Blackhawk Network prepaid and financial payments announced InCommâs “e2Interactiveâs” US Patent No. 7,578,439 (the â439 patent) is being reexamined by the United States Patent and Trademark Office (USPTO). In a complaint filed in the United States District Court for the Western District of Wisconsin, InComm has alleged that Blackhawk infringes the â439 patent. Blackhawk denied that it infringes and alleged in defenses and counterclaims that the â439 patent is invalid and unenforceable. On June 28, Blackhawk also requested that the USPTO reexamine the â439 patent on the grounds that the claims of the â439 patent should not have been issued and that substantial new questions existed regarding the patentability of those claims.
The American Arbitration Association has asked that a House
subcommittee make inroads to reform consumer debt collection
arbitration. AAA reports that the process surrounding consumer debt
collection arbitration needs major reform and recommended a national
policy committee to identify and research solutions. The AAA has been
working with the Domestic Policy Subcommittee to review potential
improvements in consumer debt collection arbitration procedures for some
time. The AAA placed a moratorium on the administration of any consumer
debt collection arbitration programs. The news follows the decision by
the National Arbitration Forum to exit the credit card dispute area
after a lawsuit was recently filed by the Minnesota Attorney General.
(CF Library 7/23/09)
Card producer CardXX has been awarded patents for its advanced smart
cards and has stayed its litigation against Innovatier. The awarded
patents in Singapore and Mexico are for CardXX’s encapsulation
technology for the production of
advanced smart cards, active RFID tags and other devices, and currently
has over 30 patent applications pending in a number of other countries.
CardXXâs counterclaims against Innovatier, who filed for bankruptcy
involve breach of contract, misappropriation of trade secrets, and
unenforceability of Innovatier patent and patent applications.
CardXX is exploring various alternatives to proceed with its claims
against Innovatier and
to protect against the misappropriation of its technology by Innovatier
and its partners, customers, affiliates and successors.
ATM provider Global Axcess has reached a settlement with Renaissance US Growth Investment Trust PLC fund and BFS US Special Opportunities Trust PLC fund and RENN Capital Group. Although the specific terms of the settlement are strictly confidential, there will be no additional cost to the Company, other than the retention provided in the Company’s directors and officer’s insurance policy which was previously accrued and reserved for in the 3Q of 2006. As a result of the settlement, all claims and counterclaims will be dismissed with prejudice, with each side to bear its own attorneys fees and costs.
Global Cash Access, Certegy Check Services, Game Financial and U.S. Bank’s Ultron have settled a dispute over an ATM patent. The GCA patent relates to using an ATM as both an ATM and a POS terminal for some users. The defendants had counterclaimed, asserting that GCA engaged in unfair trade practices and that its patents were not enforceable. All parties denied liability to one another. The parties have entered into a “Settlement” and “Patent License Agreement” and “Release.”
The U.S. District Court for Delaware has ordered Advanta to pay Chase Manhattan Mortgage $17.5 million plus interest. The judgment was made on September 8th and involved a 2001 lawsuit filed by Chase over its $1 billion+ acquisition of Advanta’s mortgage business. The Court rejected Chase’s claims for damages of more than $88 million plus interest, except for one contract claim against Advanta. Earlier this month, Advanta and Chase settled a 2004 claim relating to Chase’s February 2001