Aristocrat Sues Ainsworth In Federal Court

Two Australian gaming companies are preparing for a massive court battle. Giant pokies producer Aristocrat Technologies Australia filed suit in federal court against Ainsworth Game Technologies for a breach of contract.

The slot machine is called Lightning Link, one that Aristocrat designed in 2014 and they claim was copied by Ainsworth in 2016 and 2017. In an effort to defend its assets and intellectual property rights, Aristocrat is suing its competitor.

News may emerge from the court in a matter of days as the first hearing is scheduled for July 17.

Years in the Making

According to Business News Australia, it all started in 2014.

That’s when Aristocrat partnered with High Roller Gaming to develop a new slot machine called Lightning Link. The machines subsequently sold well in Australia and throughout the world, becoming a staple in land-based casinos from places ranging from Macau to America.

Lightning Link offered 16 themes from which operators could choose, and all games included jackpots and bonuses. The company sold a “very substantial number” of them.

Aristocrat noted in its lawsuit that Ainsworth founder Len Ainsworth commented publicly about the success of his competitor’s machine in December 2016. That’s when he apparently told a newspaper, “They struck it lucky with a game”. He went on to say that they had “things in the wings” that would beat Aristocrat. Presumably he meant in terms of sales.

Rogue Ainsworth Employee or Collusion?

Allegedly, Ainsworth began developing a game called Jackpot Strike in 2017. The game reportedly intended to be a copy of Lightning Link. Aristocrat claims that an Ainsworth employee copied everything while developing Jackpot Strike. Everything from the screen designs to animations, and even the game mathematics.

The employee is said to have worked as a game designer at Ainsworth from 2011 to 2016. He then worked as a designer at Aristocrat for less than a month in early 2017 before returning to Ainsworth. This timeline coincides with the development of Ainsworth’s new game. Aristocrat claims the employee went so far as to download the game’s math details from a spreadsheet onto a USB drive to deliver to Ainsworth.

This all led to some of the crimes alleged in the lawsuit, including breach of confidence and copyright infringement. Aristocrat is also suing to obtain a permanent injunction on all Jackpot Strike machines, their destruction, and payment to Aristocrat for damages.

Aristocrat Steams

The fury over the situation is evident in some of the court documents from Aristocrat. A spokesperson for Aristocrat noted:

“It is our view that this case goes well beyond simple copyright infringement and concerns allegations of extensive and deliberate misappropriation of trade secrets, confidential information and intellectual property. Upholding appropriate standards is part and parcel of ensuring ongoing trust in our business and industry and is an important part of Aristocrat’s high compliance culture.”

With that said, the spokesperson added: “We won’t be commenting further while the case is on foot.”

The only response from Ainsworth was that it plans to “vigorously” defend itself against the claims made by Aristocrat.

Not the First Legal Action

Per the Sydney Morning Herald, Aristocrat first went to court with Ainsworth last year in the same matter. Only that time, it was to demand the right to see documents that might help prove its case.

The claim, even last year, was that Ainsworth had somehow obtained access to Aristocrat’s proprietary information for Lightning Link and used it to create Jackpot Strike. Aristocrat then demanded that its competitor turn over everything from artwork to source codes, math tables, and commercial documents – anything related to Jackpot Strike.

Some of those documents were used to file the federal court lawsuit last week.

Roller Coaster Investor Reactions

The Australian Securities Exchange saw an interesting range of responses to the lawsuit for both publicly-traded companies.

Aristocrat trades as ALL.AX and took a significant dip on Friday, July 5, from $29.79 down to $29.07. By Tuesday, July 9, the stock price had gone down to $28.94. But as details of the case and court documents began to come out, the price went back as high as $29.68 and hovered in that range.

Ainsworth, trading as AGI.AX, has been on a perpetual roller coaster for quite some time. Switching from $0.69 to $0.67 on July 4, it did the same on July 5 but flew up to $0.70 on Monday, July 8. It then fell quickly down to $0.66 on July 9, and down to $0.65 on July 10, and has since been fluctuating between those low points and $68.

Look for more interesting upticks and downswings after information comes from the first hearing next week.