InComm v. Blackhawk patent dispute heats up

Prepaid card aggregator and Safeway Inc. subsidiary Blackhawk Network reported that a patent owned by e2Interactive Inc. and Interactive Communications International Inc. (commonly known as the prepaid card distributor InComm) was being reexamined at the United States Patent and Trademark Office.

U.S. Patent No. 7,578,439 (the '439 patent), filed in March 2007 and granted in August 2009, involves a method for activating, deactivating, reloading and redeeming stored-value cards at the POS. In October 2009, InComm filed a patent infringement lawsuit against Blackhawk in the United States District Court Western District of Wisconsin.

The lawsuit claims that Blackhawk, through the operation of its Gift Card Mall, is infringing on InComm's patent. The lawsuit said that despite knowledge of InComm's patent, Blackhawk continues to operate the Gift Card Mall, thereby "irreparably" injuring InComm.

According to the lawsuit, InComm is seeking a jury trial to stop Blackhawk from infringing on the '439 patent. the Atlanta-based distributor also wants compensation from Blackhawk for damages caused to InComm by Blackhawk's patent infringement. InComm said a trial is scheduled for December 2011.

Neither company was available for comment at press time. Prepaid industry experts contacted for this article declined to comment due to conflicts of interest. But in a statement, InComm said the USPTO's decision to reexamine the patent is "neither a decision on the merits of the '439 patent's validity, nor is it unusual or significant" since the USPTO grants patent reexaminations when requested 95 percent of the time.

Blackhawk and InComm are the two leading distributors/aggregators of prepaid cards, such as gift, game and phone cards. Through its Gift Card Mall, Blackhawk is connected to 80,000 retail locations worldwide and offers its products and services to over 165 million consumers weekly. InComm provides prepaid cards to over 200,000 retail locations worldwide and processed almost $10 billion in retail sales transactions in 2009.

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