Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

WMS Gaming v. International Game Technology

July 20, 1999

WMS GAMING INC., PLAINTIFF-APPELLANT,
v.
INTERNATIONAL GAME TECHNOLOGY, DEFENDANT-APPELLEE.



Before Rich, *fn1 * Rader, and Schall, Circuit Judges.

The opinion of the court was delivered by: Schall, Circuit Judge.

Appealed from: U.S. District Court for the Northern District of Illinois. Judge James F. Holderman, Jr.

WMS Gaming Inc. (WMS) appeals the decision of the United States District Court for the Northern District of Illinois that it willfully infringed United States Patent No. 4,448,419 and that the patent is not invalid. See WMS Gaming Inc. v. International Gaming Tech., No. 94-C-3062 (N.D. Ill. March 7, 1997) (WMS Gaming). WMS also appeals the order of the district court denying its motion for a new trial based on newly discovered evidence. See WMS Gaming Inc. v. International Gaming Tech., No. 94-C-3062 (N.D. Ill. October 1, 1997). We affirm-in-part, reverse-in-part, vacate-in-part, and remand.

BACKGROUND

I.

United States Patent No. 4,448,419, entitled "Electronic Gaming Device Utilizing a Random Number Generator for Selecting the Reel Stop Positions," was issued to Inge S. Telnaes on May 15, 1984 (the Telnaes patent) and was assigned to International Gaming Technology (IGT) in 1988. The Telnaes patent claims a slot machine that decreases the probability of winning while maintaining the external appearance of a standard mechanical slot machine. The decreased probability of winning permits higher payoffs, which attracts players.

In general, standard mechanical slot machines include a plurality of reels with symbols around the perimeters of the reels. The symbols may include, for example, fruits, such as cherries or plums; bars, such as double-bars or triple-bars; the number "7"; and blanks. There are typically fewer unique symbols on a reel than there are reel stop positions, i.e., some symbols appear at multiple positions around the reel. For example, a reel with 20 stop positions may include six cherry symbols, five double-bar symbols, three triple-bar symbols, five blank symbols, and one "7" symbol. The number of stop positions to which a symbol is fixed affects the odds of that symbol being the displayed outcome when the machine is played. In the above example, a cherry symbol is six times more likely to be displayed than a "7" symbol.

The number of reels and the number of stop positions on each reel dictate the lowest probability of winning. For example, in a three reel slot machine with 20 stop positions per reel, the lowest probability of winning is 1 in 8000 (20 x 20 x 20). Prior to the Telnaes invention, the conventional way to decrease the odds of winning was either to increase the number of reels or to increase the number of stop positions per reel. Increasing the number of stop positions per reel typically increases the size of the reels, which, in turn, typically increases the size of the slot machine. Experience has shown that players are less attracted to slot machines that have more than three reels and to larger slot machines.

The Telnaes patent discloses a slot machine that is capable of decreasing the probability of winning while maintaining the external appearance of a standard mechanical slot machine. Telnaes, col. 2, lines 10-27. Generally speaking, Telnaes discloses a slot machine in which the reels are electronically-controlled. Id., col. 4, lines 19-21. Each time the machine is played, the control circuitry randomly determines the stop position of each reel and then stops the reels at the randomly determined positions. Id., col. 3, lines 1-4. The reels only serve the function of displaying the randomly chosen result. Id., col. 3, lines 10-12. To decrease the probability of certain symbols appearing, the control circuitry randomly chooses a number from a range greater than the number of stop positions. Id., col. 4, line 53 - col. 5, line 4. The range of numbers is non-uniformly mapped to the stop positions, e.g., a memory based look-up table, that is programmed by either the manufacturer or the operator, may be used to map the range of numbers to stop positions. *fn2 Thus, in a slot machine with 20 stop positions per reel, the control circuitry may use a random number generator to select a number between 1 and 40. The 40 numbers are non-uniformly assigned to correspond to the 20 stop positions on a reel. For example, only one number may be assigned to the symbol "7," while six numbers may be assigned to the "cherry" symbol. This non-uniform mapping of numbers to stop positions allows the probability of stop position combinations, and thus the probability of winning, to be adjusted without altering the configuration of the reels. Id., col. 3, lines 13-16. The odds-manipulating slot machines with physical reels disclosed in the Telnaes patent are referred to as "virtual reel" slot machines.

