Bodog hit with $48-million judgment

[rla]

By David Baines, Vancouver Sun

Online gambling website Bodog.com was out of service Monday and remained inoperative Tuesday, apparently due to a $48.6-million default judgment obtained by a Las Vegas company against Bodog in a patent infringement case.

By Tuesday afternoon, Bodog had established a new website, newbodog.com, which is virtually identical to the old site and enabled Bodog clients to resume their online gambling activities.

In a news release issued late Tuesday, Bodog founder and part-time Vancouver resident Calvin Ayre, said "the problems result from a dispute over the ownership of the Bodog.com domain name."

"We are fighting this dispute and are confident that we will win," he said in the release.

The release provided no details, but according to Nevada court documents, 1st Technology LLC of Las Vegas obtained a $48.6-million default judgement on June 14 against Bodog Entertainment Group S.A., Bodog.net and Bodog.com.

The Las Vegas company obtained the judgment after the Bodog companies failed to answer allegations, filed in U.S. District Court in Nevada, that downloaded software used by Bodog customers to facilitate its gaming activities infringed upon 1st Technology's patents.

It is not clear why Bodog officials did not respond to the allegations. One possibility is they were scared away by the U.S. Department of Justice, which has declared war on Internet gambling.

Through a series of high profile arrests of online gambling executives, the Justice Department has made it clear that online gambling is illegal and anybody operating or facilitating such activities is subject to prosecution.

Since then, Ayre has avoided stepping on American soil, but he continues to return to Vancouver, where Bodog runs a marketing-support business in Vancouver called Riptown Media and a call centre in Burnaby called Triple Crown Customer Service.

Ayre was in Vancouver as recently as Friday, when he attended a Bodog-sponsored mixed martial arts fight night at the Chief Joe Mathias Centre in North Vancouver. The event is packaged and sold as a pay-per-view television event.

Meanwhile, 1st Technology has been steadily tightening the noose on Bodog, which was previously run out of Costa Rica but is now based in Antigua.

In an affidavit filed in conjunction with the court action, 1st Technology lawyer Kristopher Rath complained that, despite the default judgment, Bodog "continues to act with impunity in the United States."

"The Bodog entities infringing activities are responsible for over $65 billion in cumulative transactions to date, with approximately two-thirds of this revenue currently being derived from infringing United States activities," he said.

The lawyer noted that, according to a Forbes interview with Ayre, "Bodog handled $7.3 billion dollars of revenue which translates to over $4.8 billion in revenue in the United States with revenue growing 300 per cent per year since 2004."

He also noted that, according to the Forbes interview, Ayre "has amassed a current wealth of $1 billion, which was derived in large part through infringement of 1st Technology LLC's patent.

"However, despite reaping the rewards of U.S. commerce, the Bodog entities evade United States law and courts, and Mr. Ayre gloats about his companies' ability to operate above American law."

The lawyer said 1st Technology "continues to suffer massive and irreparable harm because of the Bodog entities' wrongful conduct", and the "only way to stop this harm is to enjoin Bodog's United States activities."

Ayre, 46, is no stranger to controversy. In the early 1990s, he got into trouble with the B.C. Securities Commission over his dealings with Bicer Medical Systems, listed on the former Vancouver Stock Exchange. In 1996, he admitted to serious offences in connection with that company and agreed to a 20-year ban from the B.C. securities market.

[The Judge]

Bodog Looses Domain Name, Ordered to Pay $49.0 million
Gaming Intelligence Group
August 29, 2007

Bodog.com is no more. Following what appeared to be technical difficulties yesterday with the company’s domain, customers are now being directed to NewBodog.com.

According to details emerging this morning, the loss of the company’s domain name is not the cause of the problem, but rather a result of more serious litigation brought against the company by 1st Technology LLC.

1st Technology LLC owns a patent on a process for taking bets online and claims that Bodog’s downloadable software infringes the company’s patent, which has been granted in the United States as well as elsewhere in the world.

Bodog failed to answer the allegations made against them in a suit filed in the State of Nevada and as a result, a default judgment was issued against them on August 1st 2007 ordering the company to pay damages of $49.0 million.

As a part of the ruling, the registrar of Bodog’s domain names was ordered to remove all name servers associated with Bodog and Calvin Ayre, rendering the domains useless.

While this will no doubt severely impact Bodog, the implications for the online gaming industry as a whole are huge. If the 1st Technology patent really does protect a fundamental process of online gaming, many, many more operators could find themselves being forced to pay out big.

On June 14th 2007, 1st Technology LLC obtained a $48.6 million default judgment against Bodog Entertainment Group SA, Bodog.net and Bodog.com.

