Pure Parlay, LLC v. Stadium Technology Group, Inc., No. 2:2019cv00834 - Document 87 (D. Nev. 2023)
Court Description: ORDER Granting 74 Motion for Judgment. The Clerk of Court is instructed to enter final judgment in the defendants favor and CLOSE THIS CASE. Signed by Judge Cristina D. Silva on 1/20/2023. (Copies have been distributed pursuant to the NEF - TRW)
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Pure Parlay, LLC v. Stadium Technology Group, Inc. Doc. 87 1 UNITED STATES DISTRICT COURT DISTRICT OF NEVADA 2 3 4 5 Pure Parlay, LLC, Case No. 2:19-cv-00834-CDS-BNW Plaintiff 6 v. 7 8 Stadium Technology Group, Inc.; GVC Holdings, PLC; 9 Defendants 10 11 Order Granting Motion for Judgment on the Pleadings and Closing Case [ECF No. 74] In this patent-infringement lawsuit, defendants Stadium Technology Group and GVC 12 Holdings seek judgment on the pleadings to dismiss plaintiff Pure Parlay’s suit with prejudice. 13 Defendants allege that Pure Parlay’s patent is directed toward patent-ineligible subject matter 14 and thus an infringement claim is not viable. Because the patent is directed toward the abstract 15 idea of flexible point shading in a multi-game sports wager and employs no “saving” patent16 eligible innovative concept, I find that the patent is, indeed, directed toward patent-ineligible 17 subject matter and therefore grant defendants’ motion. The Clerk of Court is directed to enter 18 judgment accordingly and close this case. 19 I. Relevant Background Information 20 a. Procedural History 21 Pure Parlay filed suit in May 2019, alleging that Stadium and GVC infringed its patent, 22 U.S. Patent No. 9,773,382 (the ‘382 patent). See generally Third Am. Compl., ECF No. 65. United 23 States District Court Judge Gloria M. Navarro 1 denied defendants’ motion to dismiss the third24 amended complaint based on her finding that Pure Parlay sufficiently pled divided infringement, 25 26 1 Judge Navarro previously presided over this case, but it was administratively reassigned to me in April 2022. Dockets.Justia.com 1 an issue that I need not further address to resolve the instant motion. See generally Order, ECF 2 No. 72. Now, the defendants move for judgment on the pleadings under Federal Rule of Civil 3 Procedure 12(c); they contend that the ‘382 patent concerns unpatentable subject matter and 4 thus cannot support a claim of infringement. See generally Mot., ECF No. 74. Pure Parlay opposes 5 the motion (ECF No. 77), and defendants reply. ECF No. 78. I held a hearing on December 6, 6 2022, so the parties could present further argument. ECF No. 84. 7 b. The ‘382 Patent 8 The ‘382 patent underlying this suit pertains to multi-game wagering (colloquially, 9 “parlays”) 2, which is a form of sports betting. The patent is titled “Computer-Implemented 10 System and Method for Making Multiple-Game Sporting Event Wagers” and discloses: A system and method for effecting a multiple-arm wager incorporating a plurality of events, such as sporting events, including accessing a wagering system of the type including a central computer accessible by at least one network terminal interconnected thereto and hosting an executable instruction set for computing intermediate revised odds between a minimum and a maximum as a function of bettor-selected point shades to modify the line applicable to selected individual competing event teams for determining whether the selected teams have won the game for the purposes of the wager. The line for each team is individually selectively point-shaded in accordance with the wishes of the bettor, and the betting odds for the wager are calculated as a function of the total number of points shaded for the selected teams. 11 12 13 14 15 16 17 Patent Abstract, ECF No. 65-1 at 1. The ‘382 patent has one independent claim, which states that 18 it is “[a] computer-implemented method for providing increased wagering flexibility to an 19 individual bettor in the process of making a multiple[-]armed event wager from an electronic 20 wager input device having a display[.]” Id. at 15. The method is comprised of “providing and 21 accessing a wagering system,” “selecting a plurality of teams” to put in the wager, “determining 22 baseline odds” for the wager, defining the increment of point shading and maximum amount of 23 points that can be shaded, calculating the minimum and maximum potential return of the bet 24 25 A parlay “is a single wager that links together