“Third party credit card” Patent Infringement Complaint Filed

May 20th, 2009

Restricted Spending Solutions LLC, a subsidiary of Acacia Research Corp., filed a complaint yesterday against 14 financial institutions, asserting infringement of a U.S. patent. The defendants, which include banks and credit card companies, allegedly issue limited charge cards designed for teenagers or corporate employees that infringe the patent. Restricted Spending is represented by SimmonsCooper.

The complaint lists the following defendants: Allow Card of America Inc, Palm Desert Investments, Wachovia Corp, PAYJr Inc, CardLab Inc, Bancorp Inc, Discover Financial Services, Bank of America Corp, Commerce Bancshares Inc, UMB Financial Corp, Fifth Third Bancorp, MasterCard International Inc, Visa USA Inc and US Bancorp.

Restricted Spending Solutions’ patent 6,044,360 for a “Third party credit card” claims a system and method of allocating funds in pre-established customer accounts.

Last year, Restricted Spending asserted U.S. Patent 7,143,064 against Apple. The patent claims a method of allocating parental funds in pre-established accounts for use by children. Restricted Spending and Apple entered into a settlement and license agreement on June 20, 2008.

Patent(s) of the Week (2009/05/19)

May 20th, 2009

Jeff Bezos is an inventor. Again. (He’s up to 30+) U.S. Patent 7,536,351 was issued to Amazon.com. The patent claims a network-based payment service system and method of providing a user-to-user payment service that allows users to define customized pay pages for receiving payments from other users.

JPMorgan Chase Bank was issued U.S. Patent 7,536,354: “Methods for electronic multiparty accounts receivable and accounts payable systems.” The patent includes 140 method claims but only a single independent claim. The independent claim recites a system for electronic multiparty accounts receivable and accounts payable system for use by two participants (at least one creditor and one debtor) who have contracted with one another and who may owe debts to one another under one or more underlying contracts and who both use the electronic multiparty accounts receivable and accounts payable system to manage their respective debt obligations.

Japanese inventor Michihiro Sato was issued unassigned patent 7,536,330, which claims a system and method for a fixed rate financing instrument issued by a corporation, government, or other organization which pays a fixed interest rate and/or dividend as secured by an issuing entity’s promise to pay and partially guaranteed by a third party to issuance.

And last but not least, Amsterdam Power Exchange Spotmark B.V, was issued U.S. Patent 7,536,341, “Method and system for regulating the production of a second form of energy, generated from a first form of energy.” Though perhaps not, strictly speaking, a financial services patent, any time a patent issues nowadays that claims a method relating to the energy sales and auctions, I can’t help but think of Bilski.

“Jumpstarting your tech venture” . . . With Patents

May 19th, 2009

Dennis Posadas writes about the value of intellectual property to technology ventures when seeking funding:

For a bank loan, the situation is often difficult for technology startups because their value is not often premised on physical collateral, but more on intellectual collateral, which bankers often cannot value accurately. Try showing your Philippine or US patent plaque to a banker, and let’s see how far you will go with your loan application.

“Jumpstarting your tech venture”

Patent of the Week (2009-05-12): Mortgage Backed Securities

May 18th, 2009

U.S. Patent 7,533,057 issued on May 12, 2009 and is assigned to Fannie Mae. The patent, entitled “Servicer compensation system and method”, discloses a method for acquiring a home mortgage loan with a loan asset and a servicing asset and then compensating the servicer that services the loan during its term, such that the servicer’s compensation does not decrease during the term.  The timing of the issuance is perhaps ironic; for example, note the patent’s opening: 

Introduction of the mortgage backed security (MBS) has made the dream of owning a home possible for a much larger number of individuals. Frequently, when a borrower takes out a loan to purchase a home, that loan is subsequently pooled with other loans and used to create an MBS. The MBS is an investment instrument that can be sold to investors in the global capital markets. Upon sale of the MBS, lenders can turn around and make new loans using proceeds from the sale. In effect, the MBS is a way for the global capital markets to provide capital for loans to fund home ownership. The increased availability of capital reduces interest rates as compared to the interest rates that would otherwise be available, and therefore makes home ownership more affordable for an increased number of individuals.

While the mortgage backed security approach has worked exceptionally well, home ownership rates could be further improved if loans could be used to create new forms of mortgage backed securities and/or other types of investment instruments or other assets that more optimally align with investor needs.

Though loan repackaging has come under fire in the past year (perhaps the forgoing comments from the patent didn’t make it into Fannie’s last 10-K filing?), the underlying techniques of cash flow methods in such innovations reflect creativity nonetheless.

Still No Love for Financial Method Patents: Every Penny Counts v. American Express

May 18th, 2009

In Every Penny Counts, Inc. v. American Express, Visa U.S.A., Green Dot, MasterCard, First Data, Valutec, etc. (Federal Circuit 2009) the court affirmed the district court’s judgment of non-infringement based on claim construction of a patent directed to solving the problem of “loose change.”  The opinion itself is not particularly noteworthy, and the judgments from the district court in the Middle District of Florida are probably a more worthwhile read.

What is interesting about this decision is the utter disdain for the appellant’s patents.  The patents at issue generally claim an automatic donation system and method for contributing “excess cash” from retail sales transactions into predetermined charitable or savings accounts.  Here, Senior Circuit Judge Cudahy of the Seventh Circuit (sitting by designation) twice referring to the patentee’s invention with quotation marks (“Dr. Bertram Burke is a retired psychoanalyst who relates his “invention” back to an experience he had . . .”), including one reference: “‘invention,’ such as it is. . .”

Although the presumption of validity applies to all patents, not just those in a certain field or industry that we like, I suspect that we have all run across our share of patents that we think perhaps should not have been issued in the first place.  Nonetheless, a healthy respect for the presumption of validity is still an important aspect of our patent system.