Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-03236/USCOURTS-cand-3_07-cv-03236-3/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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1 All parties have consented to my jurisdiction,

including entry of final judgment, pursuant to 28 U.S.C. §

636(c) for all proceedings.

1

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

MMJK, INC.,

Plaintiff(s),

v.

ULTIMATE BLACKJACK TOUR LLC,

Defendant(s). 

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No. C07-3236 BZ

ORDER DENYING PLAINTIFF’S

MOTION FOR PRELIMINARY

INJUNCTION

This patent dispute is between rival operators of online

card game tournaments, which are operated legally if they

conform with the Unlawful Internet Gambling Enforcement Act of

2006.1

 Plaintiff’s tournament is protected by U.S. Patent No.

7,094,154 (“‘154 patent”), filed on December 30, 2004, and

issued on August 22, 2006. The patent is “directed to

computer networked multi-player games of both chance and skill

that allow subscription-based and non-subscription players

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(using an “alternative method of entry”) a chance to win

prizes that have immediate value (i.e., cash, cash-equivalent

notes and objects).” Pl.’s Mot. at 2. Plaintiff has been

operating online tournaments based on the ‘154 patent since

November 2005. Kellerman Decl. ¶ 3; Kellerman Supp. Decl. ¶

4. On June 17, 2007, plaintiff claims to have become aware

that defendant was hosting online tournaments that infringe

its patent. Plaintiff sued defendant on June 19, 2007, and

now moves to enjoin defendant from continuing to host the

challenged tournaments. 

“A preliminary injunction is a ‘drastic and extraordinary

remedy that is not to be routinely granted.’” National Steel

Car, Ltd. v. Canadian P. Ry., Ltd., 357 F.3d 1319, 1324 (Fed.

Cir. 2004) (quoting Intel Corp. v. ULSI Sys. Tech., Inc., 995

F.2d 1566, 1568 (Fed. Cir. 1993)). The parties agree that,

for plaintiff to prevail on its motion for preliminary

injunction, it must establish “four factors: ‘(1) a reasonable

likelihood of its success on the merits; (2) irreparable harm

if an injunction is not granted; (3) a balance of hardships

tipping in its favor; and (4) the injunction’s ... impact on

the public interest.’” Sanofi-Synthelabo v. Apotex, Inc., 470

F.3d 1368, 1374 (Fed. Cir. 2006) (quoting Amazon.com, Inc. v.

Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir.

2001)). 

To establish likelihood of success on the merits requires

plaintiff to show “that, in light of the presumptions and

burdens that will inhere at trial on the merits, (1)

[plaintiff] will likely prove that [defendant] infringes the

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3

... patent, and (2) [plaintiff’s] infringement claim will

likely withstand [defendant’s] challenges to the validity and

enforceability of the ... patent.” Amazon.com, Inc., 239 F.3d

at 1350 (citing Genentech, Inc. v. Novo Nordisk, A/S, 108 F.3d

1361, 1364 (Fed. Cir. 1997)). In other words, if defendant

“raises a substantial question concerning either infringement

or validity, i.e., asserts an infringement or invalidity

defense that the [plaintiff] cannot prove ‘lacks substantial

merit,’ the preliminary injunction should not issue.” Id. at

1350-51 (quoting Genentech, Inc., 108 F.3d at 1364).

In considering likelihood of success on infringement, the

court first, construes the scope and meaning of the patent

claims asserted and second, compares the construed claims to

the allegedly infringing device. Oakley, Inc. v. Sunglass Hut

Intern., 316 F.3d 1331, 1339 (Fed. Cir. 2003). The burden of

proof remains on the plaintiff. See, e.g., Amazon.com, Inc.,

239 F.3d at 1350 (explaining that the movant must show that it

is likely prove infringement and that it will likely withstand

any invalidity defenses).

