The U.S. Seventh Circuit Court of Appeals released a decision on Monday stating that PartyGaming may be liable for up to $287.4 million in damages as a result of a suit filed by WMS Gaming. The appeal involves a dispute that alleges PartyGaming "infringed" on WMS trademarks "Jackpot Party" and "Super Jackpot Party" between the years of 2004 and 2006.
WMS was originally awarded $2.673,422.10 in damages on July 19, 2007. But WMS appealed the decision on Feb. 25, 2008, asking for the full $287 million it had requested in damages.
WMS is based in Illinois and manufactures, sells and leases gaming equipment, including slot machines. WMS used "Jackpot Party" and "Super Jackpot Party" in connection with its goods as early as October, 2004 and under U.S. law has exclusive rights to the "underlying marks." WMS claims that after several failed attempts to persuade PartyGaming to voluntarily "cease its infringing uses of WMS's marks" it filed a suit in federal district court seeking "injunctive relief, damages and an equitable accounting of profits" that PartyGaming reaped from its use of "Jackpot Party" and "Super Jackpot Party" in the U.S.
WMS claimed in the suit that PartyGaming received notice from the U.S. Patent and Trademark Office (PTO) that WMS owned the rights to "Jackpot Party." As a result PartyGaming attempted to register the mark "PartyJackpot." But it was denied by the PTO because "PartyJackpot" was "confusingly similar" to WMS's registered mark "Jackpot Party." But WMS claimed that instead of abandoning use of "Jackpot Party," PartyGaming expanded its use of the mark, even after the PTO's action, and with its use, earned $977.7 million in total revenue in 2005, 84% of which came from U.S. customers, according to PartyGaming's 2005 Annual Report.
In Monday's decision, Circuit Judges Rovner, Wood and Williams agreed with WMS's argument that "the district court made a fundamental error of law by failing to distinguish between WMS's right to the defendant's profits and its right to its damages."
The decision went on to say that "while the figure WMS seeks ($287,391,140.70) is considerably larger than the 'damages' award granted by the district court ($2.673,422.10), the record shows that in a single year (2005), (PartyGaming) reported revenues of $977.7 million – nearly $1 billion ... The record shows persistent, pervasive, knowing and willing infringement for several years by PartyGaming, as it repeatedly refused to cease and desist even after receiving several forms of actual notice of its unlawful activity."
The judges concluded by saying, "We therefore reverse the judgment of the district court and remand for further proceedings consistent with this opinion."