POS Patent Holder Sues Nordstrom, Macy's and JCPenney

Card Activation Technologies, the same POS patent holder that has sued dozens of major chains and settled with many of them (including Sears, OfficeMax, TJX and McDonald's), has now sued 10 more chains for handling debit card transactions in a way that too closely follows its patent.

The new defendants are Nordstrom, JCPenney, Macy's, Lane Bryant, Blockbuster, Fashion Bug, Cabela's, Guess, Panera Bread and Starbucks. The case was filed in the United States District Court for the Western District of Missouri.

But an attorney involved in the case suggested that JCPenney, Starbucks, Panera Bread, Guess and Cabela's are actively discussing a settlement. Typically, such a settlement would involve the chain licensing the patent from Card Activation and then continuing its POS operations without change.

Mark J. Peterson, an attorney representing Card Activation, stressed that although 10 chains were being sued, only five have been served official papers.

He also indicated it was not because Card Activation hadn't gotten around to it. Peterson said more information about those chains would likely be available within a couple of weeks.

Card Activation said it has sent "almost 500" letters to various retailers threatening Patent litigation.

The case revolves around Patent 6,032,859, which was issued March 7, 2000. (See the full text of the Patent.) The process envisioned a system for debit transactions, but it is also being applied to giftcard uses. When a chain handles such transactions both in-store and online, that's where the Patent conflict crops up.