It's a sentence about that step.

[00:13:33] Speaker 00:
What do you think the board meant when it said... objectives achieved is an additional component to the algorithm, i.e. the corresponding structure.

[00:13:43] Speaker 01:
Yeah. I think what they meant there is that it's not sufficient to get the random number generator from the random number generator machine. You have to then compare it to what the wager was and determine if there was a match. I think that's what they meant.

[00:13:59] Speaker 01:
That seems consistent, by the way, with...

[00:14:03] Speaker 01:
how our expert talked about it. The expert testimony was expressly relied on by the board. Mr. Nicely's testimony is mentioned several times at pages 73 and 74 of the board's decision. And what he explained there is that when MITUS teaches this notion of calculating the results of an outcome, What happens is you determine, and here I'm going to be reading from, this is our expert's declaration.

[00:14:33] Speaker 01:
It's paragraph 214 of his declaration, which is on, I think, appendix page 2473 and 74. But what he did, he's quoting essentially from Midas and saying, Amidas determines the outcome of a game. By the way, I should say, this is analyzing claim one, so the analysis here actually started in claim one, and then that was relied upon for claim 18, so that's why I'm reading from this paragraph. So he's talking about Amidas here in terms of this step, which is collecting results of the game, but he goes on to say, determining an outcome of the game being played, citing from Amidas, Amidas also discloses that the outcome can be generated by accessing another server and or software application and retrieving information, such as by receiving results from a random number generator to determine the outcome of the game, i.e., whether the user won or lost.

[00:15:20] Speaker 01:
The gaming server then determines an amount won or lost based on the amount wagered, and that last sentence is a citation from paragraph 104 of Amidas. So it's not just... What did the slot machine show? Is that what the user bet on? Compare it to what the wager was, and then that determines the outcome of the game. I think that's what the board meant. I mean, again, none of this was really briefed below.

[00:15:42] Speaker 00:
You're interpreting the claim through what the prior art discloses. That's the thing that I got lost on. I'm asking you, what's the best understanding of what the board meant when it construed this means plus function limitation and said that the corresponding structure apparently may be above and beyond calculating results is an additional component to the algorithm called figuring out the objectives achieved by a player.

[00:16:14] Speaker 00:
Is that a separate, independent, unrelated thing from determining the results?

[00:16:19] Speaker 01:
Well, the board concluded that it was based on the spec and that flowchart. So they said that's an additional step of this algorithm that had to be part of the claim structure. What did they mean? I'm not meaning to interpret it in terms of the prior art. I'm trying to show how I think the board was applying the prior art to that algorithm. But I think it's the same thing, because it's a wager. There's a bet. There's nothing unique here about the games here. These are just casino games. So the user is going to make a wager, which is a prediction about something that's going to happen in the future, and there's a certain amount of money associated with that. Then...

[00:16:47] Speaker 01:
The thing happens, we're not. And then you compare that to the wager and determine if they won. So it's really two steps. Did the thing happen? And then what was the wager? And you compare those two and you come up with an outcome. Excuse me, you come up with what the objectives were and whether the objectives were satisfied. So I think that's what they meant. But again, it's admittedly unclear because none of this was really addressed by the brief below or in the final written decision.

[00:17:09] Speaker 01:
But what is clear is the board found, you know, there is this structure, it is this algorithm, and then the board expressly found, based on Mr. Nicely's testimony, This is in Appendix Page 74.

[00:17:20] Speaker 01:
Concerning structure, we are persuaded by petitioner's contention and Mr. Nicely's testimony that a person of ordinary skill in the art would have implemented the algorithms of the 498 patent in a MIDAS as part of the gaming service provider. So whatever those algorithms are, whatever the board was saying is necessary for this claim to be satisfied, it's saying we find it would be obvious to put that thing into a MIDAS. There's certainly substantial evidence for that finding, so I don't think there's any basis to challenge it on appeal. Certainly the claim construction does not be challenged.

[00:17:49] Speaker 00:
So it's nicely paragraph 271, which refers to a minus paragraph 104?

[00:17:55] Speaker 01:
271, I think that's a cross-reference to 214.

[00:18:00] Speaker 01:
He actually, if you look at 271, it's a citation to section... It goes back to 1K. Correct, correct. He doesn't give a paragraph number.

[00:18:07] Speaker 00:
In 1K, they refer to paragraph 104.

[00:18:10] Speaker 01:
Correct, that's, 214 is the paragraph I just read to you a moment ago. Yeah, correct.

[00:18:14] Speaker 01:
So that's what I conclude about Claim 17. I think there's substantial evidence for the board to have reached this conclusion that whatever this structure is that's being claimed, it's obvious to put that structure into a Midas.

[00:18:26] Speaker 01:
So I don't think we have to go further and try to deduce what that additional meaning is, but the extent you want to, that's my explanation. I think that's what they meant, that it's not just what did the random number generator say, but what was the wager associated with this event? Match them up, decide where is this better as objectives achieved or not, and then pay out.

