It appears that the lawsuit was filed in a federal court in
Miami last month by a company called Default Proof Credit Card
Systems, which is run from the chief executive's home and generated
no revenue last year.
Default Proof claims to be the only company holding a patent
covering pre-paid debit cards and accuses the corporations named in
the lawsuit of violating US intellectual property laws by
dispensing such cards without paying licence fees.
Pre-paid debit cards are not connected to bank accounts and are
widely used by retailers, allowing customers to use and recharge
them at any store of the same company. Default Proof reportedly
claims that in 2002 alone, these cards accounted for 22 billion
transactions in the US.
The dispute arose in June 2002, when the US Patent and Trade
Mark Office granted Default Proof a patent covering "a system for
dispensing pre-paid debit cards through computerised point-of-sale
terminals."
According to the filing (US patent number 6,405,182), the system
comprises "a point-of-sale assembly", "[the] means for dispensing
at least one debit card for each transaction", and "a remotely
located computerised clearing house assembly." Default Proof's
chief executive, Vincent Cuervo, is listed as the inventor of the
system.
After Default Proof was awarded the patent, it approached
several major corporations to demand licence fees, Law.com reports.
When no-one agreed to pay, the company decided to take legal
action.
Default Proof is apparently seeking "adequate" compensation for
the alleged infringement, as well as a permanent court order
preventing infringement in the future. The lawsuit reportedly
demands that a licence fee be paid to the company for each
transaction where such pre-paid debit cards are used.
The text of Default Proof's patent in question is available
here
