Betting against the house
A Harrison company focused on intellectual property assets and patent enforcement has gone to federal court in Mississippi to force some of the nation”™s largest casino operators and gaming manufacturers to stop infringing on a patent the company acquired this year in its strategy to reap for investors a bonanza in royalties and court-ordered damages from its patent portfolio.
MGT Gaming Inc., a subsidiary of MGT Capital Investments Inc., has asked a U.S. District Court in Jackson, Miss., to order five defendants to stop infringing on MGT”™s ”˜088 patent that applies to bonus-round games played on an interactive sign linked to slot machines. MGT Capital this year paid $200,000 to two Long Island inventors for a majority interest in the patent. One of the inventors was known on Wall Street to Robert Ladd, president and CEO of MGT Capital and its largest shareholder, formerly a Manhattan money manager and hedge fund operator.
Attorneys for MGT claim that two defendants, WMS Gaming Inc. and Aruze Gaming America Inc., manufactured and sold the products described and claimed in the patent. Three casino operators, Caesars Entertainment Corp., MGM Resorts International Inc., and Penn National Gaming Inc., used the invention and offered it to their gambling customers, according to the court complaint.
The infringing game products”™ trade names include Pirate Battle, Reel ”˜Em In Compete to Win, Great and Powerful Oz, Battleship, Paradise Fishing and Clue.
MGT asked the federal court to triple any “reasonable royalty” assessed each defendant for the infringement in addition to ordering defendants to pay interest and MGT”™s legal costs.
The patent, titled “Gaming Device Having a Separate Second Bonusing Event,” was issued by the U.S. Patent and Trademark Office in February 2011, about 10 years after inventors Steven Brandstetter and James Devlin, of J & S Gaming Inc. in Dix Hills, first field a patent application. Brandstetter, reacting earlier this year to his deal with MGT, said he was “ecstatic” that he might finally be compensated by manufacturers and casinos that he believes “have misappropriated my idea willfully or otherwise.”
Ladd, the MGT CEO, previously told the Business Journal that the gaming patent deal is the first of several planned intellectual property acquisitions “with outstanding risk-reward characteristics.” Ladd also has targeted established patents in thermal energy and electronic commerce that he said could bring “tens of millions in royalties that have been infringed.”
“We are pleased to see that the gaming industry has embraced our patented technology by embedding it in a number of very successful gaming systems,” Ladd said in the company”™s announcement of the court action. “Moreover, it is gratifying to see that many casino patrons find enjoyment in playing these casino games. However, we deserve fair compensation for their use of our patent. As the cornerstone of our long-term strategy to create shareholder value, we will vigorously enforce our intellectual property portfolio against infringement.”
The company”™s legal team is lead by Robert A. Rowan and Joseph S. Presta, attorneys at Nixon & Vanderhye P.C., a boutique intellectual property firm in Arlington, Va. Rowan and Presta in 2007 won one of the year”™s 50 largest jury awards against another gaming company in the same federal court in Mississippi.