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Mississippi patent infringement battle over video gambling machines makes its way to Chicago

By Jonathan Bilyk | Jun 6, 2014

A Chicago-based maker of casino video gambling machines has secured the chance to fend off a patent infringement lawsuit a little closer to home while some of the country’s most prominent casino operators await their turn to mount a defense pending resolution of the case brought by a manufacturer of gaming machine components.

On May 28, at the direction of the U.S. Court of Appeals for the Federal Circuit, a federal judge in Mississippi ruled that WMS Gaming Inc. could transfer proceedings over claims brought against it by MGT Gaming Inc. to Chicago's federal court.

The removal marks the latest move in the patent infringement suit that MGT filed in 2012 in the Southern District of Mississippi against WMS and its rival, gaming machine maker Aruze Gaming America, as well as the casino operators that use their machines,  which includes Caesars Entertainment Corp., MGM Resorts International Inc. and Penn National Gaming Inc.  

MGT alleges that WMS and Aruze have infringed upon its patents by making and selling gambling machines that feature an interactive sign, designed to allow those playing the machines to play a second bonus game.

It claims the components for which it holds patents have been installed on machines played under the names Pirate Battle, Clue, Battleship, Monopoly Big Event, Star Trek Battle Stations and Castle King, which MGT contends are used improperly in Mississippi casinos owned by the defendant operators.

In its suit, MGT seeks injunctions against WMS, Aruze and the casino operators, and damages that would include, “at a minimum, a reasonable royalty, trebled,” for the use of the machines featuring the components at the heart of the patent infringement case.

WMS and the casino operators requested the court to sever MGT's claim against the defendants. WMS also asked Mississippi's federal court to remove the case to federal court in Chicago, where it is headquartered.

U.S. District Court Judge Carlton W. Reeves of the Southern District of Mississippi severed the claims against WMS and Aruze, but would only stay the actions against the casino operators pending the outcome of the WMS case.

He also refused to transfer the case to Chicago, saying he believed the facts of the case made Mississippi a more convenient location to try the case.

WMS appealed, however, and the U.S. Federal Circuit Court of Appeals, which hears patent law-related appeals, vacated the Mississippi judge’s decision, determining his transfer denial "amounted to a clear abuse of discretion."

In the April 30 order granting the petition for a writ of mandamus, the federal appellate judges explained the documents and witnesses needed to try the case are with WMS in Chicago and said the Mississippi court had failed to properly note MGT’s lack of connection to Mississippi.

“The only identified sources of proof are located in the Northern District of Illinois,” according to the order from the Federal Circuit panel, which was made up of Judges Alan D. Lourie, Timothy B. Dyk and Jimmie V. Reyna.

In response to their order, the Mississippi court revisited the case, ordering late last month that the case against WMS be transferred to Chicago and the case against the casino operators be stayed, pending resolution of the complaint against WMS.

The parties in the suit agreed to the resolution. It appears Aruze is continuing its legal fight against the claims in Mississippi's court system.

Electronic court documents show a status hearing in the recently-transferred case will take place June 17 before Chief Judge Ruben Castillo in Chicago.

MGT is being represented by Erin Saltaformaggio and David W. Clark of Bradley Arant Boult Cummings LLP in Jackson, Miss., and Robert A. Rowan, Joseph S. Presta, Chris Comuntzis and Michael E. Crawford of Nixon & Vanderhyde P.C. in Arlington, Va.

WMS and Caesars are being represented by Timothy C. Meece, V. Bryan Medlock, Jr., Michael J. Harris and Audra C. Eidem Heinze of Banner & Witcoff Ltd. in Chicago.

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