In an affidavit filed in conjunction with the case, lawyers on behalf of 1st Technology LLC argued that “Bodog continues to act with impunity in the United States”, generating revenue of over $4.8 billion since 2004.

"However, despite reaping the rewards of U.S. commerce, the Bodog entities evade United States law and courts, and Mr. Ayre gloats about his companies' ability to operate above American law." The affidavit goes on to state, “1st Technology continues to suffer massive and irreparable harm because of the Bodog entities' wrongful conduct", and the "only way to stop this harm is to enjoin Bodog's United States activities."

1st Technology LLC was granted patent no. 5,745,379 on April 28th 1998 for a Method for the production and transmission of enhanced multimedia information.

The patent is for an optimization method that enhances the interactivity of multimedia information. The optimization method includes separating a multimedia information into primary and secondary layers and enhancing that information in the primary layers such that the perceived psychographic information quality is improved. This method has the advantage of providing compression and/or transmission algorithms to maximize enhancement of the multimedia information.

Thus far, the following online gaming companies have been identified as licensees of the patented technology:

Excapsa - Since August 2005
Orbis – Since October 2005 (following a lawsuit by 1st technology LLC against Orbis).
Sportingbet – Since December 2005
Chartwell Technology Inc. – Since December 2005
Playtech – Since September 2006

[psycho]

BODOG REACTS TO DOMAIN LOSS

Surprise litigation shuts down traditional Bodog brands....but New Bodog.com now in action

The past 24 hours have been a torrid time for the webbies and owner of the Bodog.com brand. The online gambling and entertainment group, which trademarked its brands some time ago, has been under siege following a Seattle court order that has hamstrung its brands....at least for now.

Bodog staff put in plenty of overnight overtime to set up New Bodog.com as a temporary solution for an issue that has serious implications for the company and its business.

The first intimation that something was wrong was when players around the planet found they could not access the usual Bodog links on Tuesday. Amid confusion and concern, the gambling group stepped up to explain that the problems were the result of a dispute over the ownership of the Bodog.com domain name, which the group was fighting. In the meantime, an alternative site had been set up for the use of customers.

As Online-Casinos.com/InfoPowa went to press it appeared that the US legal situation and Bodog's possible vulnerability in regard to appearing in the USA may have played a hand to the company's disadvantage.

On August 1st a Washington State judge in Kings County, Seattle issued a court order on the registrar for Bodog.com to have the domains taken down due to an unanticipated "patent infringement" claim.

It was part of an uncontested judgement in favour of a company called 1st Technology LLC against Bodog Entertainment Group, with the former apparently winning an award of $48 937 456.

It is not yet clear whether Bodog was aware of the action, or decided that it was too risky to enter the States or be represented in defending it. The group may not have wanted to give the USA the power of jurisdiction over it. In any event, Bodog did not appear and suffered for it.

Known Bodog registered domains have been suspended, and as an immediate 'bandaid' solution the company registered New Bodog.com - the company has trademarked the Bodog brand and founder and CEO Calvin Ayre has said it is going to fight the action with determination.

The implications for brand, business, search engine positioning and other elements are clearly significant.

According to Internet searches, 1st Technology LLC is "....a leading technology licensing company with a patent portfolio of advanced Internet and multimedia innovations.

"1st Technology is headed by Internet pioneer Dr. Scott Lewis who led the development of the world's first single integrated circuit chip with on-board video and audio compression, advanced adaptive digital signal processing technology at Oxford University, and introduced multiple broadband Internet and multimedia technologies. 1st Technology has a long list of industry leaders as licensees.

"The [alleged Bodog] violation relates to the method for the production and transmission of enhanced multimedia information.

"An optimization method is disclosed that enhances the interactivity of multimedia information. The optimization method includes separating a multimedia information into primary and secondary layers and enhancing that information in the primary layers such that the perceived psychographic information quality is improved. This method has the advantage of providing compression and/or transmission algorithms to maximize enhancement of the multimedia information."

"Nearly all aspects of the [Bodog] website have been updated to reflect the environment our clients are accustomed to," says Ayre. "We are working to resolve any of the minor remaining glitches on the alternate site, but other than that it is business as usual."

The timing of the litigation is significant and presumably intended - the first two to three weeks of North American football are the busiest of the year for online sportsbetting in that market sector.

Legal detail can be found at: http://www.metrokc.gov/kcscc/daily%2...7judgments.txt in case number 07-9-21969-8 dated 8/1/2007, and at http://dw.courts.wa.gov/index.cfm?fa...asesearchTerms