Bloomberg News

Gap Wins Alexsam Patent Trial in Texas Over Prepaid Gift Cards

June 28, 2013

Gap Inc. (GPS:US) didn’t infringe a Texas company’s patents for prepaid gift cards, a U.S. jury said today in the second case this month in which a retailer fended off royalty demands from the licensing company.

The jury in Marshall, Texas, rebuffed Alexsam Inc.’s request for $34.5 million in damages. San Francisco-based Gap, the largest U.S. specialty apparel retailer, claimed it didn’t use the technology and the jury agreed.

Closely held Alexsam owns patents that cover systems to activate and recharge stored-value cards, and has claimed it’s entitled to royalties on every gift card sold. The retailers joined together to try to invalidate the patents. A jury sided with Alexsam in May, setting the stage for a series of trials on the different non-infringement arguments.

Best Buy Co. settled before trial. Barnes & Noble Inc. (BKS:US) won a non-infringement ruling from a different Marshall jury on June 7 in which Alexsam sought more than $72 million. Trials against McDonald’s Corp. (MCD:US), JC Penney Co. and Toys “R” Us Inc. are scheduled for October, said Alan Fisch of Fisch Hoffman Sigler in Washington, who represented Gap and Barnes & Noble at their trials.

Though it’s reached a number of settlements, Alexsam has had less luck in courts.

It won a $9 million verdict against IDT Corp. (IDT:US) that overturned by an appeals court in May. In 2011, Pier 1 Imports Inc. (PIR:US) won a case in which Alexsam was seeking $26.1 million in damages. Alexsam’s appeal in that case is pending.

The case is Alexsam Inc. v. The Gap Inc., 12-4, U.S. District Court for the Eastern District of Texas (Marshall).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net.

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net.


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Companies Mentioned

  • GPS
    (Gap Inc/The)
    • $40.07 USD
    • -0.09
    • -0.22%
  • BKS
    (Barnes & Noble Inc)
    • $22.43 USD
    • 0.18
    • 0.8%
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