Lawsuit alleges USR technology at core of Apple Pay

On May 22, 2017, Universal Secure Registry LLC filed a complaint in the U.S. District Court for the District of Delaware alleging that Apple Inc., Visa Inc. and its subsidiary Visa U.S.A. Inc. infringed seminal patents for electronic payments and identity authentication integral in developing their mobile payment platforms.

Represented by Quinn Emmanuel Urquhart & Sullivan LLP, the same law firm that represented Samsung Electronics Co. Ltd. in a design patent dispute with Apple, USR holds 13 of the more than 30 U.S. patents authored by USR founder and Chief Executive Officer Kenneth Weiss, inventor of SecurID token and former CEO of Security Dynamics Technologies Inc., now RSA Security LLC.

Weiss apparently met with Apple executives in 2010, years before Apple Pay’s 2014 launch, as well as Visa executives, to develop and license commercial implementation of USR's patented technology. The patents at issue in the infringement suit include authentication systems that use a smartphone, biometric identification and secure one-time tokens to conduct transactions.

In its complaint, USR stated that "during the meeting with Visa, USR made detailed presentations of the patented technology under protection of a non-disclosure agreement." And after several attempts to strike partnerships with all parties failed, "Apple and Visa began working together on Apple Pay at least as early as January 2013, and Visa dedicated approximately 1,000 people towards the development project with Apple."

Price tag unknown

While the suit seeks unspecified damages, the scope of the infringement was outlined. In addition, the plaintiff stated that since 2014, "Apple's backend servers and Visa's payment processing network VisaNet, including Visa Token Service, have supported and processed transactions made using Apple Pay, including billions of Apple Pay transactions made in the United States."

According to the complaint, Apple CEO Tim Cook stated at the iPhone 6 launch in September 2014 that payments “is a huge business. Every day between credit and debit we spend $12 billion. That's over $4 trillion a year and that's just in the United States. And this business is comprised of over 200 million transactions a day.''

USR believes that if a jury finds that Apple and Visa's infringements were willful, up to triple damages could be awarded. The median damages award for patent infringements in 2016 hovered at $6.1 million, according to the PwC 2017 Patent Litigation Study. "USR has set forth facts in the complaint which we believe will lead to discovery that will support claims of willful infringement against both Apple and Visa," Weiss said.

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