Sunday, July 08, 2007

An Interesting Precursor to the Issue of WTO Intellectual Property Rights

[Canada Cal here, coping with the heat...]

This is one of those "tangled web" tales that illustrates what happens in an uncertain market, when everyone is scrambling to get their share.

The ongoing World Trade Organization dispute between the United States and the rest of the world over open access to online gambling included, almost unseen, a press release a couple of weeks ago. The press release was issued by Derek Webb of Prime Table Games, and was titled, "An Open Letter to the U.S. Congress and the Gaming Industry: 'The Hypocrisy of Antigua Regarding Internet Gambling'." In it, Webb assailed Antigua & Barbuda for being home to some online casinos that have offered games such as Three Card Poker and Caribbean Poker, which are the property of --- you guessed it --- Prime Table Games. The press release is such a misdirected ploy, it's worth sharing in its entirety:

LAS VEGAS, June 8 /CNW/ -- Antigua has threatened to act against U.S. trademarks, copyrights and intellectual property rights, in response to the U.S. position in the World Trade Organization dispute regarding internet
gambling. The WTO decision, however, does not reveal the extent of the issues
relevant to cross border wagering.

Around $100 million has been won from U.S. players through abuse of U.S. intellectual property rights by most Antigua internet casinos. For example, the most popular proprietary casino table game is Three Card Poker. The right to offer Three Card Poker to U.S. players has never been granted to any Antigua internet casino. Yet most Antigua internet casinos offer Three Card Poker to U.S. players, and in the process, knowingly infringe U.S. patents related to Three Card Poker. Ironically, Antigua seeks relief from the WTO, while contrary to WTO principles Antigua fails to rectify infringement of patents and other intellectual property rights.

An independent internet gambler survey conducted in the U.K. in April 2006 revealed the following --

Question Should internet casinos get permission from the inventors of
games before using their games?
Answer Yes 83%
No 6%
Don't Know 11%
This response is so clear that no comment is needed.

Antigua is proposing to act against U.S. intellectual property rights as retaliation against the U.S., whilst ignoring that most Antigua internet casinos already abuse U.S. intellectual property rights to deceptively and unethically generate revenue from U.S. players.

As a priority Antigua should compel the internet casinos that have obtained funds through abuse of U.S. intellectual property rights to disgorge and repatriate those funds. If a method of funds disbursement to players is impractical, then funds should be transferred to a U.S. government agency for the dedicated purpose of addressing problem gambling.

No WTO action in respect of compensation by the U.S. should be considered until after this transfer of funds from Antigua to the U.S. has taken place. While hypocrisy exists in the U.S. position, Antigua is at least equally inconsistent.

Any change in U.S. policy towards internet gambling, through either of the pending Frank or Wexler proposals, should incorporate a solid defense of U.S. intellectual property rights and protection of players from abuse of those rights. No entity, whether internet site owner, gaming software provider, an associated revenue-sharing affiliate or the enabling regulatory body, should be allowed to profit from legal U.S. internet gambling without first disgorging and repatriating misappropriated funds.

Prime Table Games creates and provides casino game content based on a portfolio of over 30 granted U.S. patents. The first game we created was Three Card Poker. In a recent U.S. Federal Civil Anti-Trust case against PGIC we won our first litigation as Plaintiffs. The damage award of $39 million is the highest award ever in a gambling intellectual property dispute. We are also claiming legal costs of nearly $5 million that will be adjudicated on at a future post-trial hearing.

Derek Webb
Prime Table Games

That sure is an interesting letter, isn't it? Basically, Webb's position is that the U.S. has every right to ignore Antigua because some companies that may have been licensed in Antigua have allegedly infringed on Prime Table's rights. In other words, Webb expects Antigua to do its work. Has Webb pursued any actions against an Antigua-based company, and if so, what were the results of that action? That's the type of stuff that should be in the release, but none of that information is offered. Instead, Webb serves up a Prime Table Games case against Progressive Gaming International Corp. (PGIC), which has nothing to do with the issue raised in the letter.

Now do Webb and Prime Table Games (PTG) deserve compensation if their products are being infringed upon by others? Of course they do. However, it appears as though Webb expects Antiguan authorities to act as PTG's agents in the matter. It also shows exactly the type of situation that's going to unfold if the U.S. doesn't get with it and negotiate in good faith. You'll have thousands of like cases, each of which would have merit (assuming that the Prime complaint does). But if Antigua succeeds in having U.S. intellectual property rights abrogated, then it's a "too bad, so sad" story.

Of course, there's just a faint chance that despite Webb's accusations of Antiguan hypocrisy, that Webb and PTG are a bit hypocritical themselves. The point and timing of the misdirected attack against Antigua (instead of the violating company or companies licensed there), is curious. After all, PTG works very closely with Shuffle Master, which produces tons of brick-and-mortar variants of the games (and many others) listed above. It'd be hard to name a company with more to lose in relative terms than Shuffle Master, should online gaming be fully licensed and regulated, and Shuffle Master is likely either PTG's largest client or another part of the same company.

A curious issue, isn't it?

If you'd like to think deeper into how tangled all this stuff gets, then know that among the patent holders for the Caribbean Stud and Three Card Poker games listed above is none other than David Sklansky, the 2+2 founder. That puts Sklansky with a foot in both camps in this particular debate, since he receives royalties for the games.

The "This response is so clear that no comment is needed," comment is a classic, too. If it's so clear, then don't make the "no comment needed" comment, right? It would be nice to know, however, exactly which "independent internet gambler survey" did the surveying, just to make sure that everything's on the up and up, because hypocrisy is plentiful, these days.

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