US judge delays mobile gambling patent trial for criminal investigation

Nov 28 (Reuters) - A federal judge in California has delayed a patent case brought by mobile-gaming platform Skillz Inc (SKLZ.N) against rival AviaGames, citing a criminal investigation into AviaGames' alleged misuse of non-human "bots" in its money games.

In an order made public on Monday, U.S. District Judge Beth Labson Freeman pushed back a trial that was set to begin next week. The judge said AviaGames had been subpoenaed by New Jersey federal prosecutors as part of a grand jury's probe into allegations that the company secretly used bot competitors to manipulate cash games that were advertised as having only human players.

AviaGames has denied using bots to rig its games. Attorneys for the company did not immediately respond to a request for comment on Tuesday.

Skillz attorney Lazar Raynal of King & Spalding said on Tuesday that it was "not surprising that the judge decided to give AviaGames a little more time to shore up their criminal defense counsel, given the ongoing criminal investigation."

The U.S. Attorney's Office for the District of New Jersey declined to comment.

Skillz first sued California-based AviaGames for patent infringement in 2021, alleging that its Pocket7Games app was a "copycat" of Skillz's mobile-gaming platform.

Las Vegas-based Skillz told the court in August that it had learned during the discovery process that AviaGames used bots to "rig" its cash games and that its executives lied to the court about them.

AviaGames countered in a court filing that Skillz "engages in the exact conduct it falsely accuses AviaGames of carrying out."

AviaGames and its executives Vickie Chen and Peng Zhang have since retained criminal defense attorneys to represent them in the Skillz case, in a rare development for a patent case.

According to the Monday order, AviaGames told the court last month that it had received a grand jury subpoena from the U.S. Attorney's office in New Jersey for documents related to the fraud allegations.

Freeman said in the order that she would delay the trial until February to give AviaGames' attorneys more time to prepare in light of the office's pending investigation.

AviaGames was hit with a separate proposed class-action lawsuit in California court earlier this month by gamers who accused the company of committing fraud and racketeering by using bots to covertly tilt games like blackjack, solitaire and virtual pool in its favor.

The case is Skillz Platform Inc v. AviaGames Inc, U.S. District Court for the Northern District of California, No. 5:21-cv-02436.