Court throws out $33 million slot suit award

Thursday, July 22, 1999 | 11:12 a.m.

WASHINGTON -- A federal appeals court threw out International Game Technology's $33 million patent infringement award against WMS Industries Inc. and ordered a lower court to recalculate the damages.

On Tuesday the Federal Circuit Court of Appeals in Washington ruled that WMS had not "literally" infringed on IGT's Telnaes patent. The court, however, said the IGT slot technology patent was still valid and said WMS had violated that patent under the "doctrine of equivalents."

The Telnaes patent is the technology that allowed the creation of slots with massive progressive jackpots, such as Megabucks.

Literal infringement refers to the direct copying of a patented design. The doctrine of equivalents doesn't refer to direct copying, but is instead a finding that the two designs are so similar in form and function that the original patent is violated.

IGT, of Reno, had been awarded $33 million in the case, decided by a Chicago federal judge in 1996. The company was awarded $10.75 million in actual damages, a figure that was tripled for willful infringement. The appeals court on Tuesday vacated the district court's willful infringement finding, and ordered a reconsideration of the issue.

The appeals court upheld the actual damages total, but ordered a reconsideration of damages based on the willful infringement issue. WMS, of Chicago, wrote off those damages in 1997.

IGT acquired the Telnaes patent in 1989 and licensed it to other manufacturers. It computed the "stops" on a mechanical reel with a random number generator rather than simple mechanics. The effect was to increase the number of stops per reel from 20 to 256, increasing the odds of the top jackpot from 1 in 8,000 to 1 in 16.8 million.

WMS used the technology in some of its machines without paying for a license. It sued IGT in 1994, claiming the patent was invalid. IGT countersued.

WMS no longer uses the technology in its machines, a WMS executive said. The Telnaes patent expires in 2002.