Good news for casinos and card clubs from the patent world: you can’t get a patent on a new card game unless you invent a new deck or implement it in a computer. The US Patent & Trademark Office took just that position after the Supreme Court’s Alice decision in mid-2014. For our casino clients this was a two-edged sword. Though our clients could no longer patent their new, innovative games, nobody else could either, and the existing card game patents were seemingly invalid. The USPTO’s approach has now been affirmed in the courts. The decision comes from the Court of Appeals for the Federal Circuit, which decides all appeals of patent cases and is the highest authority on patent law short of the Supreme Court. The odds that the Supreme Court would reverse the decision of the Federal Circuit here is near zero. I would bet on it.
Patent reform became a hot issue about ten years ago. The IT industry in particular complained about patent trolls and the high cost of defending patent cases. The Supreme Court’s Alice decision leads a handful of court decisions and actions by Congress which weakened the patent system. Though some people continue to cry for further weakening of the patent system, the statistics reflect that the existing reforms have already had a solid impact. New patent filings fell 5% in 2015 from 2014, despite a growing economy and tremendous strength and innovation in technology. Patent grants have also slowed. Likewise, the rate of new patent lawsuits (correcting for changes in joinder rules, etc.) has fallen by almost 50% in 2016 over previous norms. Lawsuits that in the past could cost $1M+ to defeat now are defeated by motion to dismiss or by fast and less expensive procedures in the USPTO. This might sound great, but many of us believe that reforms have over-corrected and this will ultimately be bad for the United States economy. One startling reflection of this – China has become a better place to enforce patents than the US in the view of a lot of very smart and knowledgeable people.
In all, patents continue to be a concern for casinos. While the games might enjoy a patent free zone, other aspects of the business continue to be exposed. Examples include casino management systems and security. However, casinos typically rely upon outside vendors to provide key components in these aspects of the business. To insulate the casino from patent concerns, we recommend strong indemnification provisions that require the vendors to take responsibility when a patent issue arises.
My firm blogs about IP law almost weekly through SoCal IP Institute, our pro bono and public interest program. I invite you to subscribe. www.socalip.org.