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Patenting of intellectual property rights is typical for almost every business, including the gambling industry. Companies need it to secure the right to use the brand and protect it from others. It can be about different aspects, such as the design of a slot, roulette table, slot machine or the visual style and name of an online casino. However, there is a category of people who try to unfairly get money from patents. Read our article to find out who patent trolls are and how they work in the gambling industry or read online casino reviews UK to find more about this theme.
A patent troll is an individual or legal entity that specializes in patent lawsuits. In particular, this person obtains a patent for a certain item that is widely used by individual companies (for example, a blackjack table), but after obtaining a patent does not produce or use the object of its intellectual property. Instead, it begins to sue firms that use the technology protected by the patent, demanding high licensing fees or royalties for the use of their intellectual property. There is also an option when the patent is obtained in advance and the beneficiary waits until the market develops to a level where the patent begins to play a significant role in it.
Accordingly, this phenomenon is quite negative, as it is often used either for personal gain or as a means of unfair competition. For example, Rockstar Consortium Inc. is a patent monetization organization founded by a consortium consisting of Apple, Microsoft, Sony, Blackberry and Ericsson. In 2012, Business Insider magazine ranked the organization third out of eight in the list of the most formidable patent trolls in the industry, because Rockstar initiated legal proceedings against eight companies that developed Android smartphones, including Google, Huawei, Samsung, Asus, HTC, etc.
The question arises - why is this phenomenon so developed and large-scale? The fact is that patent lawsuits in the United States and other countries are very expensive, and even if the victim of trolls wins, it is cheaper to pay royalties than court costs. For example, in 2012, Kaspersky Lab spent $2.5 million to defeat the patent troll IPAT.
It is interesting that such persons or organizations like to call themselves patent holdings, patent dealers or patent traders.
And this phenomenon is quite common, and it is also present in the gambling business.
In December 2019, Marketmaker Software Ltd., an Irish company based in Dublin, announced that it had patents for cash-outs covering a popular sports betting option that allows bettors to withdraw from a bet before the event ends. The New Jersey operators - DraftKings Sportsbook, FanDuel Sportsbook and BetStars - had the relevant functionality, and the rights to it, according to the plaintiffs, belonged to them. In fact, Marketmaker's patents, dating back to 2007, protected intellectual property on withdrawal of funds in the early stages of betting.
According to experts, this was an attempt by trolls to obtain the rights to intellectual property and wait for the moment when they could be used to obtain funds, that is, at the time of increasing popularity of the technology.
In the USA, this problem has been widely known since 2013. Back then, the American Gaming Association (AGA) called on the Congress to make reforms in patent legislation, as constant lawsuits against small and large gambling businesses seriously undermine the industry. At the same time, Nevada Senator Dean Heller expressed his concern.
"If frivolous lawsuits are constantly being filed throughout my state of Nevada when Las Vegas casinos receive a patent complaint letter for a game they offer, it can have a negative impact on the economy because it hinders innovation and economic growth in the region," the politician said.
At the same time, the growth in the number of lawsuits began to concern innovative technologies for slot machines and online gambling platforms.
At that time, a large-scale patent lawsuit by MGT Gaming against most casino operators and slot machine manufacturers was unfolding in the country, in which the prosecutor claimed that gambling establishments used patented intellectual property in their machines. Even such market giants as MGM and Caesars Entertainment were involved in the court case.
Another well-known troll was Lottotron, which then opposed Interactive Systems, a licensed operator of Sportsbetting.com. The reason was a patent that protected the method of remote betting with the operator. Moreover, Lottotron claimed that this patent applied to all online betting and sued Playtech, PokerStars and GTech. The patent itself was approved in 1998, but the owner did nothing with his technology and just waited for the right moment.
The US government managed to change the patent legislation, so nowadays you can rarely hear about litigation in the gambling business. However, in 2011-2013, there was a real boom of lawsuits in the country due to the use of patented intellectual property. But after long court cases and financial expenses, none of the above claims was satisfied.
More than 250 federal lawsuits were filed by the gambling media troll Righthaven. He challenged the copyrights of sites or blogs that reposted his materials in full or in part. Usually, the media outlet that owns the rights first asks another media outlet to take down the infringing material, and if such a request is ignored, it files a lawsuit. However, Righthaven skipped this stage and went straight to lawsuits. In addition to compensation for damages, the trolls demanded the domain name of the offending site. Faced with the threat of losing their domains, more than 70 defendants decided to settle the case, allocating several thousand dollars each, and the owners of the plaintiff shared the profits.
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