The three-judge panel did not provide an in-depth explanation but indicated that the patent’s claims primarily involved conventional programming techniques. The panel further acknowledged that GeoComply’s claims lacked the innovation needed to sustain patent protection.
GeoComply, based in Canada, supports major platforms such as DraftKings and FanDuel to ensure compliance with state gambling regulations. In 2022, it filed suit against Xpoint, a newer entrant in the industry, after New Jersey online casino PlayStar selected Xpoint as its geolocation compliance provider.
An Xpoint spokesperson said: “We are pleased the court has ruled in our favour, affirming what we have maintained from the start: Xpoint has conducted its business legally and appropriately, and GeoComply has attempted to restrict competition through a patent that is invalid under US law.
“Both the District Court and now the US Court of Appeals for the Federal Circuit have held that GeoComply’s patent infringement allegations against Xpoint are meritless. The decision means that Xpoint can continue to operate and innovate freely in the geolocation technology space.”
GeoComply solution nothing special
The lawsuit alleged that Xpoint’s services violated GeoComply’s patented method for verifying users’ physical locations to prevent location spoofing — an essential requirement in the online sports betting industry where state-based gambling laws mandate precise user location verification.
GeoComply’s patent claims involved a method of identifying the physical location of a user’s device and corroborating it through the geolocation of a user’s various device programs. The process, according to GeoComply, added an inventive concept by focusing on a combined approach to prevent potential location spoofing.
This spoofing tactic is used by individuals seeking to bypass geographic restrictions on gambling and betting apps. However, both the District Court and now the Federal Circuit have found GeoComply’s prevention method lacks the inventive threshold required for patent eligibility under US patent law.
Claim fails the Alice test
The February 2023 dismissal of GeoComply’s suit by Judge Bryson rested heavily on a well-established precedent from the 2014 Supreme Court case, Alice Corp. v. CLS Bank International. This landmark decision introduced a two-step framework for determining whether a patent involving computer-based processes is valid or simply embodies an “abstract idea.”
Under the Alice test, the court first assesses whether the patent is based on an abstract idea. If so, the second step examines whether the patent includes an “inventive concept” sufficient to transform that abstract idea into a patent-eligible application.In GeoComply’s case, Judge Bryson ruled that the patent’s anti-location spoofing approach was built upon an abstract idea: the process of determining a device’s location through known geolocation methods.
Bryson concluded that GeoComply’s method lacked the inventive concept required to satisfy the Alice test, noting that its claims boiled down to a conventional application of existing programming techniques for tracking a user’s location.
Because the court deemed the patent insufficiently transformative, it dismissed the suit with prejudice. This invalidated the patent and barred GeoComply from re-litigating the same claims.
The Xpoint spokesperson added: “The invalidation of GeoComply’s patent shows that no company can monopolise vital geolocation technology services and force their clients to work with them. Xpoint will vigorously pursue opportunities to create choice for gaming operators and improve the health of the industry.
“Xpoint’s victory demonstrates its commitment to an open, competitive market that drives forward the capabilities of geolocation technology for the entire gaming industry. With this ruling, Xpoint is excited to continue our momentum and deliver leading-edge solutions across the sector.”
GeoComply responds
In response to the ruling, GeoComply provided the following statement to NEXT.io: “Throughout this legal process, our commitment to serving our customers and delivering innovative solutions has remained as strong as ever. Our cutting-edge suite of solutions have never been about a single patent; they are the result of our decade-plus experience, the expertise of our team, and our unrelenting focus on customer success.
“This innovation is demonstrated through GeoComply’s proven track record of service delivery, reliability, and scalability. Our industry-leading platform processes over 1.2 billion transactions per month in a dynamic, context-aware system logic, all while consistently maintaining over 99.99% uptime and achieving over 99% pass rates. Our focus on creating and delivering industry-leading geolocation compliance and anti-fraud technology continues to drive us forward.
“We are disappointed by the court decisions related to patent law technicalities, and while we respect the judicial process, we stand firm in our belief that this specific innovation within our groundbreaking technology deserves protection from improper infringement.
“GeoComply takes pride in championing fair competition in the marketplace and promoting start-up innovators who challenge incumbents and strengthen the industry. However, when we believed our proprietary technology rights were being violated, we could not stand by without defending our innovation. GeoComply remains committed to promoting competition while still protecting our broad intellectual property rights.”
