(CN) – The Federal Circuit reversed a ruling that ordered MoneyGram Payment Services to pay Western Union royalty damages of $16.5 million for patent infringement.
Western Union sued in May 2007, claiming that the competitor copied its money-transfer technology. A Texas jury ruled for Western Union in September 2009, rejecting MoneyGram’s argument that the technology was “obvious.”
The Federal Circuit sided with MoneyGram on appeal, however, finding that both companies’ systems were a natural progression from a known money transfer system that was first used in 1997.
Orlandi Valuta’s Red Phone technology did not require customers to fill out forms to transfer money. Western Union developed its own formless transfer system and acquired Orlandi Valuta in 1997.
MoneyGram created its FormFree money transfer system in 2000.
Like Western Union’s patented technology, the MoneyGram system provides customers with a confirmation number that is needed to complete the transaction. MoneyGram argued, however, that it took deliberate steps to avoid infringing on Western Union’s patents.
The jury that ruled for Western Union did not agree that MoneyGram’s system developed from an obvious technology.
“Specifically, regarding the Orlandi Valuta prior art system, the court found that it did not employ an [electronic transaction fulfillment device] terminal at the retail location and did not use a code,” the appeals ruling states. “The court concluded that it would not have been obvious for a person of ordinary skill in the art to combine these two elements with the existing Orlandi Valuta system”.
Writing for a three-member circuit panel, Judge Alan Lourie rejected the lower court’s ruling and said MoneyGram could appeal the obviousness issue.
“On the merits, MoneyGram argues that the claimed invention simply takes a known prior art system and adds obvious elements, such as the use of an off-the-shelf keypad to access transaction information,” Lourie wrote. “According to MoneyGram, the patented invention simply replaced the fax machine in the Orlandi Valuta system with an off-the-shelf keypad – a well-known device in the art.”
Western Union had claimed its patents built new, core concepts on top of the Orlandi Valuta system, but Lourie said the inventions were predictable.