More Relief For Retailers: Giftcard Patent Case Unlikely To Be Appealed As Plaintiff Is Running Out Of Money

Written by Evan Schuman
July 27th, 2011

The dozens of major retail chains that have been sued for giftcard patent violations have received more good news. As the rapidly dissolving cases against them dissolved yet further, the suing vendor released a statement saying that an appeal of an unfavorable key ruling is becoming less likely as its dollars run short.

The vendor, Card Activation Technologies (CAT), has sued quite a few major chains over the last years, including RadioShack, 7-Eleven, Nordstrom, Macy’s, Starbucks, JCPenney, Sears, OfficeMax, TJX, McDonald’s, Walgreens, Barnes & Noble, Aeropostale, Lane Bryant, Blockbuster, Fashion Bug, Cabela’s, Guess, Panera Bread, Giorgio Armani, Caché, Denny’s, Sunglass Hut Trading and the Brown Group Retail (doing business as Famous Footwear). But CAT’s position began to implode earlier this month when a federal judge invalidated all but three of its claims against the retailers. That move followed a preliminary report from the U.S. Patent Office that it was also about to invalidate all of CAT’s claims. CAT then surrendered its last claims, pending an appeal.

In a statement issued on July 22, CAT said that it expects the Patent Office to make its preliminary report final. “We anticipate that the [Patent Office] will likewise make a final determination that the ‘859 Patent is invalid. Consequently, we will be required to appeal in both the Delaware [federal court] Action and the [Patent Office] reexamination proceeding.”

The statement made clear, though, that neither appeal may ever happen.

“Although we strongly disagree with the Court’s Order and what we presume will be the findings of the PTO, we are mindful of the economic realities facing the company at this juncture,” the CAT statement said. “The realities of Card’s financial status surely impact our ability to appeal these decisions. The costs of appeal, as well as the cost of maintaining an ongoing entity, are estimated to reach $750,000.00 over the next two years. It is also important to understand that success on appeal means the action will be returned to the Delaware District Court for further proceedings regarding the validity of the patent. It is also common for the Federal Circuit Court of Appeals to affirm a trial court’s ruling without written explanation.”

CAT said it would hold a briefing on August 2. But then, as though it didn’t really want anyone to attend its briefing, it said in the statement that little would be said during the briefing. “Please bear in mind that we know, and expect, our adversaries to be listening on this call. Consequently, the company will not be inclined or able to fully disclose all of its strategies.”


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