Comdata parries $10 million patent claim

Four-year ligitation by Memphis-based Fiala may not be finished

Email | Print By Milt Capps

Gary Krow

Brentwood-based Comdata Corporation's four-year effort to defend itself against patent-infringement claims brought against its Stored Value Solutions subsidiary by Memphis-based Barry J. Fiala Inc. has at least temporarily paid off, thanks to a Memphis jury that on Nov. 2 rejected Fiala's charges.

For now, the outcome of the three-week trial before U. S. District Judge Samuel H. Mays Jr. means Fiala may reap none of the more than $10 million in damages it reportedly sought from Comdata's SVS unit. At issue is alleged infringement on Fiala's approach to combining electronic-payment cards and their packaging in ways that activate accounts for prepaid gift or debit cards.

However, Fiala attorneys' comments published Monday by the IP360 news service signaled Fiala's intent to exhaust other options, including an action in the Federal Court of Appeals, in an effort to win compensation from SVS.

IP360 noted that the recent jury action not only rejected claims against Comdata, but also produced an unexpected opinion from the jury, suggesting that Fiala's patent, itself, may be invalid.

Not surprisingly, Comdata President Gary Krow was quoted in a company statement issued yesterday as saying, "Comdata is delighted with this victory."

In 2005, in the the same U.S. District Court for Western Tennessee, Fiala won a $1.3 million judgement against Card USA Inc., after Fiala sued on similar grounds of patent infringement. In 1999, Fiala settled out of court a similar lawsuit against Great Western Press Inc.

Comdata and SVS provide more than 300 customers gift cards, card production and management services, transaction processing, and loyalty programs. Comdata is a wholly owned subsidiary of Ceridian Corporation, headquartered in Minneapolis.

Comdata Senior Vice President and General Counsel Michael Sheridan and Vice President and Associate Counsel Christie Laird comprised the in-house legal team. They drew upon three law firms: Washington, D.C.-based Kay Scholer LLP and Howrey Simon Arnold & White LLP; and, Memphis-based Glankler Brown PLLC. Arrayed against Comdata for Fiala were McLean, Va.-based Morrison and Foerester LLP, and Memphis firms Martin Tate Morrow & Marston PC and Walker McKenzie & Walker PC.