Deja Vu? Another Licensee Sues CryptoLogic

14 March 2002

A pair of companies that appeared to be good business partners less than a year ago may soon find themselves in the middle of an ugly court battle.

According to published media reports in Canada, Internet gambling software supplier Las Vegas From has filed a lawsuit against CryptoLogic, one of the interactive gambling industry's leading software suppliers.

The suit centers on an alleged breach of contract on CryptoLogic's behalf after the two parties entered into a joint venture to produce and market online poker software.

Last May, the two companies announced they were working together on the system, which was supposed to be available late last year. CryptoLogic was to create the game with Las Vegas From's help and then license it to Las Vegas From Home, which would market the software to CryptoLogic's licensees, according to a report from the Toronto Star.

Calls by IGN to the Las Vegas From offices in Vancouver, weren't returned.

In an interview with the Star, Las Vegas From Home president Jacob Kalpakian said CryptoLogic failed to follow through on the deal to produce the online poker game so his firm developed its own system. The claim, which was filed this week in the Supreme Court of British Columbia, states CryptoLogic forced Las Vegas From Home's hand by not producing the software in a timely manner.

Las Vegas From Home said it is seeking damages for one or more breaches of contract, conspiracy, unlawful interference with economic relations and interests and unjust enrichment.

According to the Star, the statement of claim also asks that CryptoLogic be restrained from using "confidential information" of Las Vegas From Home allegedly involving "trade secrets."

Kalpakian told the Star that he was hoping to settle the matter out of court, but was left with no choice.

"I did not want to go to court," he said. "I bent over backwards to have a relationship with these guys."

He also vowed to beat the "much larger" company in court.

Officials with CryptoLogic said they found it ironic, though, that someone who was eager to settle the dispute didn't tell them they were going to get sued. Spokesperson Sean Stokes said the company learned about the case through the Star article and has yet to be served.

He said the company isn't comfortable commenting on a case that it hasn't seen yet, but he did talk about the history of the partnership. Crypto, he said, feels the contract was breached when Las Vegas from Home developed and launched its own poker software and a poker room on the Internet.

"As a result of that breach, the contract was canceled," he said. "We take it that this (the law suit) is their response to that."

Stokes also said CryptoLogic will wait until it receives the papers before putting together a game plan. He said the company would like to settle, but if they feel the case has no merits, they won't be afraid to challenge it either.

"We are kind of handcuffed at this point," he said. "We don't feel that it has merit based on what we read in the media."