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IGT patent dispute delays payments to Macau’s Paradise Entertainment

Friday, 15 December 2017 04:46
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Macau-based electronic table game manufacturer Paradise Entertainment Ltd has agreed to pay International Game Technology (IGT) a fee of US$800,000 to settle a dispute over the provision of “certain technologies” by Paradise subsidiary LT Game for the manufacture and provision of its licensed products worldwide.

The payment follows a 2016 agreement in which Paradise agreed to transfer all of its electronic table game technology, patents and other intellectual property to IGT with the exception of the Table Game IP used exclusively in Macau. The 15-year agreement provided IGT with exclusive rights to Paradise’s Table Game IP for the development, manufacture and distribution of Live and RNG electronic table games worldwide, other than in Macau where LT Game remains the exclusive provider.

In return, IGT agreed to pay Paradise an upfront fee plus an ongoing earn-out based on placement of products utilizing the Table Game IP over the course of the 15 year term. 

In a filing to the Hong Kong Stock Exchange on Thursday, Paradise revealed that, “Subsequent to the signing of the agreement, a dispute arose among the LT Game parties and IGT as to whether the LT Game parties have to provide certain technology (not being possessed by the LT Game parties) to IGT that may be required for IGT to make and place the licensed products under the agreement.

“On 17 October 2017, upon commercial negotiation of the parties with the view to resolving the dispute, the LT Game parties agreed in writing with IGT that they shall pay to IGT a sum of US$800,000 for complete resolution of the dispute, which was determined based on the sharing by the LT Game parties of the estimated costs for the required technology.”

Paradise said the earn-out payments it is currently entitled to were US$162,000 for the year ended 31 December 2016 and US$129,000 for the six months to 30 June 2017, but that the US$800,000 settlement will set off any payments until 30 September 2018. The company added that any amount not set off by the settlement during that time must be paid by IGT by 15 October 2018.

It has been estimated that Paradise will earn around US$44 million via the original licensing agreement over the course of the 15 years.

Speaking at the time of the agreement, Paradise Chairman and Managing Director Jay Chun said, “This IP assignment agreement is a natural and important step in Paradise's productive relationship with IGT. IGT's global reach and strong relationships with operators around the world make IGT the ideal company to maximize the business potential of Paradise's Live and Random Number Generator patents and technology in the international market.”

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