Maxim Inc., a semiconductor manufacturer based in Sunnyvale, California, has filed separate patent infringement actions against Starbucks, Expedia Inc., Capital One Financial Corp. and Bank of the West claiming that their mobile payment applications for smartphones infringe on four patents held by Maxim.  The suits were filed in federal court in East Texas.  The complaints can be found here: Starbucks, Expedia Inc., Capital One Financial Corp. and Bank of the West.

The inventions described in the patents seem to encompass activities inherent to any mobile payments program, including mobile wallets, regardless of the handset type or mobile operating system used. For example, U.S. Patent No. 5,940,510 (issued August 17, 1999) and U.S. Patent No. 5,949,880 (issued September 7, 1999) (both patents are entitled “Transfer of Valuable Information Between a Secure Module and Another Module”) claim system and method patents and describe the inventions as: an apparatus, system and method for communicating a cash equivalent electronically to and from a portable module.  The portable module can be used as a cash equivalent when buying products and services in the market place. . . . The present invention comprises a portable module that can communicate to a secure module via a microprocessor based device.  The portable module can be carried by a consumer, filled with electronic money at an add-money station, and be debited by a merchant when a product or service is purchased by the consumer.  As a result of a purchase, the merchant’s cash drawer will indicate an increase in cash value.

The other two patents at issue, U.S. Patent No. 6,105,013 (entitled “Method, Apparatus, System, and Firmware for Secure Transactions,” issued August 15, 2000) and U.S. Patent No. 6,237,095 (entitled “Apparatus for Transfer of Secure Information Between a Data Carrying Module and an Electronic Device,” issued May 22, 2001), claim inventions covering the encryption of payment information and the transmission and receipt of the encrypted information. The sweeping reach of the suit is shown by the various applications Maxim alleges infringe the above patents.

  • The Starbucks mobile payment app employs a simple barcode linked to a prepaid account and read by scanners at the point of sale to make purchases at Starbucks locations.
  • The Expedia Hotels app allows customers to pinpoint, research and pay for a hotel room in only four taps.
  • The Capital One and Bank of the West mobile banking apps allow customers to check balances, pay bills or make payments, and find ATMs and branches.

Mobile wallets and associated payment products as well as mobile banking products are increasingly ubiquitous and offered by some of the biggest firms in technology, financial services, and telecommunications, including Google, Amazon, Apple, PayPal, Citibank, American Express, Visa, MasterCard, Verizon Wireless, AT&T, and T-Mobile.  We can therefore expect Maxim’s claims and the progress of this lawsuit to be closely watched.