IP Lawsuits Abound

A bevy of patent and trademark infringement lawsuits targeting online poker companies have cropped up in the last year, and some observers say an epidemic could be on the horizon.

Interactive Gaming News has learned through confidential sources that a handful of well known online poker operators have settled with 1st Technology LLC over the last six months in a series of trademark infringement claims filed by the company.

1st Technology is headed by Dr. Scott Lewis, who claims to have trademark rights for the enhancement of transmitted multimedia content. Among companies targeted are Boss Media, CryptoLogic, Wagerworks, MGM Mirage Online, Las Vegas From Home.com, Real Time Gaming Terra Networks, Sportingbet, NDS Group, Ongame E-solutions and Orbis Technology.

The dozen or so known cases were preceded by warning letters (sent to each of the defendants) in which Lewis' attorneys advised the recipients that their online poker products could constitute patent infringements and recommended that they settle on a fee.

Cory Aronovitz, a lawyer with Casino Law Group in Chicago and counsel for a handful of defendants in settlements with 1st Technology, would like to see a joint defense assembled to fight back. Organizing such a defense won't be easy, however, because the recipients, he said, for the most part compete with one another.

"In most instances, companies are not polling competitors on issues that they themselves would not be willing to share," Aronovitz explained. "As a result, until they are named as a defendant with others, they probably think they were the only company that received a letter."

Although Aronovitz is not a patent attorney, he has consulted with experts who believe Lewis' patent could be challenged and found to be invalid. But Lewis has limited the number of defendants in each complaint to no more than four, and only two of the defendants named in the three lawsuits formed a joint defense.

"It becomes a business decision, and from a dollar-and-cents view, it is significantly less costly to license when first contacted or settle when served than to defend against the claim," he said. "To litigate a patent dispute, it is not unreasonable to anticipate legal fees to run in the hundreds of thousands, regardless of the outcome."

In SEC documents filed in February 2005, gaming software provider Las Vegas From Home.com reported that it has settled a claim with 1st Technology by agreeing to pay a $100,000 "licensing" fee plus royalty fees based on rake income.

Other parties have agreed to similar deals in lieu of litigation, although their identities and the terms of the deals are confidential.

Since then, Niro, Scavone, Hallers & Niro, the Chicago-based law firm representing Lewis, has gone after additional online gambling companies.

"Lewis' attorneys have deep pockets and are experienced in complying with Hague procedures for serving foreign entities," Aronovitz said."It would be a mistake to think that by ignoring these letters, they will go away."

He added that although the patents have not been tested in court, "they (Lewis' legal team) are willing to litigate, which is expensive to defend."

Aronovitz also pointed out that the original patent paperwork doesn't mention the Internet and was created to cover the enhancement of TV broadcasts when elements like a moving ticker tape on the bottom of the screen are used.

A software supplier with a poker platform that deals out cards showing numbers is fine, according to Lewis' legal team, but as soon as the cards are enhanced to include the suit (hearts, diamonds, etc.), Aronovitz said, Lewis' team will then argue that there's a patent infringement.

Aronovitz warned that if word spreads through the patent lawyer community that the online gambling industry is one that will settle, there's no telling how many similar suits would ensue.

Adding to Aronovitz's optimism in defeating Lewis, is the fact that while Lewis does have a patent, 1st Technology appears to have no business practice in place, other than challenging companies who infringe on the patent.

Trademark Cases

The patent claims aren't the only recent intellectual property cases targeting I-gaming companies. A handful of online poker companies are being sued for using terms such as "world," "poker," "championship" and "cup" when promoting their Web sites and online tournaments.

The World Poker Tour recently announced that it has won several trademark-related cases in recent months over online gambling operators. Among cases won were a domain infringement case brought against Playworldpokertour.net, a domain infringement in Chile over the use of "Wpt.cl" and "Worldpokertour.cl" and a trademark infringement case against WagerLogic over applications filed in Canada for the use of "InterPoker World Poker Tour," "WagerLogic World Poker Tour," "InterPoker World Poker Tournamnet," and "WagerLogic World Poker Tournament."

In addition to the WPT cases, PokerStars.com has filed documents with the U.S. Patent and Trademark Office's Trial and Appeal Board challenging the use of the term "World Cup of Online Poker" by a Connecticut-based company.

Legal experts agree that operators are fighting an uphill battle in trying to trademark names for their poker sites or tournaments that resemble well established land-based events and brands.

The WPT and the World Series of Poker are the benchmark for the industry, and any combination of those key terms will catch the ire of both companies. Attorneys say that companies opting for similar terms, like "global" instead of "world," stand a much better chance of having the name hold up in a trademark case.

Regardless of the outcome of the several IP cases being heard, their mere existence (especially considering the major law firms involved) is a sign of how big the online gambling industry has become.

"Obviously they feel the Internet and these companies pose a serious threat," Aronovitz said. "I don't think you could always have said that."

Documents

1st Tech. v. LV from Home, Real Time Gaming and Terra Networks
1st Tech. v. Sportingbet, NDS, Ongame and Orbis
Warning Letter
Las Vegas From Home Agreement