J.C. Penney, Home Depot Defeat $250 Million Case Over Gift Cards

J.C. Penney Co. (JCP), Home Depot Inc. (HD) and Toys ‘R’ Us Inc. won lawsuits in which the owner of patents for branded gift cards was seeking $250 million from the retailers.

Alexsam Inc. dropped the suits today after a federal judge in Marshall, Texas, wouldn’t delay an Oct. 22 trial so the company could find new lawyers. The retailers won’t pay any money, and agreed not to seek sanctions and attorneys fees from Alexsam unless it asserts the patents against them or their partners in the future.

Closely held Alexsam had sued the companies in 2010. While the retailers were unsuccessful in invalidating the patents in a May trial, Gap Inc. and Barnes & Noble Inc. (BKS) each won later verdicts that they didn’t use the inventions. The patents, issued in 1999 and 2001, cover systems to activate and recharge stored-value cards, such as gift and phone cards.

In the trial that was to begin Oct. 22, Alexsam was seeking a combined $250 million in patent royalties from the three companies, said lawyer Bill Sigler of Fisch Hoffman Sigler in Washington, who represented the retailers in all three trials.

Alexsam had been seeking $34.5 million from Gap and $72 million from Barnes & Noble.

The judge’s order doesn’t explain why Alexsam ended its relationship with its lawyers. The lawyer who filed the delay request also represents Alexsam in a legal dispute with its former lawyers, District Judge Michael Schneider wrote.

The cases are Alexsam v. J.C. Penney Co., 13cv5; Alexsam v. Toys ‘R’ Us, 13cv7; and Alexsam v. Home Depot, 13cv8, all U.S. District Court for the Eastern District of Texas (Marshall).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net.

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net.

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