Based on the record before me, plaintiff has failed to

demonstrate the likelihood that it will succeed in its claim

construction arguments. Independent claims 1 and 5 of the

‘154 patent require the disbursement of “the prize pool to the

winning player and any eligible runner-up players in the form

of prizes that have immediate value, subsequent to completion

of the tournament.” A principal distinction between the rival

tournaments is the timing of the distribution of prizes. In

plaintiff’s tournaments, the prizes to the winner and the

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2 Defendant’s practice is to award winners some

combination of cash and/or tournament points, and to credit

runners-up with tournament points upon elimination and prior to

completion of the tournament. According to defendant, the

tournament points, also referred to as prize points or playing

chips, may be redeemed “to enter other games or tournaments,”

without waiting for that tournament to end. Def.’s Opp. at 5;

see also Def.’s Surreply at 5.

4

runners-up are distributed after the tournament ends. In

defendant’s tournaments, most runners-up are credited their

“tournament point” prizes prior to the completion of the

tournament and can immediately use those points to enter 

other tournaments.2 See Rosenthal Decl. ¶¶ 24-26; Def.’s

Surreply at 5. Thus, defendant argues, its tournaments do not

infringe because the claim requires that all the prizes be

distributed after the tournament ends. 

To avoid defendant’s argument, plaintiff contends that

“as properly construed” the term “any eligible runner-up

players” in the ‘154 patent does not require that every

conceivable prize be distributed after completion of the

tournament. Rather, the “prize pool” is limited to “prizes

that have immediate value”. “Immediate,” plaintiff claims,

limits the conception of “prizes” to those that have inherent

or intrinsic value, such as cash. Thus, the runners-up need

only wait until after the tournament to collect prizes of

inherent value. According to plaintiff, because defendant’s

tournament points do not constitute “prizes that have

immediate value,” and because defendant distributes its

inherently valuable prizes after its tournaments, defendant’s

site infringes the claim.

Plaintiff has not persuaded me that its claim

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3 The abstract describes the ‘154 patent as

contemplating disbursement, after completion of the game or

tournament, “of cash, cash-equivalent notes, or prizes that

have inherent and immediate value.” Noah Decl. ¶ 2, Exh. A

(‘154 patent Abstract). The phrase appears again in the

invention summary, id. at col. 2, lines 29-33, and a nearly

identical phrase appears in the detailed description of the

preferred embodiment. See id. at col. 8, lines 64-65

(substituting “prizes that have immediate intrinsic value.”).

The patent’s interchangeable use of the terms inherent and

intrinsic in conjunction with the term immediate suggests that

immediate has some meaning other than inherent or intrinsic. 

4 In context, plaintiff’s argument that “any” does not

mean “all” strains the plain meaning of the term.

5

constructions are likely to be adopted. First, plaintiff

relies on a construction of “immediate” unsupported by the

‘154 patent. The text does not, as plaintiff contends, read

out a temporal meaning to the term.3 Indeed, plaintiff’s

unsupported interpretation moves away from the commonly

understood meaning of the word. See Phillips v. AWH Corp.,

415 F.3d 1303, 1312-14 (Fed. Cir. 2005) (en banc) (explaining

that, absent intrinsic evidence to the contrary, terms are to

be given their ordinary meaning as understood by one of

ordinary skill in the art, which may involve “little more than

the application of the widely accepted meaning of commonly

understood words.”). Insofar as defendant’s tournament points

have value in allowing a player immediately to enter another

game, the ‘154 patent would seem to require that they be

distributed after completion of the tournament.4 Thus,

defendant’s distribution of the points during its tournaments

presents a serious challenge to plaintiff’s infringement

argument. 

Second, assuming that the only prizes that have to be

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5 Plaintiff asserts that the patent’s text clarifies

the issue. See Noah Decl. ¶ 2, Exh. A, col. 8, lines 6-8

(“Other prizes, such as objects that have immediate value, can

also be awarded to winners.”). This sentence, however, only

suggests that one kind of prize that may be awarded is an

object of immediate value. Indeed, as already discussed, the

patent clearly contemplates the distribution of other prizes,

such as cash-equivalent notes. 

6 Insofar as defendant’s distribution of tournament

points prior to the conclusion of tournaments helps to maximize

customer game play, Rosenthal Decl. ¶¶ 25, 26, the element is

not insubstantially different from the ‘154 patent claim

limitation. See, e.g., Digital Biometrics, Inc. v. Identix,

Inc., 149 F.3d 1335, 1349 (Fed. Cir. 1998).