two or more individual bets, and the wager is dependent upon each of those individual bets winning in order to win the overall wager.” ECF No. 65-1 at 7. The 26 parties interchangeably call the individual bets constituting one part of the parlay “arms” or “legs” of the parlay. Id. 2 2 1 based on the permissible amount of point shading, “choosing, by [the] bettor” the number of 2 points to shade, “combining the chosen quantity of points shaded for each team to obtain a total 3 point shade value,” calculating the revised odds based on that total point shade value, and then 4 “placing the wager at the calculated revised odds.” Id. The ‘382 patent claims neither any 5 particular technology nor any unique physical component to implement its method. 6 In less technical terms, the ‘382 patent essentially claims a method for bettors to place 7 multi-arm wagers wherein the bettor can “shade” 3 the line on each arm of the bet. See ECF No. 8 65-1 at 8 (summarizing the claimed invention). Using a visually displayed parlay card layout, the 9 bettor can “redistribute point shades to a predetermined betting line.” Id. The user’s inputs, as 10 defined by how much they shade the original betting line, result in a changed payout for the 11 wager. Id. at 8–9. That prospective payout updates as the user slides the spread further from the 12 original line. Id. at 9. Pure Parlay claims two departures from parlay betting interfaces in the 13 prior art (i.e., other methods for placing multi-team sports wagers). First, provision of “an 14 opportunity to alter the shading value and shading direction for individual arms of a multi-team 15 wager.” Id. at 10 (emphasis added). And second, the graphical interface displaying the same, with 16 real-time changes in the prospective payout as each arm is shaded. Id. at 15. 17 To exemplify the concepts described above, take a traditional three-team parlay 18 returning 6-to-1 on a bet where Team A is a seven-point favorite (displayed as “Team A –7”), 19 Team B is a ten-point favorite (“Team B –10”), and Team C is a four-point underdog (“Team C 20 +4”). To win the parlay, the bettor would need Team A to win by seven or more, Team B to win 21 by ten or more, and Team C to win outright or lose by four or fewer points. See ECF No. 65-1 at 7 22 (using this example in the background information of the patent). The ‘382 patent describes a 23 method allowing the bettor to “shade” each line of the parlay, for example, by purchasing six 24 25 3 “Shade” refers to the number of points a bettor shifts the betting line from the line established by the bookmaker, with the consequence of more “shade” resulting in greater variation from the market payout. 26 See ECF No. 65-1 at 7 (describing an example of a bettor “shading” the line of a parlay by six points per arm). 3 1 points on each leg. Id. Team A turns into a one-point favorite (“Team A –1”), Team B turns into a 2 four-point favorite (“Team B –4”), and Team C turns into a ten-point underdog (“Team C +10”). 3 Id. With the six point “shade” applied, the bettor is more likely to win their parlay, but the 4 winning wager payout would drop from 6-to-1 to 2-to-1. Id. 5 II. Legal Standards 6 a. Motion to Dismiss under Rule 12(c) 7 “After the pleadings are closed—but early enough not to delay trial—a party may move 8 for judgment on the pleadings.” Fed. R. Civ. P. 12(c). “Judgment on the pleadings is properly 9 granted when, accepting all factual allegations in the complaint as true, there is no issue of 10 material fact in dispute, and the moving party is entitled to judgment as a matter of law.” Chavez 11 v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012) (internal quotation marks and alteration 12 omitted). Like a motion to dismiss under Rule 12(b)(6), a motion under Rule 12(c) challenges 13 the legal sufficiency of the claims asserted in the complaint. Id. Indeed, a Rule 12(c) motion is 14 “functionally identical” to a Rule 12(b)(6) motion, and courts apply the “same standard.” Dworkin 15 v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989) (explaining that the “principle 16 difference” between Rule 12(b)(6) and Rule 12(c) “is the time of filing”); see also United States ex rel. 17 Cafasso v. Gen. Dynamics C4 Sys., 637 F.3d 1047, 1054 n.4 (9th Cir. 2011). 