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Appeals Court Upholds Dismissal Of Multi-Billion-Dollar Infringement Claims Against Visa And MasterCard Over Smart Card Technology

Posted  August 19, 2014

By Owen Glist

The U.S. Court of Appeals for the Federal Circuit has upheld summary judgment against SmartMetric, a maker of biometric smart cards, affirming dismissal of its claims that Visa and MasterCard infringed its patent for credit and debit card technology.

After a previous unsuccessful suit against Visa, MasterCard, and American Express over the same patent relating to “contactless” cards (see SmartMetric Inc. v. Am. Express Co., 476 F. App’x 742 (Fed. Cir. Apr. 11, 2012)), SmartMetric again sought damages in excess of $13 billion in this suit over “contact” cards embedded with chips.  The gravamen of SmartMetric’s claim was that the Visa and MasterCard networks infringed a patent for a system to access a database of local network service providers for a given payment card transaction.

The district court granted summary judgment on several alternative grounds, including SmartMetric’s unexcused failure to properly disclose its experts and expert reports and to show sufficient “direct” control by Visa and MasterCard over users of the allegedly infringing system — i.e., banks, merchants, and cardholders.  But the court’s primary ground was that SmartMetric failed to provide any reliable evidence that defendants’ systems actually functioned the way SmartMetric alleged.

At oral argument in the Federal Circuit, counsel for SmartMetric conceded that the company had offered “an entirely new claim construction” in its reply brief from that offered in the district court or in its opening brief on appeal.  Less than a week after argument, the Federal Circuit issued a one-word order affirming the district court.

The lower court case is SmartMetric Inc. v. MasterCard International Inc., 11-cv-07126 (C.D. Cal.).  The appeal is SmartMetric Inc. v. MasterCard International Inc., 14-0937 (Fed. Cir.).

Edited by Gary J. Malone