Eye on Litigation: LevelUp’s Patent Fight; New York AG Targets Northern Leasing

Mobile payment and marketing provider LevelUp is continuing its fight against a rival over an alleged patent infringement and the New York Attorney General has filed suit against Northern Leasing Systems Inc. alleging deceptive business practices.

In 2015, Boston-based LevelUp’s parent company, SCVNGR Inc., filed suit in U.S. District Court for the Eastern District of Texas against DailyGobble Inc., a New York City-based app developer that does business as Relevant, alleging patent infringement.

Specifically, LevelUp said Relevant wrongfully used a payment method in its app that had been patented by Seth Priebatsch, who goes by the title “chief ninja” at LevelUp. The method enables payment and offer redemption in one scan of a bar code.

In January, Judge K. Nicole Mitchell found in LevelUp’s favor and ordered Relevant to “cease and desist from making, using, selling, or offering to sell products and services” that infringe on the LevelUp patent. She also ordered Relevant to pay $30,000 in damages to LevelUp.

“Relevant refused to comply with the injunction and continues to offer the infringing app for Le Pain Quotidien Inc.,” Brian Carroll, LevelUp general counsel, tells Digital Transactions News via email. Le Pain Quotidien is a New York-based restaurant chain that is not named as a defendant.

That prompted LevelUp to file a motion for contempt later in January. Now, LevelUp is awaiting an April 22 deadline for Relevant to respond. Following that filing, the court will hold a hearing on the contempt allegation, Carroll says.

LevelUp filed a second patent-infringement lawsuit against Relevant March 18 in U.S. District Court for the District of Rhode Island that involves a client that switched from LevelUp’s service to Relevant’s. It alleges infringement of another LevelUp patent that governs transactional data at the point of sale.

Relevant is not commenting on the matter. “As much as I would like to in this case, unfortunately, our policy is to not comment on pending legal matters,” Hao Ni, an attorney representing Relevant at Ni, Wang & Massand PLLC, says via email.

In a separate legal matter, the New York State Attorney General’s office filed suit Wednesday against Northern Leasing Systems Inc., a New York-based point-of-sale equipment leasing company, alleging the company used fraudulent and deceptive business practices

Specifically, the suit claims that Northern Leasing “trapped small businesses into never-ending lease agreements for over-priced credit card processing equipment and abused the judicial process by suing to collect on these leases in the Civil Court of the City of New York, regardless of whether the debt is fraudulent, the claim is timely, or legitimate efforts to terminate the lease were ignored.”

Northern Leasing would not comment on the litigation. “Northern Leasing Systems has always prided itself on the fairness of its business practices and the open dialogue it fosters and maintains with its customers and financial partners,” Cortes E. DeRussy, director of special projects, says in an email to Digital Transactions News.