Brokerage Union Gaming Securities LLC expects Scientific Games Corp will appeal against a United States federal court order to pay US$315 million to four companies as settlement in a patent dispute.
On Tuesday, a jury found that the U.S.-based maker of gaming equipment had acted unfairly in keeping a rival automatic card-shuffling device out of the market. The device, made by Shuffle Tech International LLC and three other plaintiffs, was kept off the market by “sham patent litigation against any competitor that dared to market competitive card shufflers,” the Reuters news agency reported the litigants as saying.
In a filing to the U.S. Securities and Exchange Commission, Scientific Games said it felt the jury had reached a wrong decision in the anti-trust case and would seek a review. The damages award was the culmination of six years of legal action and a three-week court trial that began in July.
In an analysis of the case, Union Gaming said it consulted experts on patents and the law, and concluded that Scientific Games could improve its situation if it appeals.
The note by analyst John DeCree suggested any appeal would mean either the company could avoid paying up for 18 months or more, or overturn the jury’s verdict, or reduce the penalty.
“It is possible, but unlikely, the judge could throw out the jury’s decision and/or trim the damage award. However, this is an important step as it sets a good record of the issues for appeal,” the memo from Mr DeCree said.
“This will take several weeks, after which the case will likely go to the Seventh Circuit Court of Appeals. The process from there would likely take around 18 months,” he added.
The jury verdict was for damages worth US$105 million which was then tripled under a judge’s order. The US$315-million award is slightly more than 10 percent of Scientific Games’ market capitalisation, Union Gaming said.
“In the near-term, we expect little financial impact for Scientific Games, with the exception of some additional legal fees,” Mr DeCree wrote. “If the company’s appeal efforts prove unsuccessful, the balance sheet should be in much better shape by the time this case concludes. In short, we are redirecting our attention and focusing back to fundamentals and the business outlook,” he added.
Shuffle Tech, Aces Up Gaming, Poydras-Talrick Holdings and one other company showed their card shuffler at the 2012 Global Gaming Expo in Las Vegas, Nevada. SHFL Entertainment – which was then known as Shuffle Master – filed a patent infringement soon after. Bally Technologies Inc acquired SHFL Entertainment for US$1.3 billion in 2013, and Scientific Games in turn bought out Bally Technologies for US$5.1 billion a year later.
Scientific Games has a September 5 deadline to lodge an appeal.
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Chief executive of the Australia-based Gaming Technologies Association