Hi, and welcome back to Legal Geek. This week, we review how patent acquisition and enforcement in a potentially trolling manner can backfire to the tune of millions of dollars, in a case over automatic card shufflers used in gaming settings like casinos.
https://archive.org/details/LegalGeekEp145
An Illinois federal court awarded over $300 million dollars of trebled damages to a group of companies this week in a dispute over automatic card shufflers. That's a pile of money even a casino would pay attention to. How did this seemingly simple technology get to this verdict in court?
The story begins in 2012 when a company called Shuffle Tech patented and developed some new automatic card shuffling machine technology, and then collaborated with other companies like DigiDeal to manufacture and market these to casinos and other gaming establishments. The goal was to make and sell about 1200 of these machines a year, with a profit margin of $7,500 dollars on each one.
But when this machine debuted in late 2013 and began to be sold, a patent infringement lawsuit was filed by Scientific Games, another player in the shuffling market. The patent infringement lawsuit was expensive as always in the U.S., and defending this lawsuit ate up most of the seed money Shuffle Tech had collected for building its business. Thus, Shuffle Tech had to quit making shuffling machines and sell its own IP, pushing this new company out of the market.
Shuffle Tech and the collaborators then filed an antitrust lawsuit against Scientific Games, arguing that Scientific Games enforced patents which it knew to be invalid. To this end, in the U.S. there is an obligation for patent applicants to cite any material and relevant prior art they are aware of so that the Patent Office can properly consider all the evidence before granting a patent. Shuffle Tech noted that prior art that seemed to invalidate the patents they were sued upon was cited by Scientific Games in other cases at the Patent Office, but not these ones. In other words, the claim was that Scientific Games knowingly committed fraud on the Patent Office, and thus, was violating antitrust laws when enforcing invalid patents against Shuffle Tech.
Scientific Games argued against this assertion, noting that it had a good faith belief these non-cited prior art documents were not highly relevant to the new cases. But the Illinois court apparently disagreed, imposing a verdict and damages of $105 million dollars against Scientific Games this month, and then tripling the damages to $315 million, as is customary in antitrust law cases. So whether Scientific Games was using troll-type litigation activity or just bad faith in the patent process, the end result was a massive verdict against it. Perhaps just competing in the open market with Shuffle Tech would have been better.
The Bottom Line is, while some companies may not want to comply with the U.S. patent rules to disclose a lot of prior art information when that information is known, the potential risks outweigh the potential gains. By not doing proper due diligence when applying for the patent here, Scientific Games lost in the end their patents and also millions of dollars on top of it. You truly do have to know when to hold em and know when to fold em in this field, which is something a casino equipment company should likely know.
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Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy
Tuesday, August 21, 2018
Tuesday, August 7, 2018
Legal Geek No. 144: Scooters Take the Streets, and Create Legal Issues
Hi, and welcome back to Legal Geek. This week, we review a new scooter craze for mobility options in cities and the legal issues they are creating.
Just this past week in my own town of Cincinnati, the company Bird descended upon us with a slew of rentable motorized scooters that people can use to easily transport from one part of town to another. Bird is one of three electronic scooter companies, the others being Lime and Spin, to hit the streets in recent weeks and months in major cities. It's basically a more advanced version of bike share programs available in many cities, or a less advanced version of electronic car rentals available in some cities.
The rentals are fairly inexpensive as well, typically costing $1 plus a few cents per minute. Thus, many people have immediately taken advantage of this new option for mobility in cities, but this has already begun to raise some legal issues and concerns.
First, electronic scooters are much like bikes in that it can be unclear whether they belong on the roadways or on the sidewalk with pedestrians. This lack of clarity has led to some accidents, and liability issues for such accidents can be hard to sort out in a new context where the rules are not clearly established. Furthermore, cities are needing to adjust just like they have with rentable cars and bikes to dealing with problems such as scooters being left in inconvenient places around the city.
But the biggest potential issue actually relates to privacy law for the consumers, which is something most users will not think about when deciding to rent a scooter. All three of these companies persistently track your whereabouts when on the scooter, so as to protect themselves from loss of the scooters. This comes with the downside that these companies know exactly where their consumers have been, which could include information on attending things like political protests or certain religious services. As of now, the companies have not disclosed how long they reserve this information, and they have explicitly reserved the right to share the information with third parties.
Organizations like the ACLU are already expressing concerns with these practices from the scooter companies, and they may be able to pressure the companies to at least better disclose their privacy and information policies. But if you plan to take advantage of this new mobility option, you should do so with the knowledge that they are tracking you, associating your movements with the identity information they collect such as driver's license and credit card information.
The Bottom Line is, new technologies can make things like mobility within a city much easier, but they often come with new legal issues to figure out. While in the early phase of things like the scooter craze, consumers need to stay as informed as possible of the risks involved before agreeing to use the new technology. That being said, I suspect many of these issues will be sorted out and it will be for the better for all who have this new additional option.
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Do you have a question? Send it in!
Thanks for reading. Please provide feedback and legal-themed questions as segment suggestions to me on Twitter @BuckeyeFitzy
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