The Federal Circuit Court of Appeals has rejected a $3.5 million patent infringement jury verdict against Blackhawk Network Inc., a subsidiary of Safeway Inc.
InComm, a prepaid product and transaction services company, sued Blackhawk in 2009, alleging that it had infringed two claims of InComm’s patent for a “System and Method for Authorizing Stored Value Card Transactions.”
Blackhawk, based in Pleasanton, California, operates gift card “malls” selling prepaid gift cards, debit cards, and telephone calling cards via grocery stores, “big box” stores, convenience stores, and other retailers and online outlets.
The damages were based on what the jury determined to be a “reasonable royalty” if Blackhawk had licensed use of the patent.
The suit related to eight lines of source code that were part of Blackhawk’s gift card activation platform. Blackhawk claims that the code was not actually used.
After the jury award in 2012, Blackhawk (which described itself as “not a technology company”) apologized to the jury and said that it would take steps to remove infringing source code from its platform.
Blackhawk also appealed the jury verdict.
The Federal Circuit ruled that the district court had misconstrued a claim in InComm’s patent that covered how InComm’s computer program determined whether a retailer’s point-of-sale device (e.g., a cash register) was authorized to make a gift card transaction.
According to the Federal Circuit’s opinion, InComm had conceded during the patent re-examination process that its claim required the use of point-of-sale device identifiers.
According to the Federal Circuit, there was no dispute that “Blackhawk’s accused product fails to use the terminal identifier when making such [an authorization] determination.”
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Photo Attribution: “Marina Safeway in Hamilton” by Caldorwards4