Jury Rules No Gift Card Patent Infringement by Barnes & Noble

California – Barnes & Noble Inc. scored a big win in federal court June 7th when a jury found that it did not infringe on gift card technology developed by Alexsam Inc. This is first of many upcoming trials related to claims of patent infringement brought by Alexsam against other large retailers.

The lawsuit, filed in federal court in the Eastern District of Texas, alleged that Barnes & Noble developed technology for gift card activation that had already been patented by Alexsam in U.S. Patent Nos. 6,000,608 and 6,189,787. Alexsam sought $72 million in damages from Barnes & Noble for the infringement.

First brought in 2010, this lawsuit originally named seven major retailers as defendants. In January, a judge ruled that the cases against each defendant should be pursued individually. Companies named in the lawsuit include Best Buy Co. Inc., Toys R Us Inc., The Gap Inc., J.C. Penney Co. Inc. Home Depot USA Inc., and McDonald’s Corp.

The jury in this case sided with Barnes & Noble, agreeing that the gift card activation technology developed by the major bookseller was substantively different than that invented by Alexsam, and that there was no patent infringement.

However, the court’s decision was not as sweeping as the major retailer defendants would have liked. U.S. District Court Judge Michael Schneider rejected the argument brought by all of the defendants collectively that the patents held by Alexsam should be deemed unenforceable due to inequitable conduct. Defendants argued that Alexsam lied to the U.S. Patent and Trademark Office in 2010 when its patent was under review by not disclosing previous inventions that predated Alexsam’s creation. Judge Schneider was unconvinced, denying the claim based on lack of convincing evidence.

Barnes & Noble’s case was the first of the lawsuits brought by Alexsam to reach trial. This judgment marks the first victory amongst the companies facing patent infringement claims. The next case set to see trial is against The Gap, scheduled to start June 24. Best Buy struck a settlement deal with Alexsam in May.

Alexsam has previously had success in defending its patents for gift card technology. In May, it won a verdict against telecommunications company IDT Corporation for violation of patents ‘608 and ‘787. The jury in that case awarded almost $10 million in damages to Alexsam.