Cairns Patent Once Again Provokes the Promotions Industry to Re-E

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Cairns Patent Once Again Provokes the Promotions Industry to Re-Evaluate Online Promotional Games

by: Sheppard, Mullin, Richter, & Hampton LLP of Sheppard, Mullin, Richter & Hampton LLP - Entertainment Law Blog

Monday, September 7, 2009

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Most major players in the promotions industry know that the so-called Cairns patent (U.S. Patent No. 6,173,267) is an online business method patent relating to online sweepstakes that involve unique codes. Although it should be clearly understood that I am not a patent attorney (a highly-technical legal specialty), and this blog entry does not constitute legal advice and most certainly does not constitute a legal opinion of this firm, there are several steps that can be taken to potentially avoid at least one of the elements, or its equivalent, for each claim of the patent.

Based on the Abstract and specifications of the Cairns patent and a summary of its various claims, the Cairns patent involves a series of steps whereby: (1) a person obtains a "unique code" from packaging or point of sale materials or through some other form of "card" (in whatever form) and is directed by such packaging, materials or "card" to visit a particular online website (the "Specified Website") for the chance to win a prize; (2) the person then takes that code and uses a computer or other device to connect to the Internet and visit the Specified Website; (3) at the Specified Website, the person enters some amount of personal information (e.g., name, address, phone number) that will allow the promotion sponsor to contact him or her; (4) at the Specified Website, the person also enters the "unique code", which can happen either before or after the personal information is entered; (5) after the "unique code" is entered, some calculation is made on the code (e.g., "the code is compared to a list of winning codes to determine whether that code is a winner at some prize level…. Alternatively, the code which is input by the purchaser may be subject to some computation, random selection, or other means for determining a winning or non-winning status, instead of the look-up list. The purchaser is then informed of his or her status based on the code, in other words, whether the purchaser has won some prize…."; and finally (6) each person who is identified as winning a prize "based on said unique code" is informed that he or she has won a prize "while [he or she] is connected [to the Specified Website]".

To avoid implicating the Cairns patent, an online promotion must avoid at least one of the elements, or its equivalent, for each claim of the patent. In other words, if any of these steps, or "claims" in patent terminology, is not present in the process, the Cairns patent is not implicated. Of course, whether or not a step, or its equivalent, is avoided requires a potentially complicated and detailed analysis of not only the patent, but its prosecution history and possibly the prior art. But merely as an example for purposes of this blog entry, if the codes that are used are not truly one of a kind for purposes of the promotion they are intended for, the promotion does not involve "unique" codes. On that point, in a case decided last month, the Federal Circuit held that a federal district court erroneously read the claim term "binary code" in a patent on a remote-control garage door transmitter to encompass trinary numbers, those based on three values. Chamberlain Group Inc. v. Lear Corp., Fed. Cir., No. 2007-1314, 2/19/08. In other words, the Federal Circuit held that "binary numbers" means "binary numbers", not trinary numbers. Analogously, "unique code" (as used in the Cairns patent) means "unique code", so if there were a series of repeating codes in a promotion, that mechanic would fall outside of the Cairns patent's "unique code" requirement.

Additionally, if users enter their personal information at the Specified Website (e.g., a registration URL) and are then taken to a different URL for purposes of entering the code and playing the game, the mechanic would involve two websites, not just the Specified Website contemplated in the Cairns patent. To further distance a promotional game from the Cairns patent claims, it is often useful to make a clear distinction in the game mechanic between entering the code and announcing that a participant has won, such as some sort of intervening act coupled with an email intercept whereby a participant is informed through an after-the-fact email that he or she has won something (e.g., "check your email to see if you've won") as opposed to being instantaneously informed while he or she is still logged on to the Specified Website.

Finally, since 2002 when the Cairns patent began to be asserted, major players in the promotions industry concluded that the Cairns patent is not implicated if the determination of whether a particular participant is a winner is based on the time the participant executes his or her entry, as opposed to being based on the code that is entered.

That position has merit, and the Cairns patent has been dormant with little or no enforcement activity against those sorts of online games for years. Indeed, the Cairns patent expired for failure to pay fees on January 9, 2005, though that failure was excused and the patent was reinstated on June 21, 2005. A few weeks ago, however, the attorney for Cairns took a broader view of its scope and wrote in a letter that's been circulating through members of the Promotion Marketing Association (www.pmalink.org), "I can see you think that the ‘267 patent requires seeded codes. You believe that random selection processes are not covered. In fact, random selection processes are described in the patent and covered by its claims. In claim 22, the purchaser is informed of a status “while . . . connected at said electronic address.” Claim 22 does not include a limitation that the status is 'based on said unique code'.” When claim 22 is read in context, however, it is arguable that the claim impermissibly broadens everything else that's otherwise described in detail in the patent, which repeatedly requires a person's winning status to be "based on said unique code". In a time-based seeding mechanic where the determination of whether someone is a winner is based on the time they play rather than the identity of the code they enter, the prize wouldn't be "based on" the code within the requirements of the Cairns patent; it would be "based on" the time of play.

Of course, there may be online business method patents other than the Cairns patent that are implicated by a particular promotion. But based on the above analysis, there are several steps that can be taken to potentially avoid several of the Cairns patent claims.