6

distributed after completion of the tournament are prizes that

have inherent or intrinsic value, a serious question

nonetheless remains. Because a player may immediately

exchange his points for entry into a new tournament which, in

turn, allows the player to compete for cash and other prizes,

plaintiff has not persuaded me that the points have no

inherent or intrinsic value. 

Finally, plaintiff attempts to use the “prizes that have

immediate value” language to limit the concept of “prize

pool.” Yet, the patent does not define the conception of the

“prize pool” as something less than all the prizes.5

Moreover, assuming that the prize pool may be defined so as to

exclude tournament points, defendant’s inclusion of such

points in its pools presents yet another challenge to

plaintiff’s infringement claim.

In short, plaintiff has failed to demonstrate that it is

reasonably likely to prove that the challenged tournaments

infringe the ‘154 patent, be it literal or under the doctrine

of equivalents.6 On this record, substantial questions remain

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7

as to plaintiff’s likelihood of success on infringement. 

Nor has plaintiff demonstrated that it is likely to

overcome defendant’s invalidity defenses. Where a defendant

raises invalidity as a defense to a motion for preliminary

injunction, the plaintiff retains the burden of establishing

likelihood of success on the merits. See Oakley, Inc. v.

Sunglass Hut Intern., 316 F.3d 1331, 1339 (Fed. Cir. 2003);

Helifix, Ltd. v. Blok-Lok, Ltd., 208 F.3d 1339, 1351 (Fed.

Cir. 2000). “Vulnerability is the issue at the preliminary

injunction stage, while validity is the issue at trial. The

showing of a substantial question as to invalidity thus

requires less proof than the clear and convincing showing

necessary to establish invalidity itself.” Amazon.com, Inc.,

239 F.3d at 1359. 

If “the subject matter sought to be patented and the

prior art are such that the subject matter as a whole would

have been obvious at the time the invention was made to a

person having ordinary skill in the art to which said subject

matter pertains,” the patent is invalid as obvious. 35 U.S.C.

§ 103(a). Recently, the Supreme Court rejected a rigid

obviousness analysis requiring that “some motivation or

suggestion to combine the prior art teachings ... be found in

the prior art, the nature of the problem, or the knowledge of

a person having ordinary skill in the art.” KSR Intern. Co.

v. Teleflex Inc., 127 S. Ct. 1727, 1734 (2007) (internal

quotation and citation omitted). Instead, the Court

explained:

When a work is available in one field of

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8

endeavor, design incentives and other

market forces can prompt variations of it,

either in the same field or a different

one. If a person of ordinary skill can

implement a predictable variation, § 103

likely bars its patentability. For the

same reason, if a technique has been used

to improve one device, and a person of

ordinary skill in the art would recognize

that it would improve similar devices in

the same way, using the technique is

obvious unless its actual application is

beyond his or her skill.

Id. at 1740. The Court emphasized that if design needs or

market pressures urge solution to a problem, “and there are a

finite number of identified, predictable solutions, a person

of ordinary skill has good reason to pursue the known

options....” The combination of elements of prior art, under

this circumstance, is more a matter of “common sense” and may

demonstrate obviousness. Id. at 1742. 

Here, defendant claims that prior art rendered obvious

the technology claimed in the ‘154 patent. In particular,

defendant points to online gaming networks maintained at

Bugsysclub.com, Pokerschoolonline.com, and Pokerpages.com. 

See Def.’s Opp. at 7. In reply, plaintiff asserts that each

site offered a different kind of gaming experience. See Pl.’s

Reply at 6-9. Thus, Bugsysclub was a “play for money” only

gaming site with no free play and no subscription-based

memberships. Id. at 6. Pokerpages.com amounted to a “free

play site only” with no subscription-based memberships. Id.

at 6, 8. Pokerschoolonline.com hosted “a subscription site

with no free play.” Id. Defendant counters by explaining

that the sites themselves are integrated by, for example,

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7 At hearing, plaintiff argued that the Bugsysclub

sites did not teach “a means for allowing a non-subscription

player to participate in the tournament without payment of the

fee by submitting information relating to the non-subscription

player . . . .” See Noah Decl. ¶ 2, Exh. A, col. 11, lines 47-

50; id. at col. 12, lines 30-33. Screen shots of the

Bugsysclub “Frequently Asked Questions” page provided by

defendant, however, indicate that a person wanting to play for

free was asked to complete registration materials first, and

then play by clicking through the Pokerpages link. See

Rosenthal Decl. ¶ 14, Exh. C at 18. Otherwise, plaintiff does

not point to any other claim of the ‘154 patent not taught by

the Bugsysclub prior art. Pl.’s Reply at 15.

