Scientific Games Corp. stares down another massive antitrust reckoning. Plaintiffs TCS John Huxley and Taiwan Fulgent aren’t backing off. And Judge John Robert Blakey just handed them a lifeline.
He denied the defendants’ summary judgment motion on statute of limitations grounds. In a Walker Process patent fraud case, no less. Boom.
Wait, What’s a Walker Process Claim Anyway?
Picture this: a company fraudulently snags a patent, then wields it like a club in infringement suits to crush competitors. That’s the setup. Walker Process Equipment v. Food Machinery & Chemical Corp. (1965) says if you knowingly use a fraudulently obtained patent to monopolize, you’ve violated Section 2 of the Sherman Act. Antitrust treble damages await. Cha-ching for plaintiffs.
But here’s the rub—patent holders get a shield. Immunity, even. Enter the Noerr-Pennington doctrine. It protects petitioning the government, including filing legit lawsuits. A straight-up patent infringement suit? Not antitrust injury. Legally sanctioned market exclusion.
Judge Blakey nails it right out of the gate.
“A patent infringement suit is not necessarily an antitrust injury. In fact, the Noerr-Pennington doctrine provides immunity from antitrust claims to patent holders.” – Judge John Robert Blakey
Short. Punchy. Undeniable.
Scientific Games—via its SHFL Entertainment arm—sued TCS in 2009 and 2012 over automatic card shufflers. Casino tech. High stakes. Plaintiffs cried foul: those patents were bogus, procured by fraud. Monopoly maintained. They filed their antitrust suit in March 2019.
Why so late? Defendants screamed statute of limitations. Four years under 15 U.S.C. § 15(b). Suits were a decade old. Case closed, right?
Wrong. Enter the discovery rule. Seventh Circuit special sauce. Clock doesn’t start ticking until plaintiff discovers—or should’ve discovered with due diligence—the injury and its cause.
When Does the Clock Actually Start Ticking?
Defendants pushed hard: limitations ran from the 2009-2012 suits. Injury happened then. Market exclusion. Done.
Blakey wasn’t buying it. Patent suits cause harm, sure. But not antitrust injury. That’s immune. Noerr-Pennington again. The real antitrust wound? Only when you learn the patent was fraudulent. Knowingly wielded invalid IP to monopolize.
“The antitrust injury stemming from a Walker Process claim occurs . . . only if the alleged infringer knows (or has reason to know) the asserted patents were procured by fraud or otherwise invalid and unenforceable ….”
Plaintiffs didn’t “know” until March 2019. That’s when they huddled with counsel from the prior Shuffle Tech case. Remember Shuffle Tech? Same defendants. Same fraud claims. Jury hit ‘em with $105 million in 2018—trebled to $315 million. Settled for $151 million. Tenth biggest federal jury verdict that year. Eye-opener.
So, post-verdict meeting. Dots connected. Suit filed a week later. Due diligence? Check. No earlier red flags forcing inquiry? Court said plaintiffs’ story holds—for summary judgment purposes.
Defendants dumped 750,000+ pages of discovery. Seven depos. Bifurcated proceedings. Still, no dice.
And here’s my unique hot take: this ruling echoes the old Hollywood accounting wars. Studios “fraudulently” wielded contracts like patents, claiming no profits on blockbusters. Took outsiders—due diligence pros—to uncover the scam. Casinos here are the box office; shufflers the tentpoles. Scientific Games’ PR spin? “Just enforcing rights.” Please. Pattern of suits, prior mega-loss. Smells like repeat offender hiding behind Noerr-Pennington until busted.
Bold prediction: if TCS wins big, expect a flurry of dormant Walker Process claims. Dormant patents unearthed. Every casino vendor dusting off old litigation files. Scientific Games? They’ll appeal, drag it out. But the discovery rule genie’s out.
Is the Discovery Rule a Free Pass for Plaintiffs?
Look, defendants aren’t wrong to gripe. Four-year limit exists for a reason. Staleness. Faded memories. Lost docs. But in fraud cases? Fraud hides itself. That’s the point. Seventh Circuit precedents like In re Copper Antitrust Litig. and Cada v. Baxter back it: accrual at discovery of injury and cause.
Blakey’s opinion dissects it meticulously. Plaintiffs knew of suits years ago. Knew they got excluded. But fraud on the PTO? Invalidity? That simmered until Shuffle Tech’s jury smoke signal.
Skeptical? Me too—of defendants’ spin. They love framing patent enforcement as sacred. Until juries peel back the curtain. Freeborn & Peters (disclosure in original: they repped here and Shuffle Tech) knows the playbook.
One-paragraph wonder: this isn’t justice delayed; it’s monopoly enforcement stalled.
Why Does This Matter for Casinos and Tech?
Casinos thrive on trust. Rigged shufflers? Existential threat. But broader: any industry with heavy patents—tech, pharma, gaming—watches. Walker Process isn’t dead; it’s tolling.
Scientific Games’ empire? Built on shuffling dominance. Acquisitions like SHFL. Now, fraud taint risks unraveling it. Treble damages. Fees. Settlements north of $150 million already.
Corporate hype alert: expect boilerplate “vigorous defense” pressers. Yawn. Real talk—this precedent emboldens challengers. Due diligence now means scanning jury verdicts, not just USPTO dockets.
Short para punch: Patent trolls, beware.
Deep dive time. Bifurcation was smart—limitations first, merits later. Avoids fishing expeditions. Plaintiffs produced mountains of docs. Defendants deposed key players. Still lost. Signals strong plaintiff case on merits too?
Historical parallel: think Bell Labs’ patent pool in the ’50s. DOJ antitrust hammer dropped when fraud surfaced years later. Discovery rule then, too. History rhymes.
🧬 Related Insights
- Read more: Federal Circuit Buries Info Exchange Patent Under Alice
- Read more: Boat AC Wars: Federal Circuit Nixes Dometic’s Import Block, Exposing Patent Traps in Hardware Design
Frequently Asked Questions
What is the discovery rule in antitrust cases?
In the Seventh Circuit, the four-year statute starts when you discover (or should’ve) the injury and its antitrust cause—like patent fraud—not just the initial harm.
Does a patent infringement lawsuit trigger antitrust liability?
Nope. Noerr-Pennington immunizes it, unless it’s knowingly based on fraudulent patents (Walker Process).
Can old patent suits lead to new antitrust claims?
Yes, if fraud only surfaces later—like here, post a prior jury verdict exposing the scam.
