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CHICAGO-Armed with a patent it obtained through an acquisition 10 years ago, a medical payment processing company is suing retail giants and demanding licenses from dozens of others for using technology that activates and processes payments for debit and gift cards. MedCom USA Inc. subsidiary Card Activation Technologies Inc. sued Sears Holdings Corp. of Hoffman Estates, Ill., on Nov. 28 for allegedly infringing on a patent that processes debit purchase transactions using a countertop terminal system. Card Activation Technologies Inc. v. Sears Holding Corp., No. 06-06485 (N.D. Ill.). Like a bar fight The lawsuit follows a similar case against Oak Brook, Ill.-based McDonald’s Corp. and Walgreen Co. of Deerfield, Ill., both filed on Oct. 13. Card Activation is asking the court to enjoin the companies from infringing on the patents during and after the lawsuits and for triple damages. Card Activation Technologies Inc. v. McDonald’s Corp., No. 06-05578 (N.D. Ill.). “With regard to this claim, we seriously question the validity of this patent and further do not believe we are in violation of, or infringing upon, this patent,” said McDonald’s senior counsel, Pauline Levy, in a written statement. Walgreen spokeswoman Carol Hively said the company does not comment on pending litigation. Sears spokesman Christian Brathwaite said the company had no comment about the lawsuit. MedCom attorney Mark Roth, a patent prosecutor and litigator with Chicago’s Orum & Roth, likened choosing defendants for the lawsuits to picking an opponent in a bar fight. “If you’re going to get into a bar fight, you take the biggest, ugliest guy and try to knock him out,” he said. This fall, the Scottsdale, Ariz.-based company also sent more than 128 letters to retailers seeking licensing agreements for the use of its patent payment transaction technology, which is used to activate and process payments for gift and telephone cards. Responses to the demand letters have ranged from nothing to a one- or two-line letter saying, “We don’t believe we infringe,” Roth said. If MedCom can prove the patent is valid and that the retailers infringe, it will be in a “much better and stronger position to enter into license agreements” with the other companies, Roth added. MedCom’s ownership of the patent dates back a decade, but it hasn’t used the technology since shifting its business focus to the health care market in the late 1990s, said MedCom Executive Vice President Michael Malet.

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