Recently, the U.S. Court of Appeals for the Federal Circuit issued a precedential decision in Beteiro, LLC v. DraftKings Inc. (Jun. 21, 2024), holding that the asserted patents failed the Alice test on patentable subject matter and were therefore invalid under 35 U.S.C. § 101.
Beteiro’s patents related to methods for facilitating remote gambling and allowing a user to participate in live gambling via a communication device. The asserted claims covered a method for processing remote bets by detecting gambling activity information, generating and transmitting a message to a user, receiving a bet and location message, determining the bet's legality based on location, and processing the bet accordingly. Beteiro filed suit against Draft Kings and other defendants based on their provision of mobile gambling and event wagering services. Draft Kings and the other defendants moved to dismiss under Rule 12(b)(6), arguing the asserted patent claims were directed to nonpatentable subject matter. The district court granted the motions. Beteiro appealed.
Reviewing de novo, the Federal Circuit affirmed. The Court found that under the first step of the Alice test the claims were directed to the abstract idea of exchanging information concerning a bet and allowing or disallowing the bet based on the user’s location. Beteiro argued the claims were tied to technological improvements for remote gambling; an argument the Court rejected. The claims, it found, featured several signs of abstractness and broadly recited generic steps using result-focused functional language reflecting fundamental and long-standing economic principles.
The Court also found the patents failed to transform the abstract idea into something more under the second step of Alice because the asserted claims simply described conventional business practices executed by generic computer components. Beteiro contended that its complaint raised a genuine issue as to whether GPS on a mobile phone was conventional technology in 2002, the earliest claimed priority date of the asserted patents. But the patents repeatedly referred to the conventional use of GPS in several types of computers and failed to describe any transformational differences in equipping a mobile phone with GPS. Having found the claims were directed to an abstract idea and that they failed to transform the idea into something more, the Court affirmed the dismissal of Beteiro’s suit.
Coauthored by Ian McFarland & Taylor McCarty.