The virtual reel slot machines claimed in the Telnaes patent have been widely accepted in the marketplace. Several competitors have licensed the patent from IGT and have paid substantial royalties. Virtual reel slot machines comprise the vast majority of the slot machines sold throughout the world, and the percentage of casino revenues derived from slot machines has increased dramatically since the introduction of virtual reel slot machines.

II.

In 1993, WMS introduced its Model 400 slot machine, the accused device. The WMS 400 slot machine is a reel-type slot machine that manipulates the odds of winning. The WMS 400 slot machine is an embodiment of the slot machine disclosed in United States Patent No. 5,456,465, entitled "Method for Determining Payoffs in Reel-Type Slot Machines," issued to Timothy J. Durham (the Durham patent). Because the parties stipulated that the Durham patent describes the accused device, our Discussion of the accused device refers to the Durham patent.

The Durham patent discloses a different approach to calculating payoffs than the Telnaes patent. In the Telnaes patent, the stop positions of the reels are determined first and then the payoff is calculated based on the stop positions. In the Durham patent, the payoff is calculated first and then stop positions that represent that payoff are chosen. Durham, col. 1, lines 40-54. As disclosed in the Durham patent, a random number generator selects two random numbers and maps those numbers to two payoff multipliers. Id., col. 3, lines 9-19. The payoff amount is determined by multiplying the payoff multipliers together. Id., col. 3, lines 3-37. The stop positions of the reels then are determined by randomly selecting a group of stop positions that corresponds to the payoff amount. Id., col. 4, lines 1-7.

Referring to Figures 5-8 of the Durham patent, which are reproduced below, the random number generator selects a first number (R1) from a known range, and the selected number is mapped to a first payoff multiplier (X). Id., Figure 5. R1 is randomly chosen from the range of 1 to 632. If R1 is one, then payoff multiplier X is 10, if R1 is between 182 and 632, then payoff multiplier X is zero, etc. The random number generator then selects another number (R2) from a second range of numbers, and R2 is mapped to a second payoff multiplier (Y). Id., Figure 6. The actual payoff amount (Z) is determined by multiplying X times Y. Id., col. 3, lines 3-37. For example, if X is 10 and Y is 10, the actual payoff amount is 100. Alternatively, if X is 10 and Y is zero, the actual payoff amount is zero.

Once the actual payoff amount is determined, the WMS 400 slot machine uses the random number generator to select a group of stop positions that match the payoff amount. Id., col. 4, lines 1-7. For example, eight different groups of stop positions may represent a payoff amount of 100. Id., Figure 7. If the payoff amount is 100, then the random number generator selects a third number (R3) between one and eight (because as indicated in Fig. 7, there are eight possible ways of displaying a payoff of 100), and the slot machine displays a group of stop positions that corresponds to the selected number. Id., Figure 8.

In the WMS 400 slot machine, there are 22 different ways to get a payoff amount of 100 when X is 10 and Y is 10 (R1 must be 1 and R2 must between 2 and 23). Id., Figures 5 and 6. Additionally, as just noted, there are eight groups of stop positions that represent a payoff of 100. Id., Figures 7 and 8. As seen in Figure 7, a payoff amount of 100 equates to three double-bars. At the same time, as seen in Figure 8, each reel includes two stop positions with a double-bar symbol. This is because in Figure 8, a "1" identifies the first double-bar symbol on a reel, while a "2" identifies the second double-bar symbol on a reel. In other words, stop position 1 and stop position 2 on each reel display a double bar symbol. Thus, there are eight combinations of double-bars on the three reels. Accordingly, the third iteration of the random number generator selects a number (R3) between one and eight. For example, if R3 is one, the group of stop positions stored in memory location A may be displayed (1, 1, 1); if R3 is two, the group of stop positions in memory location B may be displayed (1, 1, 2), etc. Id., Figure 8.

III.

On May 5, 1994, IGT sent a cease and desist letter to WMS indicating IGT's belief that the WMS 400 slot machine infringed the Telnaes patent. WMS responded on May 17, 1994, by filing an action in the district court seeking a declaratory judgment that the WMS 400 slot machine does not infringe the Telnaes patent and that the patent is invalid. IGT counterclaimed against WMS for willful infringement.

The district court bifurcated the liability and damages phases of the trial. After a three-day bench trial on liability, the court held that the Telnaes patent was not invalid and that WMS had willfully infringed the patent. Initially, the court awarded damages based on a reasonable royalty of $50 per machine. It later vacated that award, however, and awarded IGT damages based on a combination of lost profits and a reasonable royalty. The court's final damages award, after trebling for willful infringement, exceeded $30 million. In addition, the court permanently enjoined WMS from infringing the Telnaes patent.

