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Federal Circuit Affirms SJ Decision Based on Multiple Claim Construction Determinations

October 06, 2011

Decision icon Decision

Last Month at the Federal Circuit - November 2011

Judges: Newman, Lourie, Moore (author)

[Appealed from: D. Del., Judge Robinson]

In IGT v. Bally Gaming International, Inc., Nos. 10-1364, -1365 (Fed. Cir. Oct. 6, 2011), the Federal Circuit affirmed the district court’s grant of SJ of infringement for certain claims of U.S. Reissue Patent Nos. RE37,885 (“the ’885 patent”) and RE38,812 (“the ’812 patent”), as well as a grant of SJ for noninfringement of other claims.

IGT accused Bally Gaming International, Inc., Bally Technologies, Inc., and Bally Gaming, Inc. (collectively “Bally”) of infringing two reissue patents that shared a common specification. These patents describe a system for controlling networked gaming devices, namely, slot machines, and methods for rewarding players over and above normal payout levels. The ’885 patent claims generally contain three steps: (1) tracking activity of a group of gaming devices, (2) issuing a command when a predetermined event occurs, and (3) paying as determined by that command. The ’812 patent claims generally contain four steps: (1) issuing an initial command establishing the criteria for a bonus when a predetermined event occurs, (2) storing the command, (3) transmitting a pay command upon occurrence of the predetermined event, and (4) paying at the gaming device. The primary difference is that the ’812 patent claims initially send the command to the gaming device to establish the payout criteria.

IGT accused Bally of infringing the patents when it offered two promotions known as Power Rewards and Power Winners. Power Rewards is a “Play X, Get Y” promotion, where players are rewarded based upon their game play at a particular machine. For example, if a player places $100 in bets, he or she receives a $10 promotion. Once the predetermined level is reached, the gaming device displays a “Promo” key, which the player activates to receive the promotion. This is completed through a particular message (“transaction #151”), which is sent by the host computer to the gaming device when a player begins use, and includes the “Play X, Get Y” amounts. Power Rewards can be won my multiple players during the promotion. In contrast, Power Winners instead randomly selects a single player for a bonus. The payout method for Power Winners uses two pay methods. In the first method, ACSC, the system uses a similar method to Power Rewards where the message is set to Play $0, Get Y and uses the “Promo” key. The second, SDS/CMP, simply notifies the user that he or she won the promotion and pays out through the casino’s accounting system.

The district court construed a number of claim terms before turning to infringement determinations. The district court found as a matter of law that Power Rewards infringed certain claims of both patents. For the ’885 patent claims, the district court determined that the transaction #151 message was a “command” or “message” under the claims. For the ’812 patent claims, the district court determined that the transaction #151 message is the “command” and the “predetermined event” was the player’s fulfillment of the “Play X” requirement. The district court also ruled that the ACSC embodiment of Power Winners infringed claims 10 and 46 of the ’885 patent, finding the “predetermined event” to be the random selection that a given time period should produce a winner and the “command” to be the transaction #151 message. However, the district court found the SDS/CMP embodiment of Power Winners to not infringe because the only possible “command” did not cause payment, but only notified the winner.

The Federal Circuit reviewed the claim construction for the disputed claim terms. The Court first reviewed the term “one” as used in claim 10 of the ’885 patent, which 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.” Slip op. at 8. Bally argued that “one” requires the command be sent to one and only one machine during a promotional period. Bally then argued that since Power Rewards pays at more than one gaming device, it cannot infringe. IGT countered that the claims do not limit the system to pay out at a single one of the preselected devices, only that a single command pay out at a single machine. IGT also noted that Bally ignored claim 21 of the ’812 patent where the command is sent to “only one” gaming device. Therefore, the applicants knew how to claim a “one and only one” embodiment as argued by Bally.

The Federal Circuit agreed with IGT’s arguments, finding the meaning of the word “one” clear from the surrounding words. The Court believed that the use of “one” limited that a command go to one of the preselected gaming devices and “modifies devices that will receive a particular command, not the number of commands that might be issued.” Id. at 10. The Court felt that “[n]othing in this limitation requires issuing only one command to only one machine.” Id. Further support for this construction came from the preferred embodiments, where a number of promotions involved multiple commands sent to different devices. In light of this construction, the Federal Circuit found that the district court correctly granted SJ of infringement by Bally’s Power Rewards. The “fact that Power Rewards pays a bonus at more than one gaming device does not render it noninfringing.” Id. at 11.

The Federal Circuit also reviewed the district court’s construction of the term “predetermined event” to mean “the occurrence of one or more conditions chosen in advance.” The district court noted that the predetermined event may be random in its occurrence, as long as the condition itself is chosen in advance. Bally argued that a “predetermined event” cannot be a random event, while IGT believed the plain and ordinary meaning is that a condition must be chosen in advance. The Federal Circuit felt that the district court correctly construed the term, noting the claims and specification only required some condition be met in order for the system to issue the claimed command. The claims or specification did not require the predetermined event to be finite or nonrandom. The Court felt that even “[i]f the condition determined in advance is an entirely random occurrence, it is no less an event.” Id. at 13. The specification gave examples of nonrandom conditions, but the Court did not find this sufficient to redefine “predetermined event” with anything other than its plain and ordinary meaning.

The ’885 patent used the term “predefined” in place of “predetermined,” but the district court found the two terms to have essentially the same meaning. On appeal, Bally argued that the term “predefined” was ambiguous and that the applicants indicated during prosecution that “predefined” was broader than “predetermined.” Bally reasoned that since “predetermined” can be any random event, the term “predefined event” could not possibly be broader. The Federal Circuit disagreed, finding the term to have a plain and ordinary meaning and not insolubly ambiguous. The Court found the applicants’ claim that “predefined” is broader did not raise to the level of a disclaimer and that they did not act as their own lexicographer to depart from the plain and ordinary meaning. Therefore, the Federal Circuit affirmed the district court’s construction of both “predetermined” and “predefined” events.

The Federal Circuit also reviewed the district court’s construction of “command” or “message,” which led the district court to determine that Power Winners in its SDS/CMP embodiment did not infringe because it did not cause the gaming device to pay out. The district court found the term to include a “reconfiguration” element, which IGT argued was improper. The Federal Circuit disagreed and ruled that “[t]his is not an instance of reading a limitation from the specification into the claim, but rather of interpreting the claim language.” Id. at 17. The claims required the machine to pay out a bonus it would not have paid in its previous configuration. The Federal Circuit noted that the specification strongly supported the district court’s construction, as the abstract, summary of the invention, detailed description, and system overview all discussed only reconfiguration commands. The Federal Circuit affirmed the district court’s grant of SJ of noninfringement, holding that the claim language “paying at said one gaming device in accordance with the command” meant the command causes an extra payment to the user at the gaming device that the gaming device would not have paid out.

The Federal Circuit also affirmed the district court’s constructions of “transmitting a pay command
. . . upon the occurrence of the predetermined event” and “paying.” The Court agreed that the terms simply meant that the system must transmit a pay command when the predetermined event occurred.

Accordingly, having affirmed the district court’s claim constructions and noting that there were no factual issues on appeal, the Federal Circuit affirmed the district court’s grants of SJ of infringement of certain claims and noninfringement on other claims.

Summary authored by Michael D. Stone, Esq.