Associates First Capital Corp. has settled out of court with a marketer that claimed the Ford unit had violated a processing patent.
The marketing company, Meridian Enterprises Corp., is also suing and being countersued by Visa U.S.A., MasterCard International, Chase Manhattan Bank, and Shell Oil Co.
Meridian sued Dallas-based Associates in 1994, charging patent infringement in the processing of rebates in its cobranded program with Union Oil Co.
Though the parties would not disclose the terms of the settlement, legal observers believe that Associates agreed to pay Meridian royalty fees.
"At some point you have to examine the cost of litigation and how long it is going to go on," said Anita Boomstein of Hughes, Hubbard & Reed in New York.
St. Louis-based Meridian claimed its patent covers a process by which rebates are credited to cardholders' accounts electronically, with points that translate into dollars.
It charged that the Associates/Unocal program-and those for Visa and MasterCard cards offered by Chase and Shell-violate the 1991 patent.
A spokesman for Associates said processing in its 1% rebated program with Unocal did not change as a result of the agreement.
Michael L. Fraser, vice president of Meridian, said, "We settled to avoid the inconvenience and cost of continued litigation. We are pleased with the settlement."
The out-of-court settlement was reached late last year, and the presiding judge dismissed the lawsuits earlier this year.
The Unocal program offers cardholders a 1% rebate up to $100 on all purchases made with the card. The rebate is given as a credit on the monthly statement against purchases from Unocal service stations.
The other lawsuits involving the Meridian patent are expected to lumber on in pretrial discovery through the middle of this year, said an attorney for Visa. The case is proceeding in the U.S. District Court in New Jersey.
A verdict in Meridian's favor could be costly for banks and discourage them from offering the popular cobranded programs that give cardholders rebates on their statements.