iGB North America magazine IGBNA Aug/Sep | Page 14

Law and Legislation

PLAYING THE PATENTS GAME
The recent agreement between IGT and Net Entertainment demonstrates how
important it is for European iGaming companies considering the US to be
cognizant of gaming technology patents ahead of entering the market, write
Paul Taufer and Stacy Rush from DLA Piper’s Philadelphia office.
The US gaming market generates billions
of dollars in revenue every year, and it
is no wonder that gambling technology
suppliers are looking to expand into the
US to take advantage of the nascent US
iGaming market, now that the regulatory
environment is permitting them to do so,
with patents increasingly central to their
expansion strategy.
Entities looking to enter the iGaming space
in the US should be particularly cognizant
of gaming technology patents. Patents in
the iGaming industry are limited in Europe,
largely as a result of the patent system there,
which is generally resistant to protecting
software-based inventions. However, such
protection is commonplace and widespread
in the US. As a result, companies in the
traditional land-based gaming industry in
the US typically focus substantial resources

the US market may inadvertently infringe
on a patent, even if they felt their European
IP position was bullet-proof. This can
potentially result in an unexpected patent
infringement action, and create a potential
risk for damages, legal fees, and a possible
injunction. The end result can force the
new product to be pulled from the market.
Significant business disruption and financial
loss can be avoided with proper due diligence
prior to entry into the market.
Proper diligence may uncover patents
owned by others that could present an
infringement risk, for example through
a ‘freedom to operate’ patent survey.
The freedom to operate patent survey is
designed to establish whether a proposed
game or gaming technology may infringe
on any patents. If infringement does exist,
a company may consider modifying their

“Businesses blindly entering the US market may
inadvertently infringe on a patent, even if they felt
their European IP position was bullet-proof.”
to establish strong patent portfolios
surrounding their products and technology.
Such strategies have naturally led to many
iGaming-related patents being filed as that
segment of the industry rapidly developed.
For this reason, businesses blindly entering

product or technology to avoid the patent at
issue, or alternatively, may consider entering
into a business relationship to license
another company’s patents.
A licence agreement, in addition to
avoiding a patent infringement risk, may

14 | iGamingBusiness North America | Issue 20 | August/September 2015

provide several financial benefits, including
access to already established brands and
technologies. Product development costs
can be reduced significantly and products
launched sooner, so a company may be able
to broaden its reach in a shorter time frame.

The NetEnt and IGT agreement
The two gaming companies NetEnt and IGT
recently announced that they have reached
an “IP patent cross-license agreement”,
where NetEnt can offer patented game
features from IGT’s patent portfolio in the
North American market. IGT owns the rights
to one of the largest patent portfolios of slot
machine game features in North America.
NetEnt, although strong in the digital
entertainment space in Europe, is a relatively
recent entrant to the North American market
following its licensure in New Jersey. The
deal between the two companies provides
NetEnt with safer access to the North
American market in this key gaming area.
A patent cross-license agreement is
where both entities license patents or
associated intellectual property to one
another. Parties who engage in this kind of
agreement tend to own patents and IP that
complement one another, and one or both
of the companies want to gain access to the
technology owned by the other entity. While
it may, it does not always involve payment
from one company to another, and instead,
both companies can benefit by gaining
access to the other company’s patents.
There is also the key benefit of avoiding
the risk of infringing the other company’s
patents. Also, where the license includes