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The United States Patent and Trademark Office, asserted the validity of allegations that DraftKings breached certain inter parties (IP) patents related to the checkout process.
Initiated in December 2021, Colossus Bets brought a lawsuit against the industry giant, asserting patent violations. After a lengthy deliberation process, the authorities have now ruled in favor of Colossus Bets.
Company owner Bernard Marantelli, a renowned figure in the industry for pioneering cashout technology, accused DraftKings of four IP infringements. The UK-based company Diogenes Limited, which assisted Marantelli in developing this technology, joined the fight against DraftKings.
Digital product regulation, including desktop devices, mobile phones, and specialized kiosks, has been subject to legal scrutiny since 2016.
DraftKings has drawn parallels between this latest litigation and the historic Dewaal case, where players could cash out from slot machines or video poker machines during bonus rounds. However, real-time actions were not a feature in Dewaal, setting the cases apart. Judges noted that in the Dewaal case, the bets for the respective event were pre-established.
Although DraftKings’ cashout system in the Dewaal case bears some resemblance to the recent situation, the former offered players the choice to cash out their prizes. Judges explained, “DeWaal discloses that, after each round of the bonus game, the central controller may offer advancing players an opportunity to quit the bonus game in exchange for an award.”
While a District of Delaware federal judge ruled in favor of DraftKings in July 2022, the new ruling has flipped the tables. The ruling may severely impact DraftKings, potentially obligating them to pay damages equivalent to the gross revenue garnered from bets placed through Diogenes’ platform. While the exact amount remains unknown, speculation suggests it could exceed $1 billion.
Asserting his commitment to protecting Colossus Bets’ intellectual property rights, Marantelli said, “We take our intellectual property very seriously. This is the next step towards protecting our rights and income across the industry in the US.”