AG 18 v. DK Crown Holdings — Federal Circuit Affirms PTAB Invalidation of Networked Gaming Patent

Background

AG 18, LLC, doing business as Arrow Gaming, sued DraftKings Inc. (now DK Crown Holdings Inc.) in August 2018, asserting five patents generally related to networked gaming systems. The patents cover technology for online and mobile gaming platforms — a market that expanded dramatically after the Supreme Court’s 2018 decision in Murphy v. NCAA opened the door to legalized sports betting across the United States.

DraftKings responded by petitioning the PTAB for inter partes review (IPR) of all five asserted patents. The district court stayed the litigation pending the outcome of those reviews. The PTAB instituted the IPRs in 2022–2023 and issued final written decisions cancelling at least some challenged claims in all five proceedings, though it confirmed the patentability of certain claims in two of the five reviews.

AG 18 appealed the PTAB’s adverse findings to the Federal Circuit. This case (No. 24-1821, on appeal from IPR2022-01447) addresses one of those IPR final written decisions. DK Crown Holdings also filed a cross-appeal (No. 24-2078) challenging the claims that the PTAB had upheld.

The Court’s Holding

The Federal Circuit issued a Rule 36 summary affirmance, upholding the PTAB’s cancellation of the challenged claims without a written opinion. The per curiam panel of Judges Chen, Hughes, and Stoll found no basis for reversal in the Board’s analysis.

DK Crown Holdings’ cross-appeal (No. 24-2078) — which seeks cancellation of the claims the PTAB initially upheld — remains pending. The outcome of that appeal could further reduce AG 18’s remaining patent rights from this portfolio.

Key Takeaways

• The Federal Circuit’s Rule 36 affirmance upholds the PTAB’s cancellation of gaming patent claims asserted against one of the largest U.S. sports betting platforms.
• DraftKings’ strategy of filing IPRs against all five asserted patents simultaneously — rather than defending only in district court — proved effective at dismantling the asserted portfolio.
• The pending cross-appeal (No. 24-2078) could result in the cancellation of the remaining claims the PTAB initially upheld, potentially eliminating AG 18’s entire patent position.

Why It Matters

As the online gaming and sports betting industry continues to grow rapidly, patent disputes over fundamental platform technologies are intensifying. DraftKings’ successful use of IPR proceedings to dismantle an entire five-patent portfolio illustrates how aggressively large operators use the PTAB to clear the field of patent assertions. For smaller gaming technology companies and patent holders, this case highlights the risk that suing well-resourced defendants may trigger comprehensive IPR challenges that put the entire portfolio at stake — not just the asserted claims. The pending cross-appeal adds another layer of uncertainty for AG 18’s remaining patent rights.