At trial, WMS presented three patents to support its position that the Telnaes patent was invalid for obviousness. After trial, WMS located an unpatented slot machine--the Merit Sweet Shawnee--that was sold several years before the application for the Telnaes patent was filed. WMS claimed that the Merit Sweet Shawnee operated in a manner similar to that of the claimed invention. On March 14, 1997, WMS moved for a new trial under Fed. R. Civ. P. 59 based on this newly discovered prior art. The district court responded by allowing discovery on the new evidence, and then holding a "hybrid" trial on whether to grant the motion and on the substance of the motion. After a two-day proceeding, the court denied the motion for a new trial. It did so on the grounds that WMS had not been diligent in discovering the Merit Sweet Shawnee and that the new evidence was not likely to change the outcome of the case.

WMS appeals the judgment of liability, the quantum of damages awarded, and the order denying a new trial. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1) (1994).

DISCUSSION

I.

We begin with the issue of infringement. A determination as to infringement involves a two-step analysis. First the court must construe the claims at issue. See Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1581-82, 39 USPQ2d 1573, 1576 (Fed. Cir. 1996). Next, the court must determine whether the claims, as properly construed, read on the accused device. See id. Claim construction is an issue of law which we review de novo. See Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1456, 46 USPQ2d 1169, 1174 (Fed. Cir. 1998) (en banc); Markman v. Westview Instruments, Inc., 52 F.3d 967, 979, 34 USPQ2d 1321, 1329 (Fed. Cir. 1995) (en banc), aff'd 517 U.S. 370, 38 USPQ2d 1461 (1996). The determination as to whether the claims, as properly construed, read on the accused device presents an issue of fact which, following a bench trial, we review for clear error. See Charles Greiner & Co. v. Mari-Med Mfg., Inc., 962 F.2d 1031, 1034, 22 USPQ2d 1526, 1528 (Fed. Cir. 1992). "'A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.'" In re Graves, 69 F.3d 1147, 1151, 36 USPQ2d 1697, 1700 (Fed. Cir. 1995) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)). WMS's first contention on appeal is that the district court erred in its claim construction and that the WMS 400 slot machine does not infringe the properly construed claims.

The Telnaes patent has 10 claims, four of which, numbers 1, 8, 9, and 10, are independent. The district court found that the WMS 400 slot machine infringed claims 1, 2, 4, 5, 6, and 8, both literally and under the doctrine of equivalents, and that it infringed claims 9 and 10 under the doctrine of equivalents only. The parties' arguments on appeal reflect an acknowledgment that determination of the issue of infringement of claim 1 controls the infringement issue as far as the remaining claims are concerned.

Claim 1 reads as follows:

"1. A game apparatus, comprising:"

"a reel mounted for rotation about an axis through a predetermined number of radial positions;"

"means to start rotation of said reel about said axis;"

"indicia fixed to said reel to indicate the angular rotational position of said reel;"

"means for assigning a plurality of numbers representing said angular positions of said reel, said plurality of numbers exceeding said predetermined number of radial positions such that some rotational positions are represented by a plurality of numbers;"

"means for randomly selecting one of said plurality of assigned numbers; and"

"means for stopping said reel at the angular position represented by said selected number." Telnaes, col. 5, lines 38-53.

It is undisputed that the first three limitations of claim 1 read on the accused device, the WMS 400 slot machine. The parties' dispute involves the last three limitations, which are written in means-plus-function format, pursuant to 35 U.S.C. § 112, ¶ 6 (1994). Under that provision, "[a]n element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof." We have stated that "for a means-plus-function limitation to read [literally] on an accused device, the accused device must employ means identical to or the equivalent of the structures, material, or acts described in the patent specification. The accused device must also perform the identical function as specified in the claims." Valmont Indus., Inc. v. Reinke Mfg. Co., 983 F.2d 1039, 1042, 25 USPQ2d 1451, 1454 (Fed. Cir. 1993); see also Pennwalt Corp. v. Durand-Wayland, Inc., 833 F.2d 931, 934, 4 USPQ2d 1737, 1739 (Fed. Cir. 1987) (en banc) ("To determine whether a claim limitation is met literally, where expressed as a means for performing a stated function, the court must compare the accused structure with the disclosed structure, and must find equivalent structure as well as identity of claimed function for that structure.") ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.