CG Technology Development, LLC, et al., v. Zynga, Inc.
Case number NVD-2-16-cv-00859
U.S. District Court for the District of Nevada
Zynga’s Renewed Motion to Stay Granted: May 24, 2017

(EDITOR’S NOTE: This is an older case, but we’re posting now for the sake of completeness.)

This case deals with patents concerning various aspects of social casino gaming, including gambling on mobile devices. CG, a unit of CG Technology LP, sued the San Francisco-based online game developer Zynga Inc. in April 2016. Interactive Games LLC and Interactive Games Ltd. also joined as plaintiffs. The plaintiffs alleged that Zynga’s online social casino games utilized mechanisms that infringed patents relating to such things as a remote server, statistic displays, and plurality of game events. According to court documents, CG provides technology solutions for lottery, gambling, racing and sports wagering, as well as mobile phone apps for money and social casino gambling.

Eight patents were asserted. Of these, only U.S. Patent Number RE39,818 survived a motion to dismiss. In October 2016, U.S. District Judge Robert C. Jones held that the claims of the other patents were invalid under the U.S. Supreme Court’s ruling in Alice Corp. Pty. Ltd. v. CLS Bank International (2014). In Alice, the high court held that a claim involving an abstract idea implemented through a computer is patent-ineligible under Section 101 of the Patent Act. The Nevada Court dismissed CG’s infringement claims regarding the ‘818 patent after finding the company failed to allege sufficient facts to state a claim, but gave CG a chance to amend the filing.

In February 2017, after CG amended their filing, the Nevada District Court held CG adequately pled that Zynga infringed its patent. Judge Jones held that CG presented sufficient evidence to survive Zynga’s motion to dismiss its claims. However, the judge dismissed CG’s claim that Zynga’s infringement of the ‘818 Patent was willful , but gave the company another chance to revise its claim to show the infringement was “egregious beyond typical infringement.”

On May 24, 2017, Judge Jones granted Zynga’s Renewed Motion to Stay pending the disposition of the ‘818 patent in a case in the Southern District of New York. Previously, the Magistrate Judge in Nevada had denied Zynga’s previous motion to stay pending resolution of the ownership of the patent in the New York suit. The Nevada Court reasoned that if CG would be determined not to own the ‘818 Patent they would therefore not have standing in this suit. The New York court has not yet made post-trial rulings, but the return of the ‘818 Patent to the inventor is a possible outcome. The Court therefore found this uncertainty counseled in favor of a stay until the New York Court determined its equitable remedy

This could be a pertinent case in the world of gaming patents, especially in the wake of Alice. Whether the Supreme Court intended to kill software patents or not, the way the Federal Circuit and the PTAB have applied Alice is to render more software subject matter ineligible. After Alice, even rules of game play have been interpreted by courts to be abstract ideas. For example, the USPTO has recently rejected an application for a new variation of blackjack that uses a standard deck of 52 playing cards as merely an abstract idea in financial services (i.e., gambling is merely an allocation of financial risk).

We will continue to update as more information becomes available.