18 Judgment on the pleadings should thus be entered when a plaintiff does not plead 19 “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 20 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content 21 that allows the court to draw the reasonable inference that the defendant is liable for the 22 misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard . . . asks 23 for more than a sheer possibility that a defendant has acted unlawfully.” Id. (internal quotation 24 marks omitted). For the purposes of ruling on a Rule 12(c) motion, the court must “accept 25 factual allegations in the complaint as true and construe the pleadings in the light most 26 favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 4 1 (9th Cir. 2008). 2 b. Motion to Dismiss for Patent Ineligibility Challenges Under 35 U.S.C. § 101 3 Defendants argue that the ‘382 patent fails to claim patent-eligible subject matter under 4 35 U.S.C. § 101, based on the standards set forth in Alice Co. v. CLS Bank International, 573 U.S. 208 5 (2014). Patent eligibility under § 101 is an issue of law. Intellectual Ventures I LLC v. Cap. One Fin. 6 Corp., 850 F.3d 1332, 1338 (Fed. Cir. 2017). Accordingly, a district court “may resolve the issue of 7 patent eligibility under Section 101 by way of a motion for judgment on the pleadings.” Papst 8 Licensing GmbH & Co. KG v. Xilinx Inc., 193 F. Supp. 3d 1069, 1078 (N.D. Cal. 2016), aff’d 684 Fed. 9 App’x 971 (memorandum decision) (citing buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1351 (Fed. 10 Cir. 2014) (affirming determination of ineligibility made on motion for judgment on the 11 pleadings)). 12 Although claim construction is often desirable, and may sometimes be necessary, to 13 resolve whether a patent claim is directed to patent-ineligible subject matter, “claim 14 construction is not an inviolable prerequisite to a validity determination under § 101.” Bancorp 15 Servs., LLC v. Sun Life Assur. Co. of Can., 687 F.3d 1266, 1273 (Fed. Cir. 2012). When a court has a “full 16 understanding of the basic character of the claimed subject matter,” the question of patent 17 eligibility may properly be resolved on the pleadings. Content Extraction & Transmission LLC v. Wells 18 Fargo Bank, N.A., 776 F.3d 1343, 1349 (Fed. Cir. 2014). 19 20 21 c. Substantive Patentability Standards Under 35 U.S.C. § 101 i. Patent-Eligible Subject Matter Title 35, § 101 of the U.S. Code “defines the subject matter that may be patented under 22 the Patent Act.” Bilski v. Kappos, 561 U.S. 593, 601 (2010). Under § 101, the scope of patentable 23 subject matter encompasses “any new or useful process, machine, manufacture, or composition 24 of matter, or any new or useful improvement thereof.” Id. (quoting 35 U.S.C. § 101). These 25 categories are broad but limited. Section 101 “contains an important implicit exception: [l]aws of 26 nature, natural phenomena, and abstract ideas are not patentable.” Alice, 573 U.S. at 216 (quoting 5 1 Assoc. for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013)). 2 These three categories of subject matter are patent-ineligible because “they are the basic 3 tools of scientific and technological work,” which are “free to all men and reserved exclusively to 4 none.” Mayo Collaborative Servs. v. Prometheus Laby’s, Inc., 566 U.S. 66, 71 (2012) (citations omitted). 5 Allowing patent claims for such purported inventions would “tend to impede innovation more 6 than it would tend to promote it,” thereby thwarting the primary objective of the patent laws. Id. 7 However, the Supreme Court has also cautioned that “[a]t some level, all inventions embody, 8 use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Id. 9 Accordingly, courts must “tread carefully in construing this exclusionary principle lest it 10 swallow all of patent law.” Alice, 573 U.S. at 217 (citing Mayo, 566 U.S. at 71). 11 In Alice, the Supreme Court “refined the ‘framework for distinguishing patents that claim 12 laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible 13 applications of those concepts.’” Voip-Pal.Com, Inc. v. Apple Inc., 375 F. Supp. 3d 1100, 1125 (N.D. Cal. 14 2019) (quoting Alice, 573 U.S. at 217). This framework involves the following two-step inquiry: 15 16 17 18 19 First, we determine whether the claims at issue are directed to one of those patentineligible concepts. If so, we then ask, “[w]hat else is there in the claims before us?” To answer that question, we consider the elements of each claim both individually and “as an ordered combination” to determine whether the additional elements “transform the nature of the claim” into a patent-eligible application. We have described step two of this analysis as a search for an “‘inventive concept’”—i.e., an element or combination of elements that is “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” 20 Alice, 573 U.S. at 217–18 (alterations in original) (citations omitted); see also In re TLI Commc’ns LLC 21 Patent Litig., 823 F.3d 607, 611 (Fed. Cir. 2016) (describing and applying “the now familiar two22 part test described by the Supreme Court in Alice”). 