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“Litigation in this area will be fundamentally driven by the number of patents, and there has been an explosion of patents in this area both in the gaming devices as well as process-covering systems used by casinos,” Williamson said.
And lawsuits in the area are not only plentiful � they’re high stakes.
In its latest suit against IGT, Bally is targeting the company’s popular “Wheel of Fortune” gaming machine. “Wheel of Fortune” generates more than a billion dollars in bets each year, according to industry estimates.
ROLLING THE DICE
As a result of the fierce competition in the $30 billion-a-year slot machine market, companies not only display a lack of restraint in suing each other; they also don’t hesitate to bring in the big guns in patent litigation, according to Williamson.
“Like any companies with important patent issues, gaming companies are hiring patent litigators who they trust and are the very best,” Williamson said.
Aside from marquee firms such as Quinn Emanuel, Kirkland & Ellis and O’Melveny & Myers, big-name patent litigators at other large firms also are getting some of the work.
Australian gaming company Aristocrat Technologies hired attorneys at McDermott, Will & Emery and Gibson, Dunn & Crutcher in several patent infringement suits. Financial research firm Hoover ranks Aristocrat as the largest manufacturer of slot machines in the world after IGT. It supplies clubs, hotels, casinos and bars in nearly 60 countries.
Since receiving its license to operate in Nevada in 2000, the company has been involved in at least a dozen patent suits.
But it is not just slot machine manufacturers and casinos gunning for each other in this area. Companies that provide cash services to casinos are suing over patented methods of getting cash to casino players.
Igor Shoiket, a partner at Townsend and Townsend and Crew in San Francisco, represented Global Cash Access in a patent infringement case concerning the company’s patented method of allowing casino patrons to take money from their ATM accounts once they’ve exceeded their daily limit. The Nevada company sued U.S. Bancorp and Game Financial Corp. and recently received an undisclosed amount in settlements.
“The whole industry is becoming much more high-tech and is attracting a lot of businesses that have patented ways to bring more money into the casino floor,” Shoiket said.
There is also growing litigation over patents covering cashless gaming and technology associated with customer tracking and reward cards.
O’Melveny’s Williamson is currently representing FutureLogic, a Glendale manufacturer of thermal printers used in slot machines, in a patent suit against competitor TransAct of Connecticut. FutureLogic filed a lawsuit seeking a declaratory judgment that it does not infringe TransAct’s patent, and a declaratory judgment that TransAct’s patent is invalid and unenforceable. There have been no rulings on the merits in that suit, which remains pending.
“Most of the machines in Nevada are cashless, and printers are an increasingly large part of gaming devices,” Williamson said.
Though Verhoeven still remains “deathly afraid” of gambling, he predicts he’ll continue to be a frequent visitor to Nevada.
“I don’t think there’s any chance that the pace of litigation will slow down,” Verhoeven said.
Due to a reporting error, an Oct. 11 story about patent litigation in the gaming industry mischaracterized the nature of the suit between FutureLogic and TransAct. FutureLogic did not sue TransAct for patent infringement. Instead, FutureLogic filed a lawsuit seeking a declaratory judgment that it does not infringe TranAct’s patent, and a declaratory judgment that TransAct’s patent is invalid and unenforceable.
We regret the error.
