A BioPay-Pay By Touch Patent Tiff Takes a New Twist

A simmering patent feud between rival biometric transaction processors BioPay LLC and Pay By Touch has taken another twist with Pay By Touch's acquisition of a patent covering check-cashing services, BioPay's core business. In a news release it issued last week, Pay By Touch claimed its competitor had tried to acquire the patent itself but failed. But in an interview with Digital Transactions News, Tim Robinson, president of Herndon, Va.-based BioPay, denies the company had any interest in the patent, while arguing San Francisco-based Pay By Touch uses the threat of patent-infringement suits to steer merchants away from doing business with BioPay. In a related development, Pay By Touch says it is a few weeks away from signing up its first client for its check-cashing product. Last month, BioPay filed a lawsuit in U.S. District Court in Delaware asking the court to declare Pay By Touch's patents invalid and to further declare that BioPay's products do not infringe on those patents. Pay By Touch holds 24 issued and 12 pending patents on so-called tokenless biometric authentication for financial and loyalty transactions. “Pay By Touch is a company that is all about patents and hype, not about bringing products to the marketplace,” says Robinson, who says his company is pursuing legal action to clarify to current and prospective clients that it's safe to work with BioPay. “These guys are trying to stifle the market with patents that we are not violating,” he says. “They're telling potential clients, 'If you sign up with BioPay, we will sue you.'” For its part, Pay By Touch says that while it stresses its patent ownership in the marketplace as a means of proving its validity as a processor, it does not bully merchants. “We don't go around saying we're going to sue BioPay or [potential BioPay] clients,” says Shannon Riordan, director of marketing at Pay By Touch. Sparking the most recent round of charges and counter-charges was a press release issued Jan. 28 by Pay By Touch announcing its acquisition of an issued patent (USPTO number 6,278,397) and another pending application (serial number 335649), both covering check-cashing services, from Biometric Payments Systems, Atlanta, for an undisclosed sum. The release then refers to BioPay by name, mentioning its legal action, stating the company had tried to buy the patent, and adding that it filed its suit after Pay By Touch acquired the patent. “It's completely untrue we tried to acquire that patent,” says Robinson. “We never made an offer for it.” BioPay, which has no issued patents but does have 29 pending, is “not playing the patent card,” he says. BioPay filed its suit Jan. 18. “I understand they did try to acquire the patent,” says Pay By Touch's Riordan, who would not comment further. She says Pay By Touch has never “formally accused” BioPay of patent infringement. “We've not made any decision whether or not they infringe on what we do,” she says. Pay By Touch only recently entered the check-cashing segment of the market for biometrically secured transactions by striking a deal with Certegy Inc., a St. Petersburg, Fla.-based check-verification processor (Digital Transactions News, Jan. 19). Riordan says an unnamed grocery chain in the Midwest will be the company's first client for the service. The supermarket will start with a multi-store deployment, she says. Pay By Touch currently handles in-lane card and automated clearing house transactions secured by mathematically derived templates of consumers' fingerprints. Its largest deployment is with Piggly Wiggly Carolina Co., a Charleston, S.C.-based supermarket chain that is rolling out the service to all 85 of its stores. BioPay uses fingerprint technology to secure check-cashing and ACH-based payment services at more than 1,000 merchant locations, including those of Bi-Lo LLC and Marsh Supermarkets Inc. Last year Pay By Touch prevailed in a suit brought against it by a former employee who claimed ownership of 15 of the Pay By Touch patents (Digital Transactions News, June 1, 2004).