[00:18:44] Speaker 01:
Unless there's any more questions about that claim, I'll turn to claim 12.

[00:18:48] Speaker 00:
Did the board improperly mix up transmitting data and receiving data?

[00:18:56] Speaker 01:
In claim 12? No. It's very clear that they understood what was going on there.

[00:19:02] Speaker 01:
What they said was...

[00:19:05] Speaker 01:
The actual disclosure of amitis is the transmission going from the game server, and they do this with respect to figure nine, right? The transmission goes up from the game server to the client device where the user is doing his gaming, making his gaming, playing the game essentially on his phone or his device, whatever it is. So it's true that the discussion of amitis is about the transmission, at least with respect to this particular element. He's talking about transmitting up to the client device. What the board said is, well, what the board's, clear implication of what they're saying here, when you look at page 56 and 57 of the decision is, what's going on there is the client device is receiving that transmission, right?

[00:19:42] Speaker 01:
Did the user win the game or not? The user's gotta be told, did you win the game or not? And that's the transmission that's being talked about in the Midas. The fact that a MIDAS doesn't expressly say, I send the data from the client device, and then the client device receives it and displays it, is irrelevant, because the board found a person of ordinary skill in the art would have understood that's what's being explained in that section of a MIDAS. There's no other reading of a MIDAS that would make sense. You wouldn't send the results to the user, and then the user never gets them.

[00:20:07] Speaker 00:
Suppose the patent owner must be arguing that when the claim says the client device receives data through the communication interface... you necessarily must be referring to the client device's own network interface, not the network interface for the server.

[00:20:27] Speaker 01:
Well, that's a claim construction argument that perhaps they could have made but did not here. They sort of made a claim construction argument to that effect to the board, which was rejected. The board said, look, that's not what you claimed. It just says... You look at the claim, it just says, receive data about the game from the gaming server through the interface. That's satisfied by the gaming server using its own interface to send the data to the client. Nothing wrong with that, and the board, I think, explained that quite well in its final decision, starting around page 57.

[00:20:55] Speaker 01:
I think those are the only two issues that my colleague addressed, so unless there's any other questions, I will yield back.

[00:21:00] Speaker 00:
Okay, thank you very much.

[00:21:01] Speaker 01:
One question, are you going to want us to switch just for planning purposes? That would be fine. Stay where you are.

[00:21:05] Speaker 00:
Okay, thank you.

[00:21:17] Speaker 02:
Just a few points in rebuttal, Your Honors.

[00:21:24] Speaker 02:
So first of all, during his argument Mr. Williams pointed the board, or sorry, pointed your honors to Appendix 74 from the board's final written decision. And I believe, if I was following the right section they were referencing, pointed to the top paragraph in that section.

[00:21:53] Speaker 02:
That's what they pointed to repeatedly in their red brief. But the paragraph that actually...

[00:22:01] Speaker 02:
refers to, that specifically addresses the results calculation module is actually the following paragraph, which begins specifically concerning the results calculation module. And in that paragraph, beyond the section recounting what patent owner argued, there is no citation to Mr. Nicely's testimony, petitioner's expert, anywhere. And the reason for that is because Mr. Nicely did not address, I mean, he really didn't address corresponding structure under any construction.

[00:22:38] Speaker 02:
I mean, as I think Your Honor just referenced, his declaration essentially just points back to the discussion of a non-means plus function element in claim limitation 1K.

[00:22:50] Speaker 00:
In the paragraph you're referring to on A74, isn't there a parenthetical citing to nicely? Yeah.

[00:23:02] Speaker 00:
And then a bunch of paragraphs from the nicely declaration including 271.

[00:23:07] Speaker 00:
Right. Where nicely referring back to his earlier discussion on limitation 1K.

[00:23:14] Speaker 02:
I believe that's right, Your Honor, but that's actually... part of the parenthetical, explanatory parenthetical of what patent owner argued.

[00:23:23] Speaker 00:
That's the citation to our brief and what we were referencing in our brief, not a citation to where... It was your... Yeah, they're citing your attempted rebuttal to all of the arguments contained in the petition, which was relying on Nicely Exhibit 1003 and a whole series of Nicely paragraphs.

[00:23:42] Speaker 02:
Okay.

[00:23:44] Speaker 02:
Last point I was going to make, Your Honor, if I have a moment, is just on claim 12, the idea of shifting and saying that the receiving can be done at the gaming client devices, as we argued in our gray brief, also would run afoul of the processor limitation. Look at the structure of the claim. There's a processor that performs all of those functional steps. They relied on the processor of Amatis' gaming server as meeting those limitations.

[00:24:14] Speaker 02:
But as Mr. Williams just argued, and as the board sort of went back and forth in its decision, it seems like they're actually saying the receiving happens not at the gaming server that's transmitting the data, but the receiving happens at the client. But those devices would not have the same processor.

[00:24:29] Speaker 00:
Thank you very much. Yeah.