The biometric payment system vendor BioPay LLC has been awarded its first patent, which may help in its legal dispute with Solidus Networks Inc.
The patent, which was announced last week, covers the use of negative customer data – such as records of check bouncing – to assess transaction fees. BioPay expects to receive a second patent within a few weeks.
Tim Robinson, BioPay’s president, said in an interview that having a patent “starts to level the playing field in terms of some of the issues with” Solidus.
Both companies offer systems that merchants can use to authorize customers’ transactions. People enroll with merchants by providing a payment card or bank account number and their fingerprint; on later visits they can make purchases by placing their fingertip on a scanner at the point of sale.
The two first locked horns in January, when BioPay, of Herndon, Va., sued Solidus and requested a legal ruling that BioPay was not violating any of Solidus’ patents.
Mr. Robinson claimed at the time that Solidus was telling prospective clients that its portfolio of 25 patents made it a better choice than BioPay, which had none.
Solidus, which is based in San Francisco and does business under the Pay by Touch Solutions brand, said in a countersuit that BioPay was violating its patents.
Solidus “threatened to escalate the litigation,” Mr. Robinson said, but his company’s patent makes Solidus “vulnerable to the same issue.”
Shannon Riordan, Solidus’ director of marketing, wrote in an e-mail that “BioPay’s patent does not affect Pay by Touch.”
Josh Kessler, an analyst with the emerging technologies practice at TowerGroup, the Needham, Mass., market research unit of MasterCard International, said that “patents are potentially a business-killer,” because an unfavorable verdict in a patent suit could be “a death blow” for a company.
Though he said BioPay’s patent “is largely good for BioPay and largely bad for Pay by Touch,” he also said it would have little impact on either.
The end result, he said, is that Pay by Touch may have more of a challenge in court in proving that BioPay infringes on its patent – and if it cannot prove infringement, both companies will continue business as usual.
Avivah Litan, a vice president at Gartner Inc and the research director. for the Stamford, Conn., company, said the patent battle is “a lot of hot air” because there is little at stake. “The market is still really nascent.”
BioPay’s suit against Solidus is not scheduled to be heard until January 2007.