8 Plaintiff’s President and CEO asserts that “it is

well known in this industry that if a provider of online gaming

services reaches a ‘critical mass’ in terms of numbers of

customers, it is nearly impossible for other providers to

achieve comparable market shares.” Kellerman Decl. ¶ 7. Thus,

there is a constant push in the industry to expand market

9

allowing an individual to play on all three sites using the

same software and the same username and password. See

Rosenthal Decl. in Support of Surreply ¶¶ 51, 52.

Substantial questions exist about whether plaintiff is

likely to overcome the obviousness defense. All or nearly all

of ‘154 patent claims appear to have been taught by the prior

art and, in particular, the Bugsysclub “Frequently Asked

Questions” page. See Rosenthal Decl. ¶ 14, Exh. C. Plaintiff

opines that the ‘154 patent’s inclusion of subscription and

non-subscription-based paying and non-paying players in one

site distinguishes it from the previous art. Pl.’s Reply at

15.7 All this amounts to, however, is a combination of

technology previously employed. Bugsysclub’s use of three

separate sites did not teach away from that combination,

particularly in light of the integration of the Bugsysclub

sites and plaintiff’s own explanations of the market forces at

work in the online gaming industry.8 The record suggests that

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share. One obvious way to do so is to create a network that

can capture both paying and non-paying players.

9 Plaintiffs’s efforts in its papers and at the hearing

to undermine defendant’s obviousness argument by attacking the

Rosenthal declarations as conclusory or inadequate are not

persuasive. In the context of discussing anticipation, Mr.

Rosenthal compared the ‘154 patent claims to the prior art in

detail. He then drew conclusions as to obviousness based on

that analysis. In his supplemental declaration, he referred

specifically to claim charts tracking the claims and the

teachings, and discussed application of the legal test prior to

and post-KSR. While some of plaintiff’s contentions might

provide productive cross-examination of Mr. Rosenthal, his

opinions raise a serious question as to invalidity and

plaintiff offered no expert declaration to the contrary.

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a person experienced in the art might well have recognized

that the teachings from the prior art could be beneficially

combined. See Rosenthal Decl. ¶¶ 4-11, 33, 153-63; Rosenthal

Decl. in Support of Surreply ¶ 176.9 In light of the KSR

case, plaintiff has failed to demonstrate that it is likely to

overcome defendant’s assertion that the ‘154 patent is invalid

as obvious.

Plaintiff’s failure to establish a likelihood of success

on the merits alone precludes issuance of a preliminary

injunction. See Polymer Technologies, Inc. v. Bridwell, 103

F.3d 970, 973-74 (Fed. Cir. 1996) (citing Reebok International

Ltd. v. J. Baker, Inc., 32 F.3d 1552, 1556 (Fed. Cir. 1994)). 

However, I additionally conclude that plaintiff has not

demonstrated that existence of irreparable harm.

Where, as here, plaintiff fails to make a strong showing

on likelihood of success, there is no presumption of

irreparable harm. See Eli Lilly and Co. v. American Cyanamid

Co., 82 F.3d 1568, 1578 (1996); Yamashita v. Wilbur-Ellis Co.,

2006 WL 1320470, at *6 (N.D. Cal). Plaintiff’s argument that

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10 Defendant objected to a number of statements made in

the Kellerman Declaration relating to the online gaming market

and the nature and amount of harm plaintiff will suffer without

issuance of an injunction, arguing that the statements

demonstrated a lack of foundation for personal knowledge and,

in some cases, amounted to an improper lay opinion or hearsay. 

See Def.’s Obj.’s to Evidence Nos. 2-5. In light of Mr.

Kellerman’s position with plaintiff, I find these objections to

be without merit. They are therefore OVERRULED, and I will

give the statements the weight each deserves.

