(CN) – Gift cards issued by Visa, MasterCard, American Express and others do not infringe on a company’s patented method for donating “excess cash” to charities and savings accounts, the Federal Circuit ruled.
Dr. Bertram Burke, a retired psychoanalyst, came up with an automatic donation system to solve the problem of what to do with loose change after a retail purchase.
His company, Every Penny Counts, accused various businesses of violating his patents by selling gift cards, because the cards involve a means of “loading value onto accounts at a point-of-sale terminal.”
The district court ruled for the defendants, and the federal appeals court affirmed.
The decisions hinged on the definition of “excess cash.” The courts adopted the defendants’ definition of “an amount selected by the payor beyond the total amount due at the point of sale.”
Every Penny Counts admitted that it could not prove infringement under this definition.
It tried to convince the court that “excess cash” meant “an amount … offered in excess of the sale price of merchandise,” but tweaked the traditional interpretation of “sale price.”
“According to EPC, the ‘sale price’ of a $50 gift card may be as low as $0,” Judge Cudahy explained, “because the merchant does not typically account for transactions involving gift cards as ‘sales’ until the gift card is redeemed.
“EPC offered no evidence in support of its proposed interpretation of ‘sale price,’ or of accounting practice with respect to gift card transactions,” Cudahy added. “Instead, EPC’s attorney simply asserted that this is how merchants understand the phrase ‘sale price.'”
The court affirmed two final judgments for the defendants.