23 24 ii. Alice Step One – Identification of Claims Directed to an Abstract Idea There is no bright-line test to separate abstract ideas from concepts that are sufficiently 25 concrete to end the Alice inquiry. Voip-Pal.Com, 375 F. Supp. 3d at 1125 (collecting cases). Thus, in 26 evaluating whether claims are directed toward patent-ineligible abstract ideas, courts generally 6 1 begin “by compar[ing] claims at issue to those claims already found to be directed to an abstract 2 idea in previous cases.” Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1334 (Fed. Cir. 2016). 3 The first step of the Alice inquiry is a meaningful one through which the court must 4 identify, based on the specific facts at issue in a case, “a substantial class of claims [which] are 5 not directed to a patent-ineligible concept.” Id. at 1335. The court’s task is not to determine 6 whether claims merely involve an abstract idea at some level, see id., but rather to examine the 7 claims “in their entirety to ascertain whether their character as a whole is directed to some 8 excluded subject matter.” Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 9 2015). 10 11 iii. Alice Step Two – Evaluation of Abstract Claims for an Inventive Concept Even if a claim involves an abstract idea, that does not foreclose its patentability. “A 12 claim drawn to an abstract idea is not necessarily invalid if the claim’s limitations—considered 13 individually or as an ordered combination—serve to ‘transform the claims into a patent-eligible 14 application.’” Voip-Pal.Com, 375 F.3d at 1127–28 (quoting Content Extraction, 776 F.3d at 1348). 15 Thus, the second step of the Alice analysis asks whether the claim contains an element or 16 combination of elements that “ensure[s] that the patent in practice amounts to significantly 17 more than a patent upon the [abstract idea] itself.” Alice, 573 U.S. at 217–18. 18 Transforming an abstract idea into one that is patent-eligible requires more than simply 19 reciting the idea followed by “apply it.” Id. at 221. Likewise, “mere recitation of concrete, tangible 20 components is insufficient to confer patent eligibility to an otherwise abstract idea” when those 21 components simply perform their “well-understood, routine, [and] conventional” functions. TLI 22 Commc’ns, 823 F.3d at 613 (citation omitted). “The question of whether a claim element or 23 combination of elements is well-understood, routine[,] and conventional to a skilled artisan in 24 the relevant field is a question of fact” that “must be proven by clear and convincing evidence.” 25 Berkheimer v. HP Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018). This inquiry “goes beyond what was 26 simply known in the prior art.” Id. at 1369. Furthermore, “limiting an abstract idea to one field of 7 1 use or adding token postsolution components [does] not make the concept patentable.” Bilski, 2 561 U.S. at 612 (citing Parker v. Flook, 437 U.S. 584 (1978)). Attempts to “limit the use of the 3 abstract idea to a particular technological environment” are insufficient to render an abstract 4 idea patent eligible. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014) (internal 5 quotation marks and citation omitted). Finally, a “non-conventional and non-generic 6 arrangement of known, conventional pieces” can amount to an inventive concept. BASCOM Glob. 7 Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016); see also Amdocs (Israel) 8 Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1301 (Fed. Cir. 2016) (wherein claims recited an inventive 9 concept because they contained “specific enhancing limitation[s] that necessarily incorporate[d] 10 the invention’s distributed architecture,” and the use of such distributed architecture 11 transformed the claims into patentable subject matter). 