Wednesday, August 13, 2014 2:13:54 AM
Share us on: By Erica Teichert
Law360, Washington (August 08, 2014, 5:42 PM ET) -- SmartMetric Inc. urged a Federal Circuit panel on Friday to resurrect its network technology patent infringement suit against Visa Inc and MasterCard International Inc., alleging the trial court ignored evidence of the companies' infringement and let them off the hook in the $13 billion row.
According to SmartMetric's counsel Patrick F. Bright of Wagner Anderson & Bright LLP, MasterCard and Visa never provided evidence to show that their automatic-pay features on credit cards didn't infringe SmartMetric's payment processing network technology, and that should have worked in SmartMetric's favor during summary judgment proceedings.
SmartMetric alleges that the payment processing giants' systems infringed its patent by selling credit card systems that involve inserting data cards into a reader, to help establish an automatic connection to a network. Although U.S. District Judge Michael W. Fitzgerald determined Visa's and MasterCard's automatic-pay systems didn't use so-called “local access numbers” to determine the location of the transaction and network service providers, SmartMetric maintains that information would be necessary to manage the massive processing systems.
“It only makes sense,” Bright said during Friday's oral arguments. “The system is presented with millions and billions of transactions.”
In addition, Bright claimed that the lower court erred by determining that MasterCard and Visa didn't control their allegedly infringing payment processing systems, noting that witnesses for MasterCard acknowledged that they controlled the system and benefited financially from it.
Although SmartMetric presented an alternative claim construction to the Federal Circuit as part of its appeal, Circuit Judge Todd M. Hughes criticized discrepancies in the proposal in the company's briefs and was unconvinced that the panel would even reach the control issue.
Similarly, Visa and MasterCard maintained that the Federal Circuit has no need to delve deeply into the merits of SmartMetric's suit, maintaining that their declarations provided enough information to warrant the summary judgment finding.
“The patent requires an application program that facilitates the connection to the network,” said of Jones Day's Joseph Melnik, counsel for Visa. “That's outside the purview of Visa and MasterCard.”
SmartMetric launched the suit-at-hand in September 2011 after losing out on claim construction decisions in a similar suit against the companies that was filed in March 2010.
In that suit, also filed in the Central District of California, SmartMetric claimed the credit card companies' contactless card systems — Visa's PayWave and MasterCard’s Pay Pass systems — infringe the patent. The current suit only deals with traditional credit cards.
Visa and MasterCard secured a favorable ruling in the contactless card suit on May 18 from U.S. District Judge Jacqueline H. Nguyen on two disputed terms, halting the older suit in its tracks. SmartMetric appealed that order to the Federal Circuit less than two months later.
SmartMetric was first assigned the patent in February 2010 and quickly began asserting it in litigation against credit card behemoths Visa and MasterCard. SmartMetric also attacked American Express Co. in December over the same patent, making similar accusations about AmEx's ExpressPay product.
But after Judge Nguyen's claim construction ruling in the Visa and MasterCard case, which the judge said would also determine the claim construction for the AmEx case, SmartMetric decided to focus its efforts on a Federal Circuit appeal in that action.
Circuit Judges Sharon Prost, Pauline Newman and Todd M. Hughes sat on the panel for the Federal Circuit.
The patent-in-suit is U.S. Patent Number 6,792,464.
SmartMetric is represented by Patrick F. Bright of Wagner Anderson & Bright LLP.
MasterCard is represented by Gary A. Clark, Darren M. Franklin, Andrew T. Kim and Dennis J. Smith of Sheppard Mullin Richter & Hampton LLP. Visa is represented by Joseph Melnik, An Phuoc Doan and Matthew J. Silveira of Jones Day.
The case is SmartMetric Inc. v. MasterCard International Inc. et al., case number 14-1037, in the U.S. Court of Appeals for the Federal Circuit.
--Additional reporting by Kat Greene. Editing by Edrienne Su.
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