And the Hits Just Keep on Coming for PartyGaming

2008 September 10, Jonny Vincent

Online gambling giant PartyGaming is staring down the barrel of a $287 million compensation claim for trademark infringement following a decision this week by the US Court of Appeals for the Seventh Circuit.

Online gaming news service GamingIntelligenceGroup reports WMS Gaming Inc. won an appeal this week against PartyGaming Plc. (parent company of popular online gambling brands PartyCasino and PartyPoker) which will allow WMS to seek greater compensation from PartyGaming than the $2.67 million in damages awarded by Judge Blanche Manning of the US District Court for the Northern District of Illinois in July last year. PartyGaming chose to ignore the initial lawsuit last year, which resulted in a default judgment against the company.

WMS Gaming argued that PartyGaming participated in "persistent, knowing and willful infringement" of WMS trademarks Jackpot Party and Super Jackpot Party through the years 2004 to 2006 through "approximate and exact reproductions of the marks".

A contributing factor to PartyGaming's decision to ignore the lawsuit may be related to the fact that PartyGaming executives have been prevented from traveling to the US after Department of Justice officials decided to target PartyGaming for activities the company participated in prior to withdrawing from the US market post-UIGEA.

The Appeals Court ruled this week that "the district court…made a fundamental error of law by failing to distinguish between WMS's right to the defendants profits and its right to damages", leaving PartyGaming vulnerable to the original $287 million sought by WMS.

"In the absence of evidence from PartyGaming showing that deductions are warranted, WMS is entitled to the revenues supported by its evidence," said Judge Wood. "We add that while the figure WMS seeks, $287,391,140.70 is considerably larger than the 'damages' award granted by the district court…the record shows that in a single year (2005), the defendants reported revenues of $977.7 million….The record shows persistent, pervasive, knowing and willing infringement for several years by PartyGaming, as it repeated refused to cease and desist even after receiving several forms of actual notice of its unlawful activity, from both the Patent and Trademarks Office and from WMS."

The decision is sure to cause further headaches for PartyGaming executives, who are frantically trying to rebuild the PartyGaming empire after a horror two years.

Shares in PartyGaming (LSE: PRTY) are trading 2% lower today at 198.25p – the share price has been falling consistently since the company decided to withdraw from the US market after the UIGEA was signed into law late 2006.