Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Celeste Brown – Morgan Stanley.
Celeste Brown – Morgan Stanley
Given all the press recently in regards to your litigation, could you just give us your views on your strategy going forward? Are you focused on dealing with validity or infringement with the patents or do you feel that the whole case can get overturned at this point?
Thomas J. Matthews
I think there are a couple of questions there. The first is kind of what is our view on intellectual property and the rationale for the litigation to begin with. And of course our business, in our minds, is best pursued when in fact we have intellectual property that protects its margins, protects exclusivity, allows us to have a competitive advantage.
And there is this basic philosophical question within the industry of, ?Does IP matter?? And we are clearly in the camp that IP matters and there are others out there that want to undermine that point of view.
And so unfortunately it means that we have to be fairly vigorous in our enforcement and even do something that we would prefer not to, which is pursue litigation. And I think we have said in the times past, litigation is the worst business choice one can make in that you have a very time-consuming, expensive, uncertain process in which you are subjecting yourself. But nonetheless it is necessary if you are going to pursue a business strategy in which intellectual property is important.
So in terms of the case relative to Bally, as you know, there have really been three cases outstanding between the companies. I guess four cases outstanding between the companies. One successfully resolved in its entirety, in our favor, finding that Bally had infringed patents that were issued to the inventor, Ernie Moody. And damages were paid to IGT in accordance with that ruling.
We find ourselves in one case with Bally where the case has been dismissed in our favor and in another case against Bally where it has been dismissed in Bally’s favor. In both instances I would say that the final word has not been given, that we are going to go to an appellate process. The appellate process is a special court of appeals established in Washington, D.C., specifically to hear patent cases. That’s their area of expertise and that in this appellate process they have the opportunity to hear all arguments, in effect for the first time.
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