BODOG COMMENTS ON ADVERTISING SUBPOENAS

29 February 2008

Will the corporate shell argument stand up in court?


The heated dispute over a multi-million dollar default judgement and domain confiscation following an online gambling patents action in the United States continued this week between Dr. Scott Lewis of 1st Technologies LLC and Calvin Ayre, founder and CEO of the Antigua and Costa Rica based Bodog online gambling group.

The battle of words was fought on three fronts this week; Ayre's personal blog, the sportsbetting information portal Gambling 911 and a corporate press release from Bodog.

In the press release, Bodog accuses 1st Technologies of using "scare tactics" by issuing subpoenas on advertising companies that carry out business with gambling group, requiring the production of information pertinent to the issue between the two companies (see earlier InfoPowa report).

"Unfortunately for Scott Lewis and 1st Tech, as previously established on several occasions, Bodog and its former domain management service provider (now known as "Data Entry and Domain Management, S.A.") are entirely separate companies, one simply having provided services to the other," the press release alleges, again presenting the bewildering array of corporate titles that Bodog has used to challenge correct service of the original court documents. Bodog failed to appear in response to the documents, claiming these were served on the wrong corporate entity.

"At no time did Data Entry and Domain Management, S.A. have a corporate relationship with Bodog. As such, no amount of subpoenas sought from companies that work in conjunction with Bodog will be of any use in 1st Tech's frivolous patent dispute," the release adds, before again detailing its claim for wrong service.

However, a possible flaw in the Bodog argument may be indicated by an intriguing sentence in the press release: "Bodog did at one time allow the domain management service to use the Bodog name to make their domain management work for Bodog easier, but that is no longer and will never again be the case."

This potential flaw is again referred to in a 911 report, where Ayre is quoted as saying "(We still use third party domain managers, but now we no longer allow them to use Bodog in their name to ensure that this never happens again.) This was, unfortunately, bad advice from someone on our team and of negligible current importance to us as we will never go back to the old domains now that the new ones are again rising in keywords for organic search."

Ayre, who is deeply involved in the dispute, is quoted in his company's release: "The company targeted by Scott Lewis and 1st Tech in the patent dispute is not and has never been Bodog. The company itself has been asset-less since long before litigation even began. No amount of subpoenas issued on the part of Scott Lewis and 1st Tech will make the wrong company the right company or put assets into an asset-less company. At this point they're just chasing shadows."

Reporting on the bitter exchanges between the two company execs over the issue, 911 quoted Ayre as saying: "We are also confident that the Courts in Washington will agree with us that the domains should never have been allowed to be hijacked in the first place, but that issue will have no affect on us and the company they have in court will likely soon be allowed to die no matter what the domain outcome is."

1st Technologies Scott Lewis refuted Ayre's claims.

"The argument over whether Bodog Entertainment Group S.A. along with Bodog.com and Bodog.net, etc., are really the same as the online gaming company that downloads and makes millions of dollars a year is, in fact, a dead dog," he said. "This was put forward by the Defendants and summarily rejected by the judge in Federal Court on October 11, 2007; the judge upheld that our service on the Judgment Debtors for patent infringement was legally binding despite the various corporate entity arguments.

"(Per the minutes) The Court, in essence, is not going to permit some sort of corporation shell game to be used to avoid service
in this case.

"So, regardless of what name(s) they change the Judgment Debtor entities to, the legal situation remains that they have been found liable for a $49M judgment and we, the Judgment Creditor are entitled to pursue discovery using subpoenas and other means to unravel the 'corporate shell game'."

Lewis went on to challenge the alleged failure of Bodog to respond to its legal requests for documents and interrogatories concerning Bodog Entertainment Group SA (now "Data Entry and Domain Management, S.A.")

"If Calvin.......is so sure that Bodog Entertainment Group S.A., Bodog.com, and Bodog.net, [the Judgment Debtors], are dead entities and never related to online gaming, as put forward in court papers - why do the Judgment Debtors refuse to respond to our legal requests for documents and interrogatories. In fact why don't they put on their website all the corporate documents so we all can see them? I challenge them to do this and put up or shut up. This would help save many of the advertisers and affiliates the trouble of responding to the subpoenas."

Meanwhile, Ayre again lashed out on his blog, revealing that investigators [presumably hired by Bodog] claim to have found some dirt on Scott Lewis:

"Based on what investigators have uncovered on tax cheat and debt defaulter Scott Lewis, it's been proven that Lewis has never invented anything in his life and does not use any patents [that he and his lawyer bosses control] to deliver any products or services. Their business model exists exclusively to litigate settlements from real companies. And that is the definition of a Patent Troll," the Bodog boss wrote.

Lewis explained the reasons for his legal team resorting to subpoena serving on advertising companies: "The U.S. Federal Court system gives broad powers for Judgment Creditors (1st Tech) to discover documents and corporate relationships that may lead to assets of the Judgment Debtors (Bodog) and also to determine the extent of damages (e.g. U.S. downloads, e.g. U.S. customers).

"One of the best sources for this evidence is the U.S. advertisers and affiliates who enable and get compensated based upon the infringing U.S. downloads to U.S. customers and other related entities."

Responding, Ayre advises any company receiving a 1st Tech subpoena should "....just say you have never worked for Bodog.com (you cannot work for a domain), or the company they mention in the documents and then just throw the thing in the garbage and treat the Trolls with the respect they deserve, ignore them entirely."

This is perhaps questionable advice, especially for US resident companies, as 911 responsibly points out: "If you fail, without adequate cause, to obey a subpoena, you may be found to be in contempt of court. The punishment for contempt may include imprisonment or other sanctions."

Lewis ended a week where the parties seemed even further away than ever from any rapprochment by suggesting that Bodog post a $49 million bond (the size of the default judgement) and apply to the (US) court for a stay in the collection activities of 1st Tech.

Lewis offered one means of settling the matter (outside of Ayre's previous challenge inside a boxing ring). "....if they do this I will stop our judgment collection activities and most of the subpoenas and it will save a lot of effort for advertisers and affiliates. In fact, assuming they can raise the money, I challenge them to post the bond."

Whilst entertaining for some, the viciousness and bitterness of the dispute, its serious consequences and the apparent lack of any common ground for an even half way amicable solution is unsettling.

One anonymous industry exec probably summed it up for 911 when he said: "This is something that needs to be handled by attorneys in private, not on some personal CEO blog."

Online Casino News courtesy of InfoPowa