SmartMetric Loses Patent Ruling in Visa, MasterCard Case

Visa Inc. (V) and MasterCard Inc. (MA) don’t infringe a patent owned by SmartMetric Inc., a company that had sought as much as $13.4 billion for alleged use of its technology in “smart” debit and credit cards.

U.S. District Judge Michael W. Fitzgerald in Los Angeles, in a written ruling yesterday, affirmed his earlier tentative decision from a Sept. 25 hearing.

“The parties here are comparing apples and oranges,” the judge said in the written ruling. “The piecemeal similarities that SmartMetric has identified in support of its claims do not change the fact that claims 1 and 14 of the ’464 patent are simply not practiced by defendants, and no reasonable jury could conclude otherwise.”

SmartMetric sued Visa and MasterCard two years ago, claiming they infringed its patent for a system for automatic connection to a network. The company claimed it was entitled to a royalty of 25 percent of the anticipated savings Visa and MasterCard would receive from a drop in credit and debit-card fraud by the introduction of so-called EMV cards in the U.S.

The EMV cards, which are already used in Europe, include a microchip instead of a magnetic strip to access a payment system. The SmartMetric patent pertains to the process by which the payment system selects a network for a card transaction, Patrick Bright, the company’s lawyer, said at the Sept. 25 hearing.

SmartMetric said in a statement today it will appeal the non-infringement ruling.

SmartMetric fell 4 cents, or 20 percent, to 16 cents, today in over-the-counter trading.

The case is SmartMetric Inc. (SMME) v. MasterCard International Inc., 11-cv-07126, U.S. District Court, Central District of California (Los Angeles).

To contact the reporter on this story: Edvard Pettersson in the Los Angeles federal courthouse at +1- epettersson@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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