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Bally’s Gaming Promotions Infringe Slot Machine System Patents

October 6, 2011

The U.S. Court of Appeals for the Federal Circuit Oct. 6 affirmed a district court’s ruling that Bally Gaming International Inc.’s accused betting promotions infringe two IGT slot machine system patents (IGT v. Bally Gaming International Inc., Fed. Cir., No. 2010-1364, 10/6/11).

Gaming Patents.

IGT has two patents (RE37,885 and RE38,812) describing a system for controlling networked gaming devices such as slot machines.  Particularly, the patents describe and claim methods for rewarding players over and above the normal device payouts. These bonuses and promotions may be used to encourage players to use gaming devices during typically slow periods such as late nights during the week.

The ’885 patent claims at issue generally contain three steps: 1) tracking activity of a group of gaming devices, 2) issuing a command to the gaming devices when a predetermined event occurs, and 3) paying in accordance with that command. The ‘812 patent primarily differs by having the requirement of initially sending a command to the gaming device establishing the criteria for a payout.

IGT filed suit against Bally Gaming International Inc., alleging that its Power Rewards and Power Winners promotions infringe the patents.

Power Rewards incentivizes players by rewarding them based on their game play at a particular machine. It is known as a “Play X, Get Y” promotion that, for example, rewards a player with $10 each time the player reaches $100 in bets on a particular machine. When a player comes to the machine and inserts an identification card, the host computer sends a “transaction #151” to the controller monitoring play on the gaming device. When the Play X amount is reached, the controller causes the gaming device to display a “Promo” key and the player activates the Promo key to place money in an account.

Power Winners works by paying players either through the ACSC method also featuring a transaction #151 message or through the SDS/CMP method of notifying the player of the win and paying out through the casino’s accounting system. In the ACSC mode, the Power Winners transaction #151 message is set to “Play $0, Get Y” so that the machine immediately pays out the bonus to the winning player. However, the SDS/CMP mode of Power Winners only alerts a player of bonus winnings.

Claim 10 of the ’885 patent, which contains many of the patent claim terms in dispute, requires “issuing a command over the network to one of said preselected gaming devices” and “paying at said one gaming device in accordance with the command.”

The district court determined that, as a matter of law, the Power Rewards promotion infringes Claims 10, 33, and 46 of the ’885 patent and Claims 21 and 44 of the ’812 patent. As to the ‘885 patent claims, the district court determined that the transaction #151 message in Power Rewards and the ACSC mode of Power Winners satisfies the “command” or “message” limitation. With respect to the requirement in the ’812 patent claims that the system issue a command establishing the criteria for a bonus payout, the district court ruled that the transaction #151 message of Power Rewards is the “command” and that the “predetermined event” is the player’s fulfillment of the “Play X” requirement. The court, however, found no infringement by the SDS/CMP embodiment of Power Winners.

Claim Construction and Infringement Rulings Upheld.

On appeal, Bally argued that the term “one” should require that the command be sent to one and only one machine during a promotional period, and that Power Rewards is noninfringing because it pays a bonus at more than one gaming device.

The Federal Circuit disagreed, stating:

The meaning of the word “one” in this claim is clear from the words that surround it—“issuing a command over the network to one of said preselected gaming devices” and “paying at said one gaming device in accordance with the command.” Certainly the use of “one” in this claim is limiting in that a command will go to one of the preselected gaming devices. The command will cause one device to pay. Hence “one” modifies devices that will receive a particular command, not the number of commands that might be issued. The second use of “one” further supports this construction – “one” gaming device will pay in accordance with the command. These claim limitations are directed to a command which will go to one device and cause that same device to pay in response to a predetermined event. A single command must be issued to a single gaming device. The claim, however, does not limit the number of commands that could be issued to discrete gaming devices. Nothing in this limitation requires issuing only one command to only one machine. Bally would have us rewrite the claim to say “issuing only one command . . . to only one of said preselected gaming devices.” We refuse to adopt this strained construction.

Continuing, Judge Kimberly Moore read “transmitting a pay command . . . upon the occurrence of the predetermined event” in Claims 21 and 44 of the ‘812 patent to mean that the system must transmit a pay command when the predetermined event has occurred.  However, Bally had insisted that Power Rewards does not infringe because when the predetermined event occurs (Play X), the gaming device does not pay, but displays a Promo key, which the user then presses in order to cause the payment.

Moore found nothing in this limitation that mandates a particular method of payment or preludes an intervening step by the user to accept payment. Further, she agreed with the district court’s reasoning that “predetermined” can include random events as long as they are predetermined. “Transaction #151, the command at issue in the Power Winners promotion, is sent in response to a predetermined event (the random selection of the winner),” Moore said. She went on to uphold the district court’s claim constructions and infringement rulings as to Power Rewards and the ACSC mode of Power Winners.

However, the Federal Circuit affirmed the lower court’s ruling that the SDS/CMP mode of Power Winners does not infringe ” because it fails to issue a “command” that causes “paying at said one gaming device” under the language of Claims 10, 33, and 46 of the ‘885 patent. In this embodiment, a message that simply informs the winning player that he has won is not a “command” or “message” that pays out at the gaming device as required by the claims, Moore explained.

The district court’s ruling was affirmed.

The opinion was joined by Judges Pauline Newman and Alan Lourie.

IGT was represented by Deanne E. Maynard of Morrison & Foerster, Washington, D.C.

Bally was represented by Edward J. DeFranco of Quinn Emanuel Urquhart & Sullivan, New York.

Read the IGT v. Bally Gaming International Inc. ruling.
 


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