Litigation

AG18, LLC v. DraftKings Inc.

Affirmed

24-1821

Filed
2024-05-17
Terminated
2026-05-06

Patents at issue (1)

9978205

Plaintiffs (1)

Defendants (1)

Summary

AG18, LLC appealed a PTAB decision regarding the patent. The Federal Circuit affirmed the PTAB's final written decision, upholding the invalidation of claims 1-17 and 19-30 and confirming that claim 18 survived the review.

Case overview & background

Plain-language overview of the case: parties, accused product, patents at issue, and why the suit matters.

Case Overview and Background

This patent dispute involves AG18, LLC, a patent assertion entity, and DraftKings Inc., a major operator in the digital sports entertainment and gaming industry. AG18, LLC, doing business as Arrow Gaming, originally filed a complaint in the U.S. District Court for the District of New Jersey in August 2021, alleging that DraftKings' Daily Fantasy Sports (DFS) and online casino products infringed on several of its patents. The core of the dispute revolves around technology that restricts online gaming activities based on the user's geographic location, a critical feature for legal compliance in the state-by-state regulatory landscape of U.S. online gambling.

The key patent at the center of the Federal Circuit appeal is U.S. Patent No. 9,978,205, titled "Location Based Restrictions on Networked Gaming." This patent generally covers a peer-to-peer gaming system that can impose limits on a player's online wagering based on their geographical location. DraftKings, in response to the infringement suit, proactively challenged the validity of the '205 patent by filing a petition for inter partes review (IPR) with the Patent Trial and Appeal Board (PTAB). This strategic move shifted the focus of the dispute from the district court to the specialized patent tribunal of the USPTO, a common tactic for defendants in patent litigation seeking to invalidate asserted patents more efficiently than in federal court.

The case is notable for its connection to the burgeoning online sports betting and iGaming market in the United States, a sector where technology and regulatory compliance are deeply intertwined. DraftKings, a leader in this market, represents a high-profile target for patent assertion entities. The procedural history, involving a district court stay pending the outcome of a PTAB review and a subsequent appeal to the Federal Circuit, highlights the significant interplay between these different legal venues in modern patent litigation. The Federal Circuit's final decision, which affirmed the PTAB's invalidation of most claims while leaving a single claim intact, underscores the nuanced outcomes possible through the IPR process and its impact on broader infringement campaigns.

Key legal developments & outcome

Major rulings, motions, claim construction, settlements, and the present posture or final disposition.

A detailed timeline of the patent litigation between AG18, LLC and DraftKings Inc. reveals a strategy heavily influenced by parallel proceedings at the Patent Trial and Appeal Board (PTAB), culminating in a Federal Circuit appeal. The dispute centered on U.S. Patent No. 9,978,205, which relates to "Location Based Restrictions on Networked Gaming."

District Court Litigation: AG18, LLC v. DRAFTKINGS INC., No. 2:21-cv-15737 (D.N.J.)

Filing and Initial Pleadings (2021)

  • 2021-08-19: AG18, LLC, doing business as Arrow Gaming, filed a patent infringement lawsuit against DraftKings Inc. in the U.S. District Court for the District of New Jersey. The complaint alleged that DraftKings' online sports betting products infringed the '205 patent.
  • 2021-10-22: AG18 filed an Amended Complaint against DraftKings Inc. and Crown Gaming Inc.

Pre-trial Motions and Stay (2022–2023)

  • 2022-07-29: DraftKings filed a motion to dismiss the complaint. This motion was later administratively terminated pending the resolution of a separate disqualification motion.
  • 2023-03-28: After the PTAB instituted an inter partes review (IPR) of the '205 patent, DraftKings informed the court and referenced its pending motion to stay the district court case.
  • 2023-04-03: Magistrate Judge Jessica S. Allen granted DraftKings' motion to stay the litigation pending the final outcome of the IPR proceedings at the PTAB. The court reasoned that the IPR's outcome could significantly simplify or resolve the issues in the district court case. As a result of the stay, the civil case was administratively terminated.

Parallel PTAB and Federal Circuit Proceedings

PTAB Inter Partes Review (IPR) (2022–2024)

  • IPR Petition: DraftKings' entity, DK Crown Holdings Inc., filed an IPR petition (IPR2022-01446) challenging claims 1–30 of AG18's '205 patent.

  • PTAB Final Written Decision (2024-03-12): The PTAB issued a final written decision finding claims 1–17 and 19–30 of the '205 patent unpatentable as either anticipated or obvious over the prior art. However, the Board determined that DraftKings had failed to prove that claim 18 was unpatentable.

    Crucially, DraftKings had challenged claim 18 in its petition based only on a single prior art reference (Bryson). After institution, DraftKings attempted to argue in a footnote in its reply brief that claim 18 was also obvious over a combination of two references (Bryson and Schlottmann), a theory it had used against other claims. The PTAB refused to consider this new argument, stating it was improper to introduce a new ground of unpatentability for the first time in a reply.