12 13 iv. Representativeness When claims of a patent are substantially similar and linked to the same abstract idea, 14 courts may focus their analysis on representative claims rather than analyzing each claim of the 15 patent at issue. See, e.g., Content Extraction, 776 F.3d at 1348 (focusing the Alice analysis on a single 16 representative claim); Voip-Pal.Com, 375 F. Supp. 3d at 1129 (“the [c]ourt need not individually 17 analyze every claim if certain claims are representative.”) (citing Alice, 573 U.S. at 224–28). 18 Courts may treat a claim as representative “if the patentee does not present any meaningful 19 argument for the distinctive significance of any claim limitations not found in the representative 20 claim or if the parties agree to treat a claim as representative.” Berkheimer, 881 F.3d at 1365 (citing 21 Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1352 (Fed. Cir. 2016)). 22 d. Leave to Amend 23 If a court determines that a complaint should be dismissed, it must then decide whether 24 to grant leave to amend. Rule 15(a) of the Federal Rules of Civil Procedure states that leave to 25 amend “shall be freely given when justice so requires,” bearing in mind “the underlying purpose 26 of Rule 15 to facilitate decisions on the merits, rather than on the pleadings or technicalities.” 8 1 Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (alterations and internal quotation 2 marks omitted). When dismissing a complaint for failure to state a claim, “a district court 3 should grant leave to amend even if no request to amend the pleading was made, unless it 4 determines that the pleading could not possibly be cured by the allegation of other facts.” Id. at 5 1130 (internal quotation marks omitted). Accordingly, leave to amend should generally be denied 6 only if allowing amendment would unduly prejudice the opposing party, cause undue delay, or 7 be futile, or if the moving party has acted in bad faith. Leadsinger, Inc. v. BMG Music Publ’g, 512 F.3d 8 522, 532 (9th Cir. 2008). 9 III. Discussion 10 a. Alice Step One 11 Step one of the Alice inquiry considers the claims “in light of the specification” to 12 determine “whether their character as a whole is directed to excluded subject matter.” Enfish, 13 822 F.3d at 1335 (citation omitted). I am careful not to express the claim’s focus at an unduly 14 “high level of abstraction . . . untethered from the language of the claims,” but rather in parallel 15 with the level of generality or abstraction expressed in the claims themselves. Id. at 1337; see also 16 Thales Visionix v. United States, 850 F.3d 1343, 1347 (Fed. Cir. 2017) (requiring courts to “ensure at 17 step one that [they] articulate what the claims are directed to with enough specificity to ensure 18 the step one inquiry is meaningful”). My inquiry therefore “centers on determining the ‘focus’ of 19 the claims.” Two-Way Media Ltd. v. Comcast Cable Commc’ns, LLC, 874 F.3d 1329, 1340 (Fed. Cir. 20 2017), cert denied, 139 S. Ct. 378 (2018). 21 Defendants assert that the ‘382 patent is directed to the abstract idea of managing a 22 multi-game sports wager. ECF No. 74 at 7. Plaintiff asserts that the ‘382 patent is directed to a 23 method for increasing wagering flexibility for bettors making multi-game sports wagers from 24 electronic wager input devices with a display (i.e., “a smartphone or tablet”). ECF No. 65-1 at 9. 25 Plaintiff’s description is more specific but nonetheless fails to escape the realm of abstraction. 26 The increased wagering flexibility arises from the use of a drop-down menu or slide-bar to 9 1 change the line of each arm of a parlay while the odds update in real time. The drop-down 2 menus, the software necessary to carry out the ‘382 patent’s method, and the device used to 3 place bets are tangible things outside the scope of the ‘382 patent’s claims. The ‘382 patent 4 simply seeks to cover the abstract idea of allowing a bettor to shade multiple lines within a 5 parlay. 6 Three jurisprudential themes demonstrate that claim 1 of the ‘382 patent is directed 7 toward an abstract idea. First, the claimed method discloses only generalized steps drafted in 8 purely functional terms. “Generalized steps to be performed on a computer using conventional 9 computer activity are abstract.” RecogniCorp, LLC v. Nintendo Co., Ltd., 855 F.3d 1322, 1326 (Fed. Cir. 10 2017). The ‘382 patent describes an abstract idea, in part, due to the level of abstraction of its 11 claims, all of which describe generalized steps to be performed on a computer, phone, or tablet. 