Federal Circuit backs Safeway in patent row

The US Court of Appeals for the Federal Circuit has upheld a lower court decision that said supermarket chain Safeway did not infringe a patent belonging to licensing company Kroy IP Holdings.

In a decision handed down yesterday, April 21, the court upheld a ruling by the US District Court for the Eastern District of Texas, accepting Safeway’s claim that Kroy’s patent, US number 7,054,830, was invalid.

The ‘830 patent, granted in 2006, centred on a method for providing awards online.

Kroy claimed Safeway’s ‘Just for U’ programme, which enables users to participate in online games and pick up prizes from their nearest Safeway store, infringed the patent.

Kroy sued Safeway in 2012.

Last year, the Patent Trial and Appeal Board rejected Safeway’s petition for an inter partes review to challenge the patent’s validity, prompting it to appeal to the Texas court.

Judge William Bryson, in a decision handed down in June last year, granted Safeway’s motion for summary judgment and said the patent covered ineligible subject matter.

According to Safeway, the patent was invalid because “using a computer to apply the ancient idea of incentivising a customer to buy more products does not turn a basic business method into patentable subject matter”.

Citing the US Supreme Court’s decision in Alice v CLS Bank, Bryson said: “The use of incentive award programmes in marketing is indistinguishable in principle from the kinds of financial or business operations that were at issue in Alice.”

The three-judge federal circuit panel, consisting of Judges Newman, Schall and Chen, unanimously upheld the Texas court’s ruling.

William Overend, partner at law firm Reed Smith, which represented Safeway, said the federal circuit’s decision “justifiably affirmed” the Texas court’s judgment.

He added: “Safeway developed the accused ‘Just For U’ programme for its customers and is pleased the programme has now been vindicated both at the trial court and appellate levels.”