DK Crown Holdings v. AG 18 — Federal Circuit Affirms PTAB’s Refusal to Consider Late-Raised Prior Art Against Surviving Patent Claim

Related: AG 18 v. DK Crown Holdings — Federal Circuit Affirms PTAB Invalidation of Networked Gaming Patent (April 15, 2026, appeal no. 24-1821)

Background

This case is a companion appeal arising from the same inter partes review (IPR) of U.S. Patent No. 9,978,205, which covers “Location Based Restrictions on Networked Gaming” — a system that restricts a player’s online gambling activity based on their geographic location. AG 18, LLC owns the patent; DK Crown Holdings (formerly DraftKings) petitioned to invalidate it.

In the underlying IPR (No. IPR2022-01446), the Patent Trial and Appeal Board found that 29 of 30 challenged claims were unpatentable. That ruling was affirmed by the Federal Circuit in a separate appeal. However, claim 18 — which adds a “non-monetary wagering” limitation to the base claim — survived. The Board found that DraftKings’ petition challenged claim 18 only under “Grounds 1 and 2” (using Bryson alone as prior art) but never asserted “Ground 3” (Bryson plus Schlottmann) against claim 18, even though Ground 3 was asserted against the parent claims 15–17.

After institution, DraftKings tried to fix this gap by requesting in a footnote of its reply brief that the Board analyze claim 18 under Ground 3 “instead of Grounds 1/2.” The Board refused, concluding that this was an improper new ground raised for the first time on reply. DraftKings’ Request for Director Review was denied, and this appeal followed.

The Court’s Holding

The Federal Circuit affirmed. Writing for the panel, Judge Chen held that the Board did not abuse its discretion by refusing to consider DraftKings’ late-raised request to apply a new prior art reference (Schlottmann) against claim 18.

The court reasoned that DraftKings’ reply footnote was a “new ground of unpatentability” — not a clarification of the existing petition. The petition’s own “summary scorecard” of asserted grounds confirmed that Ground 3 was aimed only at claims 15–17, not claim 18. Under Netflix, Inc. v. DivX, LLC, the Board cannot entertain theories absent from the petition. DraftKings argued this was merely a “clerical error,” but the court distinguished Voice Tech Corp. v. Unified Patents, LLC, where the petition had included a substantive cross-reference making the intended argument clear — no such cross-reference existed here.

The court also rejected DraftKings’ novel collateral estoppel argument — that because the Board invalidated other claims whose limitations, taken together, encompass all limitations of claim 18, claim 18 should be deemed invalid by estoppel. The Federal Circuit declined, noting that it has never applied collateral estoppel by “cobbling together limitations from disparate claims to replicate another claim.”

Key Takeaways

• IPR petitioners must challenge every claim under every intended ground in the petition itself. A reply brief footnote cannot repair a gap in the petition’s claim-by-claim analysis — the Board has no obligation to consider it, and the Federal Circuit will not reverse a refusal to do so.
• The Voice Tech “clerical error” escape hatch is narrow. It requires the petition to contain a substantive cross-reference or other indication that the intended ground was actually raised. Mere logical inference that the petitioner “must have meant” to include a reference is insufficient.
• Collateral estoppel does not allow aggregation of separate claim limitations. A petitioner cannot stitch together findings from different invalidated claims to argue that a surviving claim, whose limitations overlap with those claims in the aggregate, is also invalid.

Why It Matters

This case reinforces the critical importance of petition drafting precision in IPR proceedings. DraftKings had all the pieces to challenge claim 18 under its Bryson-plus-Schlottmann theory — it simply failed to include claim 18 in that ground’s scope. That oversight left one claim standing in a patent that was otherwise fully invalidated, a costly result in the online gaming industry where DraftKings and competitors face ongoing patent assertions. For patent challengers, the lesson is clear: audit your petition’s claim-by-ground matrix exhaustively before filing, because correcting omissions after institution is extremely difficult.