12 Claim 1, in fact, describes “[a] computer-implemented method . . .” for providing wagering 13 flexibility to a bettor devising a parlay. ECF No. 65-1 at 15. The method is comprised of equally 14 generic steps, which are: “providing and accessing a wagering system,” “selecting a plurality of 15 teams,” “determining baseline odds,” “defining” or “calculating” a series of terms (i.e., the 16 maximum amount of point shading permitted, the odds for each prospective line, etc.) necessary 17 for the operation of the method, “choosing” by the bettor of how many points to take, 18 “combining” the shade for each arm of the parlay, and “calculating” the total odds of the bet in 19 consideration of the bettor’s shade choices. Id. None of these steps purports to explain how the 20 ‘382 patent’s method is effectuated with sufficient specificity. For example, the patent does not 21 reveal the inputs or outputs of the calculation steps. It does not describe how the maximum 22 amount of permissible shade is determined. It does not list any specific computer program or 23 function used to carry out its steps. In total, the ‘382 patent simply describes generic steps to be 24 performed by a computer using undescribed computer activity. 25 Second, this method is analogous to well-known, long-standing practices in the sports 26 betting industry. Counsel for Pure Parlay admitted at oral argument that sports books have long 10 1 permitted bettors to shade a single line of a sports bet. See Hr’g Tr., ECF No. 86 at 26 (“We 2 haven’t suggested that we invented the notion of shading at least as far as it goes with one bet. 3 With a single bet, not a multi-armed bet.”). The purported innovation here just extends the 4 long-standing practice of permitting shading a single sports bet to multiple arms of a parlay. 5 Even taking as true plaintiff’s assertion that the ‘382 patent covers a method that, for the first 6 time in history, would allow a bettor to shade multiple arms of a multi-armed sports wager, it 7 nonetheless still claims a method that is analogous to the long-standing practice of permitting 8 shade on a sports bet. The only difference here is that three games may be shaded as part of a 9 single multiple-armed bet, rather than allowing a bettor to shade three individual games as 10 separate bets. 11 And third, the ‘382 patent does not recite an improvement in computer functionality. 12 Specifications which “are not directed to a specific improvement to computer functionality” and 13 fail “to provide any technical details for the tangible components, [and] instead predominately 14 describe[] the system and methods in purely functional terms” concern unpatentable subject 15 matter. TLI Commc’ns, 823 F.3d at 612. Claim 1 describes the purported method in broad, generic 16 functional terms but fails to identify how those ends are achieved via unique software or 17 hardware configurations. See ECF No. 65-1 at 15 (no mention of any software or hardware 18 beyond surface-level). The most specific claim 1 gets is in its first subclaim for “providing and 19 accessing a wagering system of the type including a central computer system accessible by at 20 least one network terminal in bi-directional electronic communication therewith via an 21 electronic network and having a bettor viewable display,” where the central computer system 22 hosts a set of executable instructions for the later steps. Id. This is just a generic description of 23 computer hardware; the ‘382 patent describes neither the executable instructions that must be 24 hosted on the central computer system nor the hardware specifications of the computer system 25 (beyond being able to communicate with an electronic network and having a display). It also 26 does not indicate a unique configuration of otherwise generic components. Because the ‘382 11 1 patent is simply too generic in how its claimed method is effectuated, it is focused toward an 2 abstract idea. 3 b. Alice Step Two 4 Claim 1 does not recite an inventive concept. “To save the patent at step two, an 5 inventive concept must be evident in the claims.” RecogniCorp, 855 F.3d at 1327. In assessing 6 whether a claim recites an inventive concept, I must consider its elements “both individually and 7 as an ordered combination.” Alice, 573 U.S. at 217. Accordingly, I first analyze the individual 8 elements of Claim 1 and then turn to the ordered combination of those elements. Neither 9 analysis evinces an inventive concept and thus, the ‘382 patent cannot be salvaged. 