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Table of Contents

Lead Story

Up with DCC in down economy

News

Industry Update

One platform, one processor

Processing giants go separate ways

No advance for AdvanceMe appeal

Phoenix rising from MPI ashes

2008 Calendar of events

Association roll call - Part II

Features

Brazilian banks look to Linux for ATMs

Ulric Rindebro
ATMarketplace.com

Perfecting the art of portfolio sales

ISOMetrics:
Tourist tracker

Views

The facts on FACTA

Ross Federgreen
CSRSI

Education

Street SmartsSM:
Make low price low priority

Jason Felts
Advanced Merchant Services

Great branding on zero budget

Curt Hensley
CSH Consulting

Shop before you sign

Adam Atlas
Attorney at Law

Thriving in a secure payments world

Scott Henry
VeriFone

Bets are on in evolving payments space

Ken Musante
Humboldt Merchant Services

Allies in accountability

Jeff Fortney
Clearent LLC

Company Profile

International Bancard Corp.

New Products

PCI compliance and beyond

MerchantWARE
Merchant Warehouse

Fight shrinkage with small footprint

NCR RealScan 74 OFX
NCR Corp. and ADT Security Services Inc.

Inspiration

Prioritize with purpose

Departments

Forum

Resource Guide

Datebook

Skyscraper Ad

The Green Sheet Online Edition

June 09, 2008  •  Issue 08:06:01

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No advance for AdvanceMe appeal

On May 15, 2008, the United States Court of Appeals for the Federal Circuit in Washington, D.C., rejected an appeal filed by AdvanceMe Inc. The appeal stemmed from a judgment by a lower court invalidating the company's patent, which provided merchants a means to automatically repay cash advances via credit and debit card receivables processing.

The order came nine days after a three-judge panel heard the appeal. The court upheld the August 2007 U. S. District Court for the Eastern District of Texas ruling invalidating the patent because "it is obvious and anticipated," stated Judge Leonard Davis, in the Memorandum Opinion and Order. "The patent-in-suit, simply put, is a computerized method for securing debt with future credit card receivables.

"While the patent inventor, Barbara Johnson, [an AdvanceMe board member and stock holder] implemented an aggressive marketing and business development program that brought this financing method to widespread use, she did not invent a new business method. Rather, Johnson built on long-established prior art, packaged the idea in a new way, and marketed it."

Davis further stated that AdvanceMe has presented "insufficient evidence that clearly and convincingly shows that any defendant was aware of the '281 patent before filing suit, and thus, the court finds that neither defendant willfully infringed the '281 patent."

No winning ticket

AdvanceMe, a provider of merchant cash advance services, filed lawsuits in November 2005 against RapidPay LLC, Reach Financial LLC, Merchant Money Tree Inc., Business Capital Corp., First Funds LLC and Fast Transact Inc. (doing business as Simple Cash).

AdvanceMe claimed direct or indirect infringement of its U.S. Patent No. 6,941,281 - also known as Patent '281 - issued in September 2005.

Business Capital, Fast Transact and RapidPay all settled out of court for undisclosed terms.

Mark Lorimer, AdvanceMe's Chief Marketing Officer, said having the company's patent invalidated was like losing a winning lottery ticket.

"The lawsuits were filed initially because the Patent and Trade Office decided to grant us a patent on what we thought was a novel, patentable business process. The PTO doesn't grant a lot of them, so when they issued our patent we went out to enforce it.

"The lower court found that indeed the patent had been violated, but they found that the patent should not have been issued by the U.S. Patent Office in the first place.

"Now, according to the court of appeals, we have no enforceable patent, so we're just going to continue what we have been doing for 10 years," Lorimer said.

Moving forward

Lorimer, who remained confident about his company's future, said any further appeals would be up to the company's board of directors. "The impact on our business is going to be zero," Lorimer said.

"Since we lost the case [last summer] our merchant accounts have increased by 33 percent, our profits by 40 percent, and we've signed $140 million worth of new credit facilities.

"We had not operated our business with an enforceable patent before. If the courts had found for us, we could have created some additional licensing royalties. But I don't see it having any adverse impact on our business. We're moving forward."

The lower court in Texas ruled that Johnson's work exhibited excellent entrepreneurship but does not entitle AdvanceMe to a legal monopoly on this method of business financing.

"Rather, AdvanceMe must continue to compete in the marketplace for its share of the market, which will benefit the economy and consumers as a whole," Davis said.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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Spotlight Innovators:

North American Bancard | Harbortouch | USAePay | IRISCRM.COM | Humboldt Merchant Services