11

it will suffer irreparable harm centers on the claim that it

“may never be able to capture the market share Defendant has

unlawfully obtained through its infringement.” Pl.’s Mot. At

7; see also Pl.’s Reply at 18.10 

Plaintiff’s argument is flawed insofar as it presumes

that it would succeed in capturing some material portion of

defendant’s customer base absent defendant’s current presence

in the market. At the hearing, the plaintiff contended its

site and the defendant’s site are the only two U.S.-based

sites where U.S. players can legally play on-line poker

tournaments. Defendant did not contest this assertion. 

Plaintiff, however, admitted that non-legal sites compete in

the market. Thus, the degree to which plaintiff will lose

customers to defendant’s tournaments is speculative.

More importantly, the presence of only two legal

competitors seriously undercuts plaintiff’s argument that it

will not be able to recapture market share, and strongly

suggests that damages will be a sufficient remedy should

defendant later be found to infringe. Assuming some portion

of the pertinent U.S. gaming market will be drawn only to

legal sites, if and when defendant is enjoined from its

infringement plaintiff will be the only alternative for

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11 At hearing, plaintiff suggested that defendant may

drive it out of business should they succeed in capturing a

customer base “critical mass.” See also Kellerman Decl. ¶ 7,

Kellerman Supp. Decl. ¶ 8. This assertion, however, is

undercut in part by the information Kellerman himself provides

regarding the current strength of plaintiff’s business. See

Kellerman Supp. Decl. ¶¶ 10-12. At any rate, the claim is

speculative; no other evidence in the record suggests that

plaintiff will be driven out of business should a preliminary

injunction not issue. 

12 In any event, “neither the difficulty of calculating

losses in market share, nor speculation that such losses might

occur, amount to proof of special circumstances justifying the

extraordinary relief of an injunction prior to trial.” 

Nutrition 21 v. U.S., 930 F.2d 867, 871 (Fed. Cir. 1991)

(citing Nuclear-Chicago Corp. v. Nuclear Data, Inc., 465 F.2d

428 (7th Cir. 1972)). This is not a case such as Oakley, Inc., in which the court, concluding that plaintiff would be afforded

the presumption of irreparable harm, noted that plaintiff had

demonstrated a nearly exclusive market share over the product

in question, and that defendants were about to release a new

product threatening that share. 316 F.3d at 1345. Here,

plaintiff has not established an exclusive market share in part

because defendant’s “product” is already on the market. 

12

defendant’s lawful customers.11 And, despite plaintiff’s

unsupported contention that its losses will be incalculable,

the presence of only one competitor would presumably make the

loss calculations easier. Plaintiff has not persuaded me that

monetary damages in this case are incalculable or insufficient

to remedy the claimed harm. See, e.g., Millar Decl.12 

Defendant makes a number of other arguments, such as that

plaintiff engaged in inequitable conduct, that the court need

not reach. Likewise, the other two remaining preliminary

injunction factors are not significant. The public interest

is minimally implicated by the grant or denial of an

injunction. The balance of the hardships should an injunction

issue arguably tips in defendant’s favor. Plaintiff’s showing

about loss of market share is speculative, whereas an

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13 Plaintiff objected to Mr. Millar’s statement

concerning the probable effect an injunction would have on its

television show for lack of personal knowledge and improper lay

opinion. See Pl.’s Obj.’s to Evidence No. 3. Given Mr.

Millar’s function and role with defendant, however, Millar

Decl. ¶ 3, plaintiff’s objection is OVERRULED.

14 Both plaintiff and defendant registered a number of

objections to evidence. In this Order, I have ruled only on

those objections relating to evidence I relied on in deciding

plaintiff’s motion. As to the remaining objections, they are

OVERRULED as moot.

13

injunction would exclude defendant from the market and could

have collateral consequences to other aspects of defendant’s

business, such as its television program.13 Cf. Pfizer v.

Teva Pharmaceuticals, USA Inc. 429 F.3d 1364, 1382 (Fed. Cir.

2005). 

Since plaintiff has failed to carry its burden to

demonstrate a likelihood of success on the merits, or that it

will suffer irreparable harm absent court intervention,

plaintiff’s motion for a preliminary injunction is DENIED.14

Dated: August 22, 2007

 Bernard Zimmerman 

 United States Magistrate Judge

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