10 11 i. The Individual Claim Elements Do Not Provide an Inventive Concept To supply an inventive concept, a claim element “must be more than well-understood, 12 routine, conventional activity.” Affinity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253, 1262 (Fed. 13 Cir. 2016). It “cannot simply be an instruction to implement or apply the abstract idea on a 14 computer.” BASCOM, 827 F.3d at 1349. For example, it may be found in an “inventive set of 15 components or methods,” “inventive programming,” or an inventive approach in “how the 16 desired result is achieved.” Elec. Power Grp., 830 F.3d at 1355. On the other hand, “conventional 17 steps, specified at a high level of generality, [are] not enough to supply an inventive concept.” 18 Alice, 573 U.S. at 222 (internal quotation marks omitted). Nor are “generic computer, network, 19 and Internet components” inventive. BASCOM, 827 F.3d at 1349. Yet, conventional steps and 20 generic computer components are all that Claim 1 describes. 21 Each step of the claimed method is a conventional step undertaken by generic computer 22 components: some steps involve actions from the bettor, like “accessing” the wagering system, 23 “selecting a plurality of teams,” “choosing . . . a quantity of points to shade,” and “placing the 24 wager.” ECF No. 65-1 at 15. The other steps involve simple computation: “determining baseline 25 odds for said” parlay, “defining” the maximum amount of points that can be shaded and what 26 increment they can be shaded, “calculating” the minimum and maximum possible odds based on 12 1 those definitions, “combining” the chosen quantity of points shaded, and ultimately 2 “calculating” the total odds for the parlay. Id. Pure Parlay does not assert that any of these steps 3 are novel or unique. Instead, it asserts that “the mechanism and the manner in which . . . the 4 bettor is making [the] line adjustment” is the innovative concept. ECF No. 86 at 27–28. It alleges 5 that the “sliding mechanism” constitutes that mechanism and manner and that the bettor’s 6 “interaction with the device” and ability to interface with the slide-bar to shade points on each 7 arm of the parlay “is really what [it] would call an improvement to the betting [and] the 8 technology[.]” Id. at 30, 33. 9 However, a user interacting with a sliding bar on a computer does not come close to the 10 level of innovation necessary to save the ‘382 patent’s abstract idea from unpatentability. 11 Invocation of generic computer parts used in a conventional manner does not constitute an 12 inventive concept—far from it. See Content Extraction, 776 F.3d at 1347–48 (“For the role of a 13 computer in a computer-implemented invention to be deemed meaningful in the context of [the 14 Alice] analysis, it must involve more than the performance of well-understood, routine, [and] 15 conventional activities previously known to the industry.” (internal quotations omitted)). 16 Furthermore, to the extent that Pure Parlay argues that its sliding mechanism is unique or novel 17 in the parlay-betting context, it fails to explain how that novel idea constitutes an inventive 18 concept. See Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed. Cir. 2016) (“[A] claim for 19 a new abstract idea is still an abstract idea. The search for a § 101 inventive concept is thus 20 distinct from demonstrating § 102 novelty.”). 21 ii. The Ordered Combination of Claim Elements Does Not Provide an Inventive Concept 22 Pure Parlay also argues that the ordered combination of claim elements provides an 23 inventive concept. It asserts that the innovation is the combination of allowing the bettor to 24 “choos[e] . . . a quantity of points to shade,” and then “calculating . . . respective revised odds for 25 the wager.” ECF No. 77 at 9. It notes that, previously, “bettors did not set their own lines on each 26 team in a multiple team wager and obtain revised odds/payouts associated with a wager 13 1 thereon.” Id. However, this representation overstates the method claimed by the ‘382 patent. The 2 patent-at-issue does not permit bettors to “set their own lines,” as that would allow bettors far 3 more flexibility than requiring them to shade points of a line already set; it simply permits 4 bettors to bet within a predetermined range of points via a slide bar. Defendants point out that 5 plaintiff conflates its abstract idea—being able to shade points for each game of a parlay via 6 sliding mechanism—with “innovation in the non-abstract application realm.” ECF No. 78 at 8. 