More than five years into its litigation campaign against a gaggle of big retailers, patent plaintiff Alexsam Inc. is still making trouble for defendants in East Texas. On Friday seven retail chainsincluding Best Buy Co., JC Penney Co., and Barnes & Noble Inc.failed to convince a federal jury in Marshall that two of Alexsam’s patents related to prepaid electronic gift cards are invalid.
The jury concluded Friday that the patents were valid, leaving the retailers’ to forge ahead with their still-pending inequitable conduct defense at a bench trial set for next Monday before U.S. District Judge Michael Schneider. The companies claim that Alexsam misled the patent office when it applied for and later received the two patents. The other defendants are Gap Inc., McDonalds Corp., Toys R Us Inc., and Home Depot Inc.
Alexsam’s patents, issued in 2001, cover systems to activate and recharge cards with a stored-value, such as gift and phone cards. During the invalidity trial, attorneys for the defendants argued that the patents didn’t cover a new idea.
Alan Fisch of Fisch Hoffman Sigler, who founded his firm last year after leaving Kaye Scholer, represented all of the defendants except Best Buy. Best Buy has Robins, Kaplan, Miller & Ciresi. The defense lawyers weren’t immediately available to comment.
Chicago-based Fitch, Even, Tabin & Flannery represents Alexsam. In a statement, partner Timothy Maloney called the verdict "another important milestone in our efforts to defend and enforce Alexsam’s patent rights for this fundamental technology."
Alexsam sued the companies in 2010, before Congress reined in multi-defendant patent suits with the America Invents Act. Judge Schneider broke up the infringement suit into seven separate cases after the AIA took effect, but he later reconsolidated them for last week’s invalidity trial.
If the retailers prevail in the inequitable conduct trial next week, the patents will be unenforceable. If they fail, the judge will hold separate trials on infringement. The defendants don’t all run their card programs the same way, and each has made slightly different arguments to back up their claims that they have not infringed.
In a similar case brought by Alexsam against Pier 1 Imports, a jury in Marshall found in 2011 that the licensing company’s patents were valid but not infringed. Fisch, then at Kaye Scholer, represented Pier 1 in that case. Alexsam has appealed that decision to the U.S. Court of Appeals for the Federal Circuit, which hasn’t yet issued a ruling.
Alexsam also sued IDT Corporation, a provider of prepaid phone cards, over the same two patents in 2007 in Marshall and won a $10.1 million verdict in 2011. IDT has appealed, and the Federal Circuit heard arguments in March.
