 We have more bad news for the patent trolls over at 1st Technology, Point-Spreads.com has learned that Bodog Entertainment will be rolling out a new and improved domain name called BodogLife.com. The new website will replace the NewBodog.com domain name and is currently live and accepting bets. The new domain name BodogLife.com will be heavily marketed going forward while the legal battle continues against 1st Technology.
That is too bad for Scott Lewis of 1st Technology. The “Patent Shell” that he created with the help of Raymond Niro went after what they consider to be assets within the United States that were owned by the entertainment giant, their domain portfolio, after securing a $48 million dollar default judgment against Bodog for allegedly violating the company’s business method United States Patent No. 5,564,001 entitled “Method and System for Interactively Transmitting Multimedia Information Over a Network which Requires a Reduced Bandwidth”. The problem with this is that domain names are a part of the world community based on ICANN's charter and mission statement, which brings into question whether or not they could have even been seized in the first place.
1st Technology, was created by Scott Lewis in the state of Nevada. Lewis transferred his intellectual property into the 1st Technology LLC "Patent Shell" and began suing online gambling companies shortly thereafter. Niro’s firm was able to successfully negotiate a “licensing fee” from publicly traded internet gambling software provider Playtech Ltd in September 2006. The biggest question that stands out is why did he set this up in Nevada instead of his home state of California? The answer is simple, it's called venue shopping.
Venue shopping allows lawyers to find the best courtrooms to file their lawsuits. This concept has been refined to a fine art by Patent Trolls that routinely “shop” for venues that are renown for siding with their clients often frivolous lawsuits. By bringing their cases in front of plaintiff friendly judges and juries, the Patent Trolls increase their probability of securing a large jury award. Patent Trolls readily admit that finding a friendly jury is 90% of winning the lawsuit.
You see, Scott Lewis lives in Silicon Valley but was most likely advised by one of his attorneys such as Raymond Niro of Niro, Scavone, Haller & Niro that the courts in Nevada would be more sympathetic towards his case and would be the ideal place to exploit his business method patents. The obvious reason is because Las Vegas casinos have significant influence in this jurisdiction and feel they are losing out on millions of dollars as a vast majority of gamblers play various casino games online.
The casinos of Las Vegas are upset that their hands are tied by the United States governments federal ban on internet gambling. Executives of the Las Vegas based casinos would love a crack at the very lucrative online gambling market that is estimated to be over $12 billion annually. The state has already signed into law legislation to regulate and license Nevada based internet gambling operators once the federal ban is lifted making it the first state in the Union ready to pounce.
Could Scott Lewis and 1st Technology be a pawn between infamous Patent Troll attorneys and the deep pockets of the companies they target for “licensing fees” including Bodog Entertainment?
In an article titled “Meet the Original Patent Troll” published on Law.com on July 20, 2006 author Lisa Lerer wrote:
“Niro suspected that Schneider's patent could be his next golden ticket, but he was worried that suing over a patent he owned was unethical. So he kept his wallet closed and opened his Rolodex, calling up former clients to tell them about the patent and offering his legal representation on contingency. His pitch piqued the interest of Daniel Henderson. In the late 1990s, Henderson and Niro sued over 40 companies for infringing patents on early answeringmachine technology, which Henderson purchased from a Japanese inventor. The litigation brought in $65 million in licensing fees from corporate giants like AT&T, IBM, Sony and Dell.”
The only reason why 1st Technology went after Bodog is because Calvin Ayre was featured in the 2006 Forbes Billionaire issue and clearly has deep pockets. Raymond Niro is the Uber-Troll of Patent Trolls and the creation of 1st Technology was for the sole purpose of litigating patent disputes, the entity does not have any products and its sole revenue stream is from either lawsuit settlements and/or “licensing fees”.
Who are the real owners of 1st Technology LLC? The company is a private company and from a legal perspective, Scott Lewis is listed as the sole managing member for the entity in documents held by the state of Nevada, however, everyone in the internet gambling world is familiar with beneficial ownership. Who are the beneficial owners if any of 1st Technology LLC? Are “Patent Troll” attorney’s such as Raymond Niro financing the companies they represent?
In 2001 Intel Corporation assistant general counsel Peter Detkin coined the term to characterize Niro and his client TechSearch LLC when Intel was defending a patent suit. Niro has single handily bastardized the entire intent of the US patent process when he created this business model back in 2001. United States patent laws were established to protect innovators that were running actual businesses from having competitors copy and competing against them.
The US patent process was not created for lawyers to create “patent shell companies” to go around suing legitimate businesses. This has created a huge drain on the technology sector as well as publicly traded companies such as AT&T, IBM, Sony, Google, HP, Dell and a slue of others. Shareholders of the publicly traded companies that get sued by patent trolls lose millions of dollars of their profits via legal expenses and forced settlements.
Unlike what some have speculated, Bodog’s proprietary online gambling software did not borrow programming codes from 1st Technology or steal them as some have alleged. The 1st Technology patent at the heart of the Bodog domain name hijacking is a method of delivering multimedia information across a communications network or in combination with other networks including telecommunication and cable broadcasting. Keep in mind, this is a patent that can be applied to basically any single website that displays videos and animated graphics.
