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Acres Wins $1.5 Million In Patent Dispute With Mikohn

28 March 2001

by Grace Leong

LAS VEGAS, Nevada – March 28, 2001 -- Acres Gaming Inc. of Las Vegas, which was embroiled in a longstanding gaming patent dispute with Mikohn Gaming Corp. of Las Vegas, today announced it was awarded $1.5 million in damages by a federal jury, which found Mikohn had infringed two of Acres' patents.

Acres, which has offices in Corvalis, Ore., has been involved in lawsuits with Mikohn in federal court since 1997 over the validity of four "bonusing" gaming patents -- with both parties accusing each other of patent infringement.

Acres said two of its four patents were infringed by Mikohn's MoneyTime system, a network of slot machines.

A bonusing patent covers the methods computer systems use to award bonuses to slot players and communicate with slot machines connected to a casino's network, said Reed Alewel, Acres Gaming's spokesman.

Mikohn develops, manufactures and markets slot games, table games and advanced player tracking and accounting systems for slot machines and table games.

A U.S. District Court jury in Las Vegas on Tuesday returned a verdict validating all four of Acres' gaming patents, and found Mikohn infringed two Acres patents. The decision came after an eight-day trial.

Bud Glisson, Acres' chairman and chief executive officer, said: "Mikohn put extensive resources into their efforts to invalidate our patents, and we are delighted that the jury understood the importance and value of our inventions. The jury verdict confirms Acres Gaming's competitive advantage in casino bonusing systems."

Mikohn filed two suits against Acres in 1997 and 1998, alleging two of Acres' bonusing patents are invalid and Mikohn's products didn't infringe Acres' patents and any pending patents, Alewel said.

He said Acres then sued Mikohn, New York-New York hotel-casino, Sunset Station hotel-casino and Casino Data Systems Inc. in 1998, alleging they infringed a third separate patent.

"Infringement occurs when I wire those games into the whole casino network and then select certain of those games to participate in a bonus. That's considered pre-selection," Alewel said.

"Mikohn's MoneyTime at New York-New York was attached to a network and that network allowed the casino to choose less than all of the games to participate in the MoneyTime (bonus) promotion, so that was considered an infringement of Acres' patent," Alewel said. "We suspect New York-New York is being indemnified by Mikohn, that is, Mikohn is defending them. The jury didn't make New York-New York pay anything."

Mikohn countersued Acres, alleging Acres' third patent was invalid and Acres had unfairly competed by sending letters to its customers claiming Mikohn had infringed Acres' third patent.

Mikohn filed a third suit against Acres in 1998, alleging a fourth separate patent was invalid. Acres countersued Mikohn and Casino Data, alleging they violated Acres' fourth patent. Casino Data countersued Acres, alleging patent misuse, attempted monopolization, spoilation of evidence and unfair competition.

Alewel said the four suits were consolidated as one and Acres settled its dispute with Casino Data and Sunset Station before the jury trial. Terms of the settlement weren't disclosed.

In light of the jury verdict, Mikohn said it will take a charge of $3.2 million in the fourth quarter of 2000 to accrue for the damages and write down the value of certain assets. Despite this charge, the company said it believes the verdict was inappropriate and will appeal.

Charles H. McCrea, Jr., Mikohn's executive vice president and general counsel, said: "The jury verdict, while a disappointment, is not a final finding that the Acres patents are infringed by the MoneyTime system. We intend to vigorously pursue post-trial motions to overturn the verdict and, if necessary, to appeal."

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