On Thursday, Visa was sued by mobile wallet provider Cortex in the Western District of Texas. The filing alleges that Visa infringed on multiple patents owned by the plaintiff.
Cortex is a company that specializes in the development of technology that enables users to make payments using their mobile device. The plaintiff developed this technology because “The adoption of mobile wallets and mobile payments lagged behind the rapid growth of smartphones, despite the fact that those applications were naturally suited to those devices. The primary reason why mobile wallets failed to gain traction with consumers and merchants was that existing payment methods such as credit cards proved ill-suited for storage on mobile devices. For example, early mobile-wallet applications required “ secure element chips” to be physically embedded into user devices to ensure the security of the s stored data. Most phones, including iPhones, did not include these chips.”
To address this issue, Cortex invented the “Officially Verifiable Electronic Representation” or “OVER File”. The OVER file allows users to put credit card data, as well as all the information associated with that card, onto their mobile device without having to worry about the threat of information theft. As described in the filing, the OVER file “ is a token that is unique to the user and device. The OVER File is also encrypted, which prevents the use or manipulation of data even if a hacker gains access to the device or to the file. When a customer presents an OVER File identification at a point of sale, the merchant can validate the user’s credentials through an authentication”. This file is also compatible with the point-of-sale technology used by merchants.
In an effort to protect this technology, Cortex has filed multiple patents relating to their OVER file technology, beginning on February 2, 2016. All 4 patents are entitled as “File format and platform for storage and verification of credentials”, and describe the same technology. The patents describe the technology as something capable of receiving, transmitting, generating, and verifying OVER files.
In the early months of that same year, Visa reached out to Cortex for a summary of possible synergies between the two companies. This summary contained and expressly cited Cortex’s OVER file, and notified Visa of its existing patents as well as its impending patent issuance. Lastly, it mentioned that almost all existing wallet solution providers were infringing on this patent.
However, Cortex claims that this did not stop Visa from violating, as well as inducing others from violating, their patents. According to the lawsuit, “Visa has actively induced product makers, distributors, retailers, and/or end users of the Accused Products to directly infringe the ’ 531 Patent throughout the United States, including within this Judicial District, by, among other things, advertising and promoting the use of the Accused Products in various websites, including providing and disseminating product descriptions, operating manuals, and other instructions on how to implement and configure the ’531 Accused Products.”
The plaintiff also states that “Visa’s infringement of the ‘531 Patent is willful and deliberate,… After speaking with representatives from Cortex about the ‘531 Patent, Visa nonetheless continues to sell and offer for sale infringing products, including the Visa Token service.”
Despite multiple notices informing Visa of their infringement, Visa has allegedly continued their infringing behavior. In light of the defendant’s refusal to cease this behavior, the plaintiff felt that legal action was their only remedy. The Plaintiff requests that the court certify their accusations, and request compensation from the defendant.
The plaintiff is represented by Susman Godfrey and Steckler Wayne Cherry & Love.
