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The U.S. Court of Appeals for the Federal Circuit on Aug. 20 reinstated a patent infringement suit against Palm Inc. involving the company’s handheld devices. E-Pass Technologies Inc. filed suit against the 3Com Corp. and Palm Inc. (which was spun off from 3Com about two years ago), claiming that the companies infringed its patent on a method to substitute multiple credit cards with a single electronic card. Judge D. Lowell Jensen of the U.S. District Court for the Northern District of California granted a summary judgment of noninfringement in August 2002, concluding that Palm’s device was larger than a credit card and thus not covered by the patent. But the Federal Circuit disagreed with Jensen’s interpretation of the term electronic multi-function card and sent the case back to the district court. “The district court’s premise that the electronic multi-function card must be accepted interchangeably with standard credit cards is not correct,” the Federal Circuit wrote in E-Pass Technologies Inc. v. 3Com Corp., 02-1593. Despite this setback for Palm, patent lawyers say E-Pass will have a difficult time arguing that its patent covers Palm’s handheld organizers. “It doesn’t seem logical that the Palm Pilot would infringe this patent,” says Roger Cook, a partner at Townsend and Townsend and Crew. “Certainly this [patent] doesn’t enable anyone to build a Palm Pilot.” The Federal Circuit looked at one claim — the definition of the term card. But there are a number of other terms and applications that will have to be looked at as well, Cook says. “It will be a long, hard road for E-Pass to assert this against the PDA [personal digital assistant] market.” E-Pass attorney Stephen Weiss, a partner at New York’s Moses & Singer, says a jury will determine whether the patent was infringed and, if so, a damages award. Palm could not be reached for comment, nor could the company’s attorney Bradley Hulbert, of Chicago’s McDonnell Boehnen Hulbert & Berghoff. New York-based E-Pass has a similar suit against the Microsoft Corp. and the Hewlett-Packard Co. in Texas federal court that had been stayed pending the Federal Circuit’s ruling. Weiss says that case will now proceed. E-Pass is seeking an injunction and damages. While Weiss did not specify the amount of damages, he says it would be a “reasonable royalty” multiplied by the personal digital assistant market. That could be a windfall for E-Pass since Palm’s total sales topped $1 billion in 2002. E-Pass said in a release that it expects to file additional patent infringement suits in the “not-too-distant future.” E-Pass does not market any product in the United States, and both Weiss and company spokesman Don DeLuca says they do not know if the company has a product on the market outside the United States. The company’s Web site includes a photo of an “e-pass device,” which is described as a credit-card-sized computer. DeLuca says E-Pass has one patent. Brenda Sandburg is a reporter at The Recorder, the American Lawyer Media newspaper in San Francisco.

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