Originally published on LinkedIn Pulse on March 14, 2016.

Are card games or other games of chance patentable?  Does it matter whether the game is played in the physical realm (e.g., using physical cards, dice, etc.) or in the virtual realm on a computer display?  A recent decision by the Federal Circuit (In re Smith, Fed. Cir. Case No. 2015-1664) illustrates that the eye of the needle to be traversed in patenting either category of games is a narrow one.

Back in October 2010, Ray and Amanda Tears Smith filed a U.S. patent application for a method of conducting their “Pacific Rim Blackjack” card game, either using physical playing cards or virtual playing cards presented on a video display screen.  Regardless of whether the cards were physical or virtual, the method included steps such as having the dealer accept wagers from the players, shuffling and dealing the initial cards to each player and the dealer, dealing one additional card to each player who chose to receive an additional card, examining the dealt cards, and resolving the wagers according to specific rules regarding the values of the dealt cards.  

A few months prior, in June 2010, the U.S. Supreme Court decided the case Bilski v. Kappos, 561 U.S. 593 (2010), which addressed the scope of patent-eligible subject matter.  In Bilski, the Supreme Court ruled that the “machine-or-transformation” test (which had been the definitive test used by the lower federal courts) was not the sole test for patent eligibility, but could be a useful tool in making the determination of whether a process was patent-eligible or merely an abstract idea and hence ineligible for patenting. 

When the Smiths received their first Office Action from the U.S. Patent and Trademark Office (USPTO) in June 2011, the Examiner had rejected the patent application for failing to satisfy the “machine-or-transformation” test.  Applying the “machine” portion of the test, the Examiner found that the claims failed to sufficiently tie the process to a machine so as to raise the process to be more than a mere abstract idea.  The Examiner also applied the “transformation” portion of the test, finding that the claims failed to include a physical transformation that would be indicative of the process being more than a mere abstract idea.  In particular, the Examiner stated that dealing the cards was not such a physical transformation since it only moved the cards from one place to another, with the cards remaining the same and the deck of cards not transforming into a different deck of cards.

In response, the Smiths amended their claims, bifurcating the claims into one set that addressed the physical version of the game and another set that addressed the electronic virtual version of the game.  The Examiner found that the claims directed to the electronic version of the game were patentable since these claims recited that the game was conducted on a video gaming system including a processor, a video display, and player input controls, i.e., a machine satisfying the “machine-or-transformation” test.  However, the Examiner continued to reject the claims directed to the physical version of the game, leading the Smiths to appeal the Examiner’s decision to the USPTO’s Patent Trial and Appeal Board (PTAB). 

While the Smiths’ appeal to the PTAB was pending, the U.S. Supreme Court decided the case Alice Corp. v. CLS Bank Int’l, 134 S.Ct. 2347 (2014), which further addressed the concept of patent-eligibility.  In Alice, instead of using the “machine-or-transformation” test, the Supreme Court outlined a two-step test for patent eligibility, originally set out by the Supreme Court for addressing the patent eligibility of inventions based on laws of nature, for determining the patent eligibility of computer-based processes.  This two-step test asks: (i) whether the claims are directed to a patent-ineligible concept such as an abstract idea, and (ii) if so, whether the claims add an “inventive concept” sufficient to transform the claimed abstract idea into something “significantly more,” i.e., a patent-eligible application. 

A few months after the Alice ruling, the PTAB heard and decided upon the Smiths’ appeal.  The PTAB affirmed the Examiner’s rejection, based on the new ground that the physical version of the game failed the two-part test as outlined in Alice.  The PTAB found that (i) the claimed method is directed to a set of rules for conducting a wagering game, which is a patent-ineligible abstract idea, and (ii) the manipulations of the deck of cards (e.g., shuffling, dealing) are conventional steps in playing a wagering game that do not add enough to the claims to transform the recited methods into patent-eligible subject matter.

In last week’s ruling in In re Smith, the Federal Circuit affirmed the PTAB and the Examiner in rejecting the claims directed to the physical version of “Pacific Rim Blackjack.”  The physical version of the game that was likely patent-ineligible under the “machine-or-transformation” test was confirmed to be patent-ineligible under the two-step test of Alice.  At least in this instance, the transition from the “machine-or-transformation” test does not appear to have made a difference when considering the patent eligibility of games in the physical realm.

While the Federal Circuit used the same rationale as did the PTAB in its ruling of patent ineligibility, the court did state that this ruling did not mean that all inventions in the gaming arts would be foreclosed from patent protection.  As an example of a potentially patent-eligible invention, the court stated that a game using a new or original deck of cards, rather than a conventional deck of cards, might survive the second step of the two-step test. 

Notably, the Federal Circuit and the PTAB only addressed the patent eligibility of the physical version of the game.  The patent eligibility of the virtual version of the game was not considered because the Smiths understandably had not appealed the allowance of these claims by the USPTO Examiner.  However, based on other instances where the two-step test has been applied by the Federal Circuit to computer-based games (e.g., a computer-aided method for managing a game of bingo in Planet Bingo, LLC v. VKGS LLC, 576 F. App’x 1005 (Fed. Cir. 2014)), it appears likely that the two-step test would find that (i) the set of rules spelled out in the claims are a patent-ineligible abstract idea (as was found by the Federal Circuit when considering the physical version of the game), and (ii) the mere inclusion of a conventional processor, video display, and input controls would not provide an inventive concept sufficient to transform the abstract idea into a patent-eligible application. 

It is in this arena (computer-based processes) that the transition from the “machine-or-transformation” test of Bilski to the two-part test of Alice has narrowed of the scope of patent-eligible subject matter.  Processes that were once deemed eligible for patenting by merely including the basic components of a computer system (e.g., a processor, a video display, a memory, user inputs) will now be barred from being patented under the two-part test of Alice. 

What then can the game designer include in their game for it to be patent-eligible?  One possible option is provided by the Federal Circuit’s mention of a new or original deck of cards, although the mere inclusion of such a deck (or a new or original die or other component) alone will likely not be enough.  Patent eligibility will ride on the nature of the new or original component and how that component is integrated into the game (i.e., whether the component and its use are sufficiently inventive to transform the abstract idea of the game into a patent-eligible application). 

For example, games in the physical realm that include components that are physically modified in conducting the game (e.g., cards with scratch-off portions) would likely have a better chance at satisfying the two-step test than did “Pacific Rim Blackjack” which merely shuffled and dealt conventional cards.  In the virtual realm, claims that recite how the game utilizes the computer system to achieve a functionality not possible otherwise or to solve a specific technological problem would likely have a better chance for patent eligibility than a game that merely uses the computer system to present conventional images of standard physical objects (e.g., images of standard playing cards) and that analyzes the cards in conventional ways.  To increase the chances of success, a patent application seeking protection for a game will not only include such components in the claimed process, but will provide an explanation in the detailed description of the patent application regarding the physical transformation or regarding the functionality provided by the computer system and how it solves a technological problem.