Recent Successes
April 30, 2012
On April 27, 2012, a jury in Austin, Texas, rendered an $18 million verdict in favor of Fitch Even client Alexsam, Inc., after a two-week trial in a breach of patent license case in the District Court of Travis County. Alexsam owns U.S. Patent Nos. 6,000,608 and 6,189,787, which relate to the processing of prepaid debit cards, phone cards, gift cards, and other stored value cards at retail locations using standard retail point-of-sale terminals.
Alexsam extended a patent license to NetSpend Corporation relating to those patents, but brought litigation against NetSpend in 2008 to resolve a dispute over nonpayment of royalties. NetSpend, a multibillion dollar company headquartered in Austin, is one of the largest issuers of prepaid debit cards in the United States. NetSpend targets its prepaid card products to “underbanked” customers, touting itself and its products as “a better way to bank.” It has been selling prepaid debit cards and other types of prepaid cards since 2001.
The jury accepted Alexsam’s contentions that following the settlement of a prior patent infringement litigation between the parties, NetSpend agreed to a license covering Alexsam’s patents in March 2004, but then subsequently failed to pay the agreed royalties. The jury rejected NetSpend’s arguments that it had avoided the license by using systems that did not employ standard point-of-sale devices or use the banking network in the activation of its various types of prepaid cards. After the jury verdict, the court held a bench trial, following which the court issued an order rejecting an additional affirmative defense and counterclaim, by which NetSpend alleged it was entitled to a reduction in royalties owed by reason of a “most favored nations” provision in the license.
UPDATE: Following the court's ruling rejecting NetSpend's "most favored nations" contentions, the parties settled the case in October 2012. Pursuant to the settlement agreement, NetSpend paid Alexsam $24 million for a fully paid-up license under the Alexsam patents.
Fitch Even’s trial team consisted of lead counsel Steven C. Schroer, Timothy P. Maloney, Joseph F. Marinelli, Nicole L. Little, and David A. Gosse, together with local trial counsel Bruce Clark of the law firm Clark & Clark in Austin, Texas.
NetSpend was represented during the litigation by Baker Botts of Houston, Texas, and by special trial counsel from Fish & Richardson P.C., Austin, Texas.
