Real-money skill gaming company AviaGames faces indictment by federal prosecutors in New Jersey over its suspected use of bots to defraud its human players. Information about the alleged activities came to light during pretrial discovery in a patent lawsuit by Avia’s rival, Skillz. The judge in that case has granted AviaGames a temporary reprieve in light of the criminal charges, postponing the civil trial until Feb. 2, 2024.
Avia had sought either a longer delay—until the conclusion of the criminal proceedings—or to “bifurcate” the patent suit. The latter option would have meant proceeding with the original case’s liability issues but postponing anything to do with the bots. However, US District Judge Beth Freeman denied both of these requests. Instead, she pushed the trial date back two months to allow Avia more time to prepare.
Skillz and Avia both allow users to compete against one another in mobile games for real money prizes. The skill element of their games allows them to avoid being defined as a gambling product.
Skillz accused Avia of pitting human users against AI players whose win rate it could control. The relevance to the patent case primarily concerns damages—i.e., establishing how much money Avia has been making off its product. However, the shocking nature of the accusation has led to a separate proposed class action on behalf of players.
This latest wrinkle in the patent case reveals that federal criminal charges are also coming, provided a grand jury agrees with federal prosecutors.
AviaGames Expects Employee Witnesses to Plead the Fifth
AviaGames presented two main arguments for deferring or splitting the patent case. First, it said that the need to deal with the criminal proceedings would cut into the time it had to prepare for the civil trial.
Judge Freeman agreed in part with that, agreeing to a “continuance” in February, though not to a stay of proceedings. The latter would have deferred the trial until after the conclusion of the criminal case, which she pointed out could take years.
Avia also argued that it could not defend itself adequately in the civil case because, in light of the criminal one, its employee witnesses would be likely to invoke their rights against self-incrimination under the Fifth Amendment.
The Fifth Amendment creates a situational exemption to the usual obligation for witnesses to answer questions during testimony. It allows witnesses who aren’t themselves defendants to refuse to answer specific questions if they believe a truthful answer would expose them to legal jeopardy.
Judge Freeman rejected this logic on the basis that no individual employees have been named in the indictment. Prosecutors are pursuing AviaGames as a corporate entity, and corporations do not have the same rights under the Fifth Amendment as individuals.