Monday, July 16, 2001 | 11:14 a.m.
Harrah's Entertainment Inc. hauled Station Casinos Inc. into Las Vegas federal court Friday, claiming Station is violating three Harrah's patents with its popular "Boarding Pass" slot club card.
Harrah's is asking a federal judge for an injunction that would force Station to halt the alleged violations. Claiming Station has been intentionally violating its patents, Harrah's is demanding triple damages.
Both Harrah's and Station often cite their slot club card systems as a key ingredient to their "same-store" earnings growth. And both companies spent a great deal of capital developing and promoting the programs as well.
"Harrah's spent thousands of hours and millions of dollars to become the only casino company with a national player-recognition program and tiered loyalty card program," said Harrah's President Gary Loveman in a statement.
Station officials declined comment, saying they hadn't yet seen the lawsuit.
Harrah's now claims 23.3 million customers are in its Total Rewards data base; Station doesn't release Boarding Pass membership numbers.
Harrah's claims three patents were violated. Two deal with the concept of a "National Customer Recognition System" that recognizes gamblers at multiple properties through a single slot club account; these patents were issued in June 1998 and February 2001.
The third patent, "Customer Worth Differentiation," deals with the concept of offering a tiered reward system for slot club members. It was issued in December 1999.
Harrah's launched its first multiproperty slot club card in 1997 under the name "Total Gold." Station launched its Boarding Pass in April 1999. Both systems track the play of gamblers at any property owned by the company, and accumulate the comp points from that play in a central account.
Harrah's renovated its Total Gold program in April 2000, rebranding it under the name "Total Rewards." Total Rewards assigns players three levels -- gold, platinum and diamond -- then awards players increasing levels of comps based on which level they have attained.
Station reworked its Boarding Pass as well in February 2001, when it announced its own tiered program. Station Boarding Pass holders are now assigned to one of five levels -- preferred, bronze, silver, gold and platinum -- each carrying a more attractive level of comps.
At the time Station launched the tiered program, company officials maintained the concept hadn't come from Total Rewards.
"We knew they (Harrah's) had a tiered program, but in all honesty, we've always had tiered programs," Station Vice President of Marketing Brad Goldberg said in February. "We've just extended that. This is more of a full disclosure, so customers understand why they get a level of offers from us. We're giving them the knowledge of how to achieve the most rewards from our company."
Harrah's and Station soon won't be the only companies to have slot cards covering multiple properties -- MGM MIRAGE, Park Place Entertainment Corp. and Mandalay Resort Group are all working on slot cards that can be used at all of their respective properties on the Las Vegas Strip. Mandalay is now introducing the card, and will have it installed at all five of its Strip properties by December.
MGM MIRAGE will begin introducing its single card in the fall, and the system will cover all MGM MIRAGE properties across the United States by March. Park Place plans to begin introducing its own unified slot club for its five Las Vegas casinos in December.
Though Harrah's didn't specifically mention these companies in its lawsuit or press release, Loveman warned that Harrah's was on its guard to protect the three claimed patents.
"Every company has a duty to protect its assets, including its intellectual assets, against encroachment," Loveman said. "When such infringements occur, we will take the appropriate action."
"I think Gary's words speak for themselves," said Harrah's spokesman Gary Thompson when asked if Harrah's was warning other casino companies.
But MGM MIRAGE believes it's on solid legal ground.
"We have reviewed the Harrah's patent and have concluded our methodology does not infringe upon their patent," said MGM MIRAGE spokesman Alan Feldman.
Park Place spokeswoman Debbie Munch said the company preferred not to comment on the litigation between Harrah's and Station; Mandalay officials could not be reached for comment.
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