September 11, 2008

PartyGaming Plc Facing Multi-Million Dollar US Lawsuit

PartyGaming plc is facing the prospect of a $287 million compensation claim for trademark infringement following a decision Monday by the United States Court of Appeals for the Seventh Circuit.
In the case of WMS Gaming Inc. vs. PartyGaming plc, WMS Gaming argued 'persistent, knowing and wilful infringement' of its trademarks by PartyGaming.

The case centres on WMS's trademarks Jackpot Party and Super Jackpot Party, which PartyGaming is said to have infringed in the years between 2004 and 2006 through 'approximate and exact reproductions of the marks'.

After several failed attempts to persuade PartyGaming voluntarily to cease its infringing uses of WMS’s marks, WMS filed suit in federal district court seeking injunctive relief, damages, and an equitable accounting of the profits PartyGaming reaped from its use of WMS’s marks in the United States.

Despite receiving proper notice, PartyGaming chose to ignore WMS's lawsuit, leading in July 2007 to Judge Blanche Manning of the US District Court for the Northern District of Illinois issuing a default judgement against the company, including an award of $2.67 million in damages to WMS.

The amount of $2.67 million in damages was substantially lower than the $287 million sought by WMS based on PartyGaming's US profits during the period, leading to this appeal which was argued in February of this year and decided on Monday 8th September.

In their decision, Circuit Judges Rovner, Wood and Williams said they agreed with WMS's argument 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 its damages."

The court found that  WMS had provided evidence of PartyGaming's profits from the United States, based on the company's own figures published in their annual report. "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, $2,673,422.10, the record shows that in a single year (2005), the defendants reported revenues of $977.7 million—nearly $1 billion.

"The record shows persistent, pervasive, knowing, and willing infringement for several years by PartyGaming, as it repeatedly 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 Court therefore upheld WMS's appeal, reversing the judgment of the district court and ordering further proceedings consistent with this opinion.   

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