IGT v. BYI: Shifting the Fight to the Patent Office

Implications: The Delaware patent infringement lawsuit brought by IGT against BYI looks like it is shifting away from Delaware and into a Patent Office process known as re-examination.   The result is a high stakes moment where BYI might significantly lessen IGT's threat, but it might fail and thereby strengthen IGT's hand at trial.

Analysis: IGT and BYI are involved in three patent cases at the moment: a Nevada case involving wheel-based bonus games and player tracking technology; a second Nevada case again on wheel-based games; and a Delaware case centering on technologies that network games together in support of player bonusing.  That latter case has moved forward in fits and starts, among other reasons because the judge originally assigned to the case was promoted and hence had to be replaced.

Now, a new possible delay is at hand: intervention by the Patent Office.   Specifically, Bally has asked the Patent Office to itself reconsider three of the patents in play, in essence telling the Patent Office that it made a mistake when it issued those patents back when, and asking the Patent Office to clean up that mistake itself rather than leaving the issue to the courts.

The Patent Office said yes on all three, and opened proceedings wherein BYI and IGT can now at the Patent Office duke out the question of whether each patent is valid.  BYI will argue that there are no real inventions here in light of the prior art.  IGT will argue that it did in fact make a contribution. 

Some interesting ramifications:

1. The Patent Office involvement will likely cause the Delaware court to freeze its case while the Patent Office runs its process.  No sense in the Delaware court working on patents that the Patent Office might then revoke.

2. BYI chose a rarely used mechanism by which to challenge these patents, namely "inter partes" reexamination.  The mechanism is rarely used because it has some sharp pros and cons.  The pro from BYI's perspective is that BYI is involved in the conversation and can push the Patent Office to do its job.  The con is that, once reexam ends, BYI will not be able to raise in court any argument it did or could have raised back during the Patent Office process.  Inter partes, then, for BYI means a better chance to do well now, but only this one bite at the apple either way.

3. Interestingly, one of the three reexams closed the same day it opened.  The other two are still pending and likely will continue to unfold over the next many months.  When these are through, one of the biggest questions in the case will be resolved: are the IGT patents valid assertions of rights to a real innovation, or are these "inventions" so obvious that they fall outside the scope of the patent system?