Geolocation technology leader GeoComply has filed a lawsuit in Delaware federal court accusing upstart competitor Xpoint of infringing on a patent the Vancouver-based company owns to perform its geolocation tracking services for sports betting and online gaming.
Since the launch of legal online gaming in the United States, GeoComply has effectively been the only game in town when it comes to geolocation technology, a crucial part of the online gaming ecosystem in the U.S. given the existence of the federal Wire Act and Unlawful Internet Gambling Enforcement Act, which prohibit interstate sports betting and unlawful interstate gambling transactions, as well as specific state laws that require players to be in-state to wager.
Xpoint has recently sought to challenge that dominance and announced its U.S. debut last month with two new market entrants in New Jersey, including PlayStar online casino and sports-betting exchange product Sporttrade.
The 19-page lawsuit filed on September 27 centers on the technology used to perform geolocation services which GeoComply claims it invented and patented and includes collecting geolocation data on a device, transmitting it to multiple servers, and providing the location back to the initial server, a method that helps prevent the technology from being circumvented by location-disguising efforts such as VPNs.
GeoComply claims that Xpoint uses a similar method as part of its own geolocation procedures, thereby violating the GeoComply patent.
“GeoComply has spent valuable resources developing and refining — and patenting— its proprietary platform for reliably and accurately determining the true location of an end-user,” the company states in its complaint.
“Should Xpoint continue to commercialize its geolocation technology, GeoComply will be forced to compete against its own patented invention."
GeoComply is asking for an injunction to require Xpoint to cease the alleged patent infringement, as well as monetary damages.
GeoComply also asked the court last week for expedited discovery and scheduling in order to analyze Xpoint’s source code, which the company claimed would streamline future hearings.
“Source code is almost always inspected in software patent infringement matters; the very worst that can result from granting this motion is that this inevitability happens sooner,” the company wrote in its brief.
However, Delaware District Judge Colm Connolly denied that request on Thursday (September 29).
In a statement, Xpoint said it believes GeoComply’s allegations are “meritless.”
“The filing of GeoComply’s complaint follows a number of recent public announcements confirming that Xpoint’s geolocation technology is now live in both the USA and Canada with multiple partners in the North American sports betting and iGaming industry,” the company said in a statement.
Xpoint added that it will not comment any further on the litigation until the legal action has concluded.
The ruling could have a significant impact on the future of sports betting and online gaming in the U.S.
GeoComply said in its briefing that it analyzes more than 10bn transactions a year across all of its offerings, which also includes streaming video broadcasters, online banking, payments and cryptocurrency providers.
A ruling in GeoComply’s favor could continue to solidify the company’s dominance in the online gambling geolocation space, while a ruling for Xpoint could herald a more competitive market for Xpoint and others.