7 Indeed, a patent claiming innovation in the non-abstract realm would describe how the sliding 8 mechanism is to be implemented, how the amount of points to be shaded is calculated, or other 9 specific details indicating some computational upgrade or software innovation. This patent fails 10 to do so. 11 In conclusion, I find that claim 1 of the ‘382 patent describes generic steps undertaken by 12 conventional computer parts. The method claimed by the ‘382 patent describes a series of 13 abstract steps, with no specification as to how each step is to be carried out, and thus must be 14 adjudged unpatentable. See SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161, 1169 (Fed. Cir. 2018) 15 (stating that claim details which are abstract or claim details that prevent one from plausibly 16 inferring inventiveness recite no inventive concept and are thus properly subject to judgment on 17 the pleadings). 18 c. Representativeness of Claim 1 19 Pure Parlay concedes that claim 1 is representative of the ‘382 patent. See ECF No. 77 at 4 20 (“Examining representative claim 1 of the ‘382 patent in its entirety reveals that the claim is 21 directed to a method for increasing wagering flexibility . . .”); ECF No. 86 at 6 (counsel for Pure 22 Parlay states “I do” in direct response to my question asking whether he “agree[s] that Claim 1 is 23 representative of all the [‘382 patent’s] claims”). Claim 1 is also the only independent claim of the 24 ‘382 patent. See ECF No. 65-1 at 15–16. Because claim 1 is representative of the ‘382 patent’s other 25 claims, I need not analyze the patent’s remaining claims to affirm my determination of patent26 ineligibility. See Voip-Pal.Com, 375 F. Supp. 3d at 1129 (stating, “the [c]ourt need not individually 14 1 analyze every claim if certain claims are representative”) (citing Alice, 573 U.S. at 224–28). 2 d. The ‘382 Patent is Patent Ineligible 3 Because I find claim 1 of the ‘382 patent representative of the patent’s other claims, and I 4 have already found claim 1 to fail the Alice test—as it is directed toward an abstract idea and fails 5 to adduce any innovative concept sufficient to transform the abstract idea into patent-eligible 6 subject matter—I conclude that the entire ‘382 patent is directed toward unpatentable subject 7 matter. An infringement suit is therefore unpermitted. See Commil USA, LLC v. Cisco Sys., Inc., 575 8 U.S. 632, 644 (2015) (“To say that an invalid patent cannot be infringed . . . is in one sense a 9 simple truth, both as a matter of logic and semantics . . . [a]n accused infringer can, of course, 10 attempt to prove that the patent in suit is invalid; if the patent is indeed invalid, and shown to 11 be so under proper procedures, there is no liability.”). Because Pure Parlay’s suit for infringement 12 cannot proceed based on an invalid patent, I must grant defendants’ motion for judgment on the 13 pleadings. 14 IV. Leave to Amend 15 Pure Parlay does not request leave to amend. Nonetheless, I may sua sponte deny leave to 16 amend if it would cause undue delay or prejudice to the opposing party or if the amendment 17 would be futile. Leadsinger, Inc. v. BMG Music Publ’g, 512 F.3d 522, 532 (9th Cir. 2008). Because 18 plaintiff’s claims of infringement are rooted in the language of the patent’s claims and 19 specification, which I find to be directed toward unpatentable subject matter, amendment 20 would be futile. See, e.g., NEXRF, 547 F. Supp. 3d at 993 (“[T]he [c]ourt cannot foresee any 21 allegations [p]laintiff could add that would solve one of the key issues with the purportedly 22 inventive steps of the asserted patent claims—that they merely ‘describe the functions of the 23 abstract idea itself, without particularity.’” (quoting Capital One Fin. Corp., 850 F.3d at 1341)). 24 25 26 15 1 V. Conclusion 2 For the foregoing reasons, IT IS HEREBY ORDERED that defendants’ motion for 3 judgment on the pleadings [ECF No. 74] is GRANTED. 4 The Clerk of Court is instructed to enter final judgment in the defendants’ favor and 5 CLOSE THIS CASE. 6 DATED: January 20, 2023 7 8 _________________________________ Cristina D. Silva United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 16
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