Two potentially explosive patent infringement lawsuits have been languishing since they were filed last August, but some of the confusion surrounding them has been dispelled with the consolidation of multiple cases.
The suits involve a marketing company, Meridian Enterprises Corp. of St. Louis, and some of the biggest players in the credit card industry.
The marketer is suing MasterCard International, Chemical Banking Corp., and Shell Oil Co. in one case, and Visa U.S.A., Unocal Corp., Ford Motor Co.'s Associates National Bank, and MasterCard in the other.
The accusation was that each company violated Meridian's patent on a certain type of cardholder rebate program.
Each of the defendants has countersued, seeking a declaratory judgment of noninfringement and invalidation of Meridian's patent.
The lawsuits were pending all over the map: Meridian filed in East St. Louis, Ill., Visa in California, and the others in New Jersey. In February, all were consolidated in the U.S. District Court for the District of New Jersey, despite the fact that Meridian had the advantage of filing its complaint first.
According to court documents, Meridian lost the "home court advantage" that usually goes to the initial filer of a complaint, because it waited longer than the stipulated 120 days to serve the six defendants with summonses.
Meridian filed its original complaint in December 1993, but the other companies were not notified until August 1994.
Industry observers found the delay odd, but Meridian would not offer an explanation.
The U.S. District Court for the Southern District of Illinois ruled that "Meridian did not exercise good faith in attempting to effect service within a reasonable time and prosecute the case, and therefore should not expect to benefit from the 'first to file' rule."
People who have been following the proceedings are puzzled as to why Meridian targeted the oil rebate cards in the first place.
According to Visa and MasterCard, many more of their members than just Associates National, which issues the Unocal card, and Chemical Bank, which issues the Shell Oil card, appear to be violating the patent. Meridian claims it has exclusive rights to credit rebates electronically to cardholders' statements. San Francisco-based Visa cited at least seven examples of card products that it said predated Meridian's patent and used various forms of electronic crediting.
Nevertheless, the courts have not thrown out the cases. Attorneys representing the various companies expect the consolidated case to come to trial in mid-1996.