Chase Manhattan Bank, one of many financial institutions sued by Meridian Enterprises Corp. for patents infringement, says it will not settle with the St. Louis-based marketing company.
Meridian has won settlements of a dozen similar lawsuits against credit card companies and their partners in the gasoline industry over the past two and a half years. The latest to settle were BankAmerica and Sun Co., which did so last week.
Chase, which markets a cobranded card with Shell Oil Co., does not feel pressure as a result of the other settlements, said spokesman Kenneth B. Herz.
"We are not interested in paying money we don't think we have to pay," he said.
Meridian owns the rights to a patent which it claims protects an electronic process of crediting rebates to cardholders' accounts. It has sued some of the most prominent credit card companies, including Banc One Corp., GE Capital, Visa U.S.A., and MasterCard, to defend its patent. And those companies, as well as others, have agreed to pay licensing fees to Meridian.
The terms of those agreements are confidential, so Meridian will not disclose whether companies have paid a one-time royalty fee or continuing fees based on how frequently the patented process is used.
Some patent attorneys suggested that the payments could be contingent on the outcome of any litigation involving the patent.
"There have been some cases in which people have agreed to pay as long as the patent is not thrown out of court," said Robert Loeffler, a Washington-based patent lawyer with Morrison & Foerster.
Chase may very well provide the opportunity to test the validity of Meridian's patent in court.
"We have not been able to settle our differences" with Chase and Shell, said Michael L. Fraser, vice president of Meridian. "At this point it looks like things are moving along toward a trial."
A final pre-trial meeting between Chase, Meridian, and the judge presiding over the case has been scheduled for Sept. 23.
In Meridian's favor is a court ruling from 1996 dismissing the defendants' motion for summary judgment, which would have ended the case. Shortly thereafter, a number of settlements with Meridian were reached.
Meridian is also emboldened by a July ruling by the U.S. Court of Appeals for the Federal Circuit in Washington. The case involved State Street Bank and Trust Co. and Signature Financial Group, which owns patented software used in the mutual fund business. The court ruled in favor of Signature's patent, essentially supporting the idea that software can be patented.
Meridian's counsel, Spiro Berevesko, said, "The financial services industry will have to deal with patents on a more regular basis. We feel that we have been on the forefront on these kinds of cases."