The legal situation as to whether or not business methods are allowed as patentable subject matter varies throughout the world based on jurisdiction. The World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) does not specifically address business method patents. A business method may be defined as "a method of operating any aspect of an economic enterprise".
Japan, Singapore, Australia and the United States are all considered "safe havens" for business method patents. Countries such as India, Mexico, Israel, China and most of Europe make it difficult or impossible to secure method patents. Other countries such as Korea, Taiwan and Canada do not have a clear stance on business method patents.
Corporations are growing tired of paying licensing fees to business method patent holders without actual products, which is the case with 1st Technolgy and some of these companies have begun to lobby the US Congress to change the United States Patent Law process. The issue has reached the US Supreme Court when in May of 2006, the court found that MercExchange LLC, a patent-holding company, wasn't automatically entitled to an injunction against eBay, even though the online auctioneer was found to be infringing MercExchange's patent.
Bodog Entertainment is an international operating company that does not have a presence in the United States. The battle over the domain name portfolio is being closely observed by intellectual property attorneys, technology companies, internet based media companies and governments from around the world since the decisions will be precedent setting. United States patent disputes cannot be enforced against an international company that does not operate within the United States.
The Nevada and Washington courts have not even established the proper/competent jurisdiction in this case so members from within the technology sector, specifically international internet and ecommerce operators are stunned that eNom, a registrar licensed by ICANN to sell top level domain names, turned over the domain names to 1st Technology in the first place because of the uncertainty pertaining to the jurisdiction.
eNom’s Terms & Conditions page in section 3 (b) states, “We will cancel, transfer or otherwise make changes to domain name registrations under the following circumstances....our receipt of an order from a court or arbitral tribunal, in each case of COMPETENT JURISDICTION, requiring such action”
The move on eNom’s part appears to contradict their own rules, especially since the registrar allowed 1st Technology to grab domain names that were not even attached to the default judgments such as BodogFight.com, BodogMusic.com, BodogNation.com, BodogBeat.com & CalvinAyre.com. Also, 1st Technology did not properly served Bodog Entertainment as was reported previously by Point-Spreads.com. Does this mean that anyone that receives a default judgment against a international company with a website can seize the domain names before a court properly establishes “competent jurisdiction”?
What is even more scary is that eNom is the second largest domain name registrar worldwide, and the number one registrar for resellers. It is entirely possible that a international domain name reseller from India can sell a domain name to a company based in India, a country that does not recognize business method patents. Since the domain name is being held by eNom in the United States, does this mean the company in India falls under the jurisdiction of the United States?
While luck seems to be on their side in the way they were able to hijack the domain names, the biggest mistake 1st Technology made was to actually change the DNS of the Bodog.com URL. This was a huge tactical error which was pointed out by Point-Spreads.com when the domain hijacking story first broke. 1st Technology lost all of the leverage they had over Bodog Entertainment because no one else can use the domain name without violating US trademark laws. So the once thriving Bodog.com domain name with an estimated 43,000 back links at its peak is now a blank page.
The value of the Bodog.com domain name has already faded to zero dollars because the website was taken offline and the SERP were lost. Instead of lining up cash to send a bank wire to pay off the patent trolls, the Bodog Nation quickly mobilized and decided to set up an alternative set of temporary domain names and within 12 hours after the hijacking, it was business as usual.
1st Technology miscalculated a second time because they believed that Bodog would cave in to the threat of DoJ involvement. You cannot use the threat of exposure to criminal prosecution as a method to settle a civil dispute and Point-Spreads.com has learned that the legal team of 1st Technology has done so on two separate occasions. This is the criminal offense of extortion under US law.
So far, 1st Technology has been able to amass a small war chest from previous settlements but time will tell if the “Patent Shell” will be able to keep up with the deep pockets of the unstoppable entertainment giant. The BodogLife.com announcement today should send a clear signal that the Mohawks are pushing forward with no intention of paying a single penny to the Patent Trolls.
Point-Spreads.com has spoken exclusively to Bodog about the lawsuit and were told:
“We are going to fight the validity of the lawsuit and believe we will prevail.”
If Bodog prevails, which they believe very strongly they will, then Patent Troll Scott Lewis of 1st Technology will be unable to go after anyone else using this particular patent. Bodog is standing up when all the other companies could not. This time, the Patent Trolls picked a fight with the wrong group. Bodog Entertainment does not have assets in the United States and is a private entity, unlike the publicly traded entities such as Playtech, Chartwell & MGM’s of the world that were forced to settle and not to mention, does not operate within the US.
Point-Spreads.com was contacted by several internet gambling insiders asking if the domain name lawsuit was a publicity stunt orchestrated by the media savvy Ayre right before football season. Unfortunately, it was not and the lawsuit over the Bodog domain name portfolio is very real and the patent trolls from 1st Technology are going to be spending millions of dollars in legal expenses going head to head with some of the deepest pockets on the planet.
At the end of the day, Bodog has been able to successfully turn a negative into a positive and will certainly get a ton of media mileage out of this lawsuit going forward. Usually, Bodog Entertainment spends tons of money to create the kind of media circus that the Patent Trolls handed them on a silver platter. The financial backers and owners of 1st Technology better get their check book out, they are in for a long and expensive fight and we don't think that their new home schooled paralegal Paddy Roberts will do them much good either!
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