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Poker News | World Poker News

Software Developer Sues PokerTek

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Nick Trout, who operates Tellis Software Inc. from his home in San Antonio, Texas, filed suit in February of 2007 against PokerTek Inc., its former CEO Gehrig White, and current President James Crawford. Trout alleged that they broke a software development contract with him and did not fully compensate him for the work he performed, and he is suing the company for $2.5 million. PokerTek not only denied the claim but countersued Tellis, and the case has since been transferred to the western North Carolina U.S. District Court, near where PokerTek is based.

The agreement in question was broken in 2004 after Trout was contracted by PokerTek to create specialized software for an electronic poker table, a project that consumed him for 15 hours per day, seven days per week for approximately nine months. "I was supposed to get two percent equity in the company and up to about $800,000," recalled Trout. "At the end of the day, I only got $30,000 out of them."

Trout claims that the poker tables would not work without the software he developed, and he notes that PokerTek filed a patent application that Trout should benefit from. He is suing for millions of dollars in damages.

Trout's lawyer, Adam J. Loewy of Barry & Loewy LLP, commented, "They got what they wanted from Nick and Tellis... It really upsets me that this company from North Carolina can treat him like this... In our view, PokerTek took Tellis' software without fully paying for it."

PokerTek is a publicly traded company that manufactures electronic poker tables called PokerPro that allow the game to be played with the help of the electronic dealer on a computerized table. By putting cash on a PokerPro account card, in a casino that has the tables, a player can sit down, insert the card, and play with electronic chips and cards against other live players.

Reportedly, PokerTek claims that Tellis did not deliver a usable product and did not implement any of Trout's software into the current PokerPro tables. While PokerTek has not publicly commented on the suit or countersuit, a statement was found amidst a filing with the Securities and Exchange Commission. "We, Mr. Crawford and Mr. White believe we each have meritorious defenses to all claims that have been asserted by Tellis Software, but there is no assurance that we will be successful in our defense of this or similar lawsuits or that such lawsuits will not have a material adverse effect on our business, financial condition or results of operations."

PokerTek has installed 131 poker tables in casinos worldwide to date, and their recently created heads-up poker tables are beginning to be sold to casinos as well. In the first nine months of 2007, according to the company's Q3 earnings release, revenues have increased 152% to $2.6 million, up from $1 million in the first nine months of 2006.

In the case's most recent development, PokerTek asked the North Carolina judge to dismiss Tellis' claims of fraud, piracy, and unjust enrichment and adds in its countersuit that Tellis was the party that breached the contract, claiming that Trout failed to meet the software design deadline of May 5, 2004. The judge has denied the dismissal request, and the case is set to go to trial in 2008.

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