*Federal Circuit Appeal: AG18, LLC v. DraftKings Inc., No. 24-1821 (Fed. Cir.)*

  • Appeal and Cross-Appeal: Both parties appealed the PTAB's decision to the U.S. Court of Appeals for the Federal Circuit. DraftKings appealed the decision upholding claim 18, while AG18 appealed the invalidation of the other claims.
  • Federal Circuit Decision (2026-05-06): In a non-precedential opinion, the Federal Circuit affirmed the PTAB's final written decision in its entirety. The court's ruling focused on DraftKings' appeal regarding claim 18. It agreed with the PTAB that DraftKings' attempt to add a new prior art reference to its challenge against claim 18 in a reply brief footnote was improper. The court rejected DraftKings' argument that this was a mere "clerical error," emphasizing that IPR petitions must clearly state all grounds for a challenge.
  • Status: The Federal Circuit's affirmation on 2026-05-06 was the final disposition of the appeal, leaving the PTAB's decision as the definitive outcome on the validity of the '205 patent's claims.

Outcome Summary

The litigation's trajectory was dictated by the parallel IPR. The district court case was active for approximately 19 months before being stayed. The core legal battle then shifted to the PTAB. The PTAB proceeding resulted in a mixed victory: DraftKings successfully invalidated 28 of the 29 challenged claims, but AG18's claim 18 survived. The Federal Circuit solidified this outcome by affirming the PTAB's decision, leaving DraftKings exposed to potential infringement liability on the single remaining valid claim. The district court case remains stayed and administratively closed, but AG18 could potentially move to lift the stay to pursue its infringement allegations based solely on claim 18.

Plaintiff representatives

Counsel of record for the plaintiff(s): attorneys, firms, and roles (lead counsel, of counsel, local counsel).

Plaintiff's Counsel of Record

Based on a review of court filings and legal directories, the following attorneys have been identified as counsel for plaintiff AG18, LLC in proceedings before the U.S. Court of Appeals for the Federal Circuit, the Patent Trial and Appeal Board (PTAB), and the U.S. District Court for the District of New Jersey.

Lead Appellate and PTAB Counsel

  • Name: Patrick John McKeever
    • Role: Lead Counsel (Federal Circuit Appeal and PTAB IPR)
    • Firm: Perkins Coie LLP (Office Managing Partner)
    • Office Location: San Diego, CA
    • Note on Experience: A former software developer, McKeever focuses on complex patent disputes in district courts, the PTAB, and the International Trade Commission, with expertise in software, mobile applications, and e-commerce technologies.

Additional Counsel at the Patent Trial and Appeal Board (PTAB)

While filings for the specific inter partes review (IPR2022-00806) that led to the appeal are not readily available in public searches, PTAB records show other attorneys from Perkins Coie frequently appear alongside Mr. McKeever in IPR proceedings. It is likely, though not definitively confirmed from available results, that members of this team were also involved in the DraftKings IPR.

  • Name: An-Wei Chen

    • Role: Of Counsel (PTAB IPR)
    • Firm: Perkins Coie LLP
    • Office Location: San Diego, CA
    • Note on Experience: Focuses on patent litigation and post-grant proceedings, with a background in electrical engineering and computer science.

  • Name: Andrew Dufresne

    • Role: Of Counsel (PTAB IPR)
    • Firm: Perkins Coie LLP
    • Office Location: Washington, D.C.
    • Note on Experience: Specializes in patent litigation before district courts and the PTAB, with experience in a wide range of technologies.

District Court Counsel

In the initial patent infringement lawsuit filed in the U.S. District Court for the District of New Jersey (AG18, LLC v. DRAFTKINGS INC., 2:21-cv-15737), AG18, LLC was represented by local counsel.

  • Name: Ryan P. O'Connor

    • Role: Local Counsel
    • Firm: Lowenstein Sandler LLP
    • Office Location: Roseland, NJ
    • Note on Experience: Represents clients in intellectual property and complex commercial litigation, with a focus on patent, trademark, and copyright disputes.

  • Name: David E. Finkelson

    • Role: Local Counsel
    • Firm: Lowenstein Sandler LLP
    • Office Location: Roseland, NJ
    • Note on Experience: A seasoned litigator handling intellectual property disputes, including significant patent infringement and trade secret misappropriation cases.

Defendant representatives

Counsel of record for the defendant(s): attorneys, firms, and roles (lead counsel, of counsel, local counsel).

Counsel for Defendant DraftKings Inc.

DraftKings Inc. was primarily represented by counsel from the law firm Perkins Coie LLP in the inter partes review proceedings before the Patent Trial and Appeal Board (PTAB) and the subsequent appeal at the Federal Circuit.

  • Name: Dan L. Bagatell

    • Role: Lead Counsel
    • Firm: Perkins Coie LLP
    • Office Location: Phoenix, AZ
    • Note: Mr. Bagatell is a seasoned patent litigator who chairs Perkins Coie's Federal Circuit practice and has argued over 50 cases before the court.

  • Name: Amanda K. Tessar

    • Role: Of Counsel
    • Firm: Perkins Coie LLP
    • Office Location: Denver, CO
    • Note: Ms. Tessar focuses on patent litigation and counseling, with experience in post-grant proceedings before the PTAB.

  • Name: Ryan J. McBrayer

    • Role: Of Counsel
    • Firm: Perkins Coie LLP
    • Office Location: San Diego, CA
    • Note: Mr. McBrayer's practice concentrates on patent litigation, including district court cases and PTAB trials.

  • Name: John M. Wechkin

    • Role: Of Counsel
    • Firm: Perkins Coie LLP
    • Office Location: Seattle, WA
    • Note: Mr. Wechkin has extensive experience in patent and technology litigation, representing clients in the software and internet sectors.