IGT court victory showcased high-stakes battle

By Liz Benston (contact)

Wednesday, Sept. 29, 2004 | 11:10 a.m.

International Game Technology's $7.4 million jury verdict against Alliance Gaming Corp. last Friday was unusual for an industry where slot machine competitors commonly sue one another over patents and quietly settle those disputes out of court. But the stakes in this case were high.

The drawn-out complaint, which involved courtroom demonstrations of slot machines and complicated discussions of computer technology, pitted two slot manufacturing titans against each other in a battle to maintain a profitable feature of video poker games popular with local players.

The dispute began in September 2001 when Action Gaming Inc. filed suit in federal court in Las Vegas, alleging that Alliance Gaming's "Multi-Play Poker" infringed on two patents used in IGT's "Triple Play Poker" slot machine.

Action Gaming is a Las Vegas company founded by an inventor named Ernie Moody who in the late 1990s pioneered video poker games that can deal multiple hands. Action licenses the technology to IGT, which creates multi-hand versions of existing poker machines. IGT later became a plaintiff in the suit against Alliance. Las Vegas-based United Coin Machine Co., a slot route formerly owned by Alliance, was added as a co-defendant with Alliance because slot machines used in United Coin locations allegedly infringed on Action Gaming's patents.

"Triple Play Poker" is one of IGT's most popular video poker games, IGT Vice President of Marketing Ed Rogich said. "It's a very important patent," he said of the Action Gaming patents.

About 25 percent of IGT's nationwide base of slot machines are video poker machines. Only about 10 percent of those poker machines are so-called "multi-hand" devices that allow gamblers to play up to 100 hands of poker at once. While relatively small in number, the multi-hand games are "hugely popular" with players familiar with video poker, Rogich said.

Multi-Play Poker is similar to Triple Play Poker in that both games deal multiple, identical hands and allow players to choose which cards they want to "hold" before the machine "deals" replacement cards, court documents show. In Triple Play Poker, the player must hold the same cards for each hand dealt. In Multi-Play Poker, the player can choose which cards he wants to hold for each hand.

An added feature of Multi-Play Poker makes it nearly identical to Triple Play Poker, however, according to court documents. The feature, called "autohold," suggests which cards players should hold and then automatically holds the same cards for each hand dealt. Players can turn the feature on or off while they gamble.

In court, IGT argued that all Multi-Play Poker games on the market violate the Triple Play Poker patents because the Alliance games contain the autohold feature. Regardless of whether players are activating the feature, the games were initially programmed to include the offending software, IGT said.

Alliance argued that the games are substantially different.

Last year, U.S. District Court Judge James Mahan ruled that the Alliance games weren't identical to the IGT games but allowed a trial to decide whether the games were substantially similar enough to warrant patent infringment.

The court has not yet entered a judgment on the verdict or ruled on an injunction filed by IGT after the verdict. The $7.4 million verdict did not include punitive damages sought by IGT.

The company is requesting that Alliance remove the autohold software from its slot machines.

Alliance Gaming officials declined to comment on the verdict or discuss whether they will appeal.