Patent Infringement Case Brought Against DraftKings and FanDuel
Interactive Games LLC, an affiliate of the major bond-trading firm Cantor Fitzgerald, sued the sports-betting giants DraftKings and FanDuel.
The case concerns five alleged patent infringements. The five patents were created by Cantor Gaming, which is no longer in operation.
The claims
Interactive Games LLC filed the claims in the federal courts of Massachusetts and New Jersey. The crux of the issue with the five patents concerns how online wagering regulation in the United States is structured through systems such as player identity verification and geolocation. Interactive Games LLC also named Betfair as one of the defendants in the New Jersey filing.
Interactive Games LLC now owns the patents as the successor of Cantor Gaming. In this case, they have argued that the infrastructure is covered by the patents and is used by online sportsbooks and casinos, as well as daily fantasy sports (DFS) products. Two of the five patents relate to mobile device functionality, and Interactive Games LLC is seeking a jury trial and monetary damages.
The link to Trump
There is a link to President Donald Trump with the recent case, as two of the patents were co-created by Howard Lutnick, who is now the U.S. Commerce Secretary. Lutnick is the former CEO of Cantor Fitzgerald and the chairman of Interactive Games LLC. Last year, when he was confirmed as the Commerce Secretary, he stepped down from those positions.
Strange situation
In patent infringement cases, the company often asks the U.S. Patent and Trademark Office (USPTO) to review the patents it is accused of infringing. If the USPTO grants the review and concludes that the patents are invalid, the defendants can move to dismiss. This is where it could become a strange situation: If DraftKings and FanDuel want a USPTO review, they will be doing so for patents co-created by the Commerce Secretary, who oversees the Commerce Department, which the USPTO is part of.
It appears this will be the case, as DraftKings and FanDuel asked the USPTO for a patent review in a case that Interactive Games LLC also brought in 2016.
Last year, when Lutnick was confirmed in his cabinet position, Cantor Fitzgerald said he had given up all his investments in the company and Interactive Games LLC. At the time of confirmation, a Commerce Department spokesperson stated, "Secretary Lutnick has fully complied with the terms of his ethics agreement, including all divestiture and recusal requirements, and will continue to do so.”
Other issues for DraftKings and FanDuel
It has been a string of bad news for DraftKings, which recently had a case dismissed after it and MLB Players Inc. said they had resolved their dispute over the use of MLB player names and images. However, the company is also facing NCAA trademark infringement and ongoing consumer protection litigation.
There have also been cases filed against DraftKings and FanDuel in Massachusetts and Pennsylvania, alleging that their products for micro-betting were designed to drive betting addiction.
