Patent claim against McDonald’s fails to pay off
An inventor’s complaint accusing McDonald’s of infringing patented payment technology has failed to pay off, as the inventor failed to show how McDonald’s used the system.
Circuit Judge Jimmie Reyna delivered judgment in the US Court of Appeals for the Federal Circuit yesterday, March 6.
Philadelphia-based inventor William Grecia filed a patent complaint against McDonald’s in the US District Court for the Northern District of Illinois Eastern Division in February 2016. He claimed the American fast-food company infringed his proprietary payment technology.
Grecia owns US patent numbers 8,533,860 and 8,402,555, relating to an invention which facilitates verification and authentication between devices (such as a Visa payment system).
The complaint said that McDonald’s refused to license the patents, instead choosing to infringe them through use of the Visa, American Express, MasterCard, and Discover tokenisation payment technology. The first three of these companies were also sued.
Tokenisation is a new security technology which replaces account information with a unique digital identifier, called a token.
“Grecia alleged that McDonald’s directly infringed its patents every time it accepted Visa cards as a payment tool for food purchases,” Reyna explained.
Grecia sought to recover a percentage of the fees McDonald’s gives to the above payment companies as a royalty for the unauthorised use of his systems, as well as triple damages for wilful infringement.
McDonald’s moved to dismiss the claim and argued that the complaint did not demonstrate “use” of the inventions, an assertion which the district court agreed with in August 2016.
It said the McDonald’s point-of-sale devices are not a part of the invented systems claimed by Grecia and that Grecia failed to state a claim for relief.
Grecia moved for reconsideration, alleging that the court erred in its dismissal and that he had wrongly been denied leave to amend his complaint. This request was denied by the court in January 2017.
“Nowhere in the complaint” had Grecia alleged that the “point-of-sale devices are part of the claimed systems”, according to the district court. It was the responsibility of Grecia to bring that fact to the court’s attention if he sought to rely on it, it said.
In addition Grecia “failed to suggest any amendments that would save his complaint” and therefore the district court did not err in denying him the opportunity to amend the complaint.
On appeal Grecia restated his claims against McDonald’s.
Reyna confirmed that Grecia failed to “plausibly allege that McDonald’s benefits from each element of the claim system necessary to allege ‘use’”.
Grecia identified only a “vague benefit” to McDonald’s, in that it used tokens stored in metadata and associated with customer Visa account numbers for subsequent purchases. McDonald’s does not receive or store the token; Visa uses it to facilitate further transactions.
“Any benefit” associated with this therefore “rests solely with Visa”, Reyna said.
Dismissing the appeal, the court confirmed that Grecia “failed to allege that McDonald’s obtained a benefit from each and every claim element” and therefore “failed to state a claim upon which relief can be granted".
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