NRT Technology Corp. v. Everi Holdings Inc.
1:19-cv-00804
D. Del.Sep 25, 2020Background:
- Plaintiffs NRT Technology Corp. and NRT Technologies, Inc. sell gaming-specific kiosks used in casinos; Defendants Everi Holdings Inc. and Everi Payments Inc. sell competing kiosks and are assignee of U.S. Patent No. 6,081,792 (the ’792 patent).
- In 2015 Everi (then Global Cash Access) sued NRT in Nevada federal court and filed an ITC complaint alleging infringement of the ’792 patent; those proceedings were later resolved (the district court dismissed infringement under §101; the ITC action was withdrawn after the ALJ found claims indefinite under §112).
- NRT alleges Everi fraudulently procured the ’792 patent by withholding prior public use (Walker Process claim) and that Everi later brought objectively baseless patent litigation to maintain monopoly power (sham litigation claim).
- NRT pleads the relevant product market as gaming-specific kiosks (distinct from ATMs) and the U.S. as the geographic market, and alleges Everi had 70–75% market share between May 1, 2015 and Jan 15, 2018.
- Defendants moved to dismiss; the Magistrate Judge recommended denial. The district court reviewed objections de novo, overruled them, adopted the Report, and denied the motion to dismiss.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Walker Process fraud was pleaded with Rule 9(b) particularity | NRT alleged specific individuals (co-inventors Cucinotta and Maskatiya), their roles, knowledge of prior use, motive and intent to withhold the information | Everi contended allegations were impermissibly generic and failed to identify who made omissions or intent with particularity | Court: Allegations of named inventors, their roles, knowledge, and motive plead intent and deceit with sufficient particularity; Rule 9(b) satisfied |
| Whether sham-litigation claim is plausible (Noerr-Pennington / PRE) | NRT alleged Everi knew the patent was unenforceable and nonetheless asserted it in Nevada and ITC suits to interfere with competition | Everi argued prior proceedings (district court, PTAB, ALJ) show the suits were not objectively baseless and NRT waived key defenses | Court: At pleadings stage, factual issues exist; NRT plausibly alleged objective baselessness and improper motive under PRE; claim survives dismissal |
| Whether NRT pleaded a proper relevant market and market power | NRT defined product market as gaming-specific kiosks (regulated, integrated with casino systems) and U.S. geographic market; alleged 70–75% market share | Everi argued market definition implausible and geographic market improperly pleaded; contested the market-share allegation’s clarity | Court: Market definition is not inherently implausible; geographic market can be U.S.-wide regardless of seller location; market-power allegations suffice at pleading stage |
| Whether antitrust injury / harm to competition was pleaded | NRT alleged enforcement of the ’792 patent deterred entry/expansion, would have increased Everi’s market share and reduced competition; litigation costs are also cognizable injury in Walker Process context | Everi argued plaintiff failed to allege harm to competition as a whole and relied only on litigation enforcement | Court: Plaintiff plausibly alleged market-wide injury during the relevant period; Transweb precedent supports patent-related litigation costs as antitrust injury; allegation adequate for pleading |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard requires plausible factual allegations)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (requires factual matter to state a plausible antitrust claim)
- Fowler v. UPMC Shadyside, 578 F.3d 203 (3d Cir. 2009) (two-part Twombly/Iqbal pleading analysis applied)
- Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49 (1993) (two-part test for sham litigation under Noerr-Pennington)
- Queen City Pizza, Inc. v. Domino’s Pizza, Inc., 124 F.3d 430 (3d Cir. 1997) (relevant market pleading requires reasonable interchangeability/cross-elasticity of demand)
- Exergen Corp. v. Wal–Mart Stores, Inc., 575 F.3d 1312 (Fed. Cir. 2009) (knowledge and intent may be pleaded generally when factual basis supports inference)
- TransWeb, LLC v. 3M, 812 F.3d 1295 (Fed. Cir. 2016) (patent-related litigation expenses can constitute antitrust injury in Walker Process cases)