|UK bookmaker William Hill has been accused of infringing a software patent with its Internet casino operation, only days before the company’s planned stock market flotation.|
Julian Menashe, a London-based computer entrepreneur, claims that the William Hill website uses a software download program on which he holds the European Patent. His company, Menashe Business Mercantile, is asking William Hill for a £200,000 license fee and 1.5% of gross profit from the Internet casino operation, a settlement that the company called “unrealistically high”.
William Hill hit back by accusing Menashe of opportunism: “He is trying it on,” said David Harding, William Hill’s chief executive. The bookmaker claims that in any case, it is indemnified by its’ software supplier, CryptoLogic against suits like this.
Menashe’s retort was to write to William Hill this week pointing out that CryptoLogic has not acknowledged this potential liability in a recent statement to shareholders.
William Hill responded with a letter warning Menashe that the company would consider counter-suing for damages if he “misled the market” – in itself a criminal offence. Menashe’s letter comes at a sensitive time for William Hill, with the flotation going ahead on Friday this week.
Menashe has already won round one in the legal battle this March, winning an initial high court ruling against William Hills lawyers’ assertion that an online casino based outside Europe beyond EU patent law.
Menashe claims that William Hills’ flotation prospectus neglected to mention that if the company lost the case it 'may be forced to cease its online casino business'. This, claims Menashe, would cost Williiam Hills “more than £100m'.
Menashe’s figures are undermined slightly by the fact that William Hill’s entire online business, including the casino, made £9.16 million profits last year.
The case poses some interesting legal issues for the online casino industry, regardless of whether the lawsuit is frivolous. The initial high court ruling that EU patent laws can apply even if the casino is outside the EU’s jurisdiction could open up a floodgate of claims. And, if a big operation like William Hill, using CryptoLogic’s software, can fall foul of software patents, there might be a few more online casinos susceptible to claims such as Menashe’s.