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Visa, MasterCard Win Tentative Ruling in SmartMetric Suit

Visa Inc. and MasterCard Inc. won a tentative court ruling they don’t infringe a patent owned by SmartMetric Inc., a technology development company that seeks $13.4 billion in damages.

U.S. District Judge Michael W. Fitzgerald issued his tentative ruling today at a hearing in Los Angeles.

“I don’t see there’s anything to determine here for a jury,” the judge said at the hearing.

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 today’s hearing.

‘Reversible Error’

Bright said he should be allowed to take his evidence before a jury.

“You substituted the court as the trier of fact,” Bright told the judge. “That is reversible error.”

Joseph Melnik, a lawyer for Visa, said at the hearing that the Visa and MasterCard systems do fundamentally different things than what’s claimed by the patent. An earlier lawsuit brought by SmartMetric against the two companies resulted in a court ruling that there was no infringement, according to a Visa court filing.

Fitzgerald didn’t issue a final ruling at the hearing and took the motion under submission.

SmartMetric fell 34 percent to 26 cents at 3:31 p.m. in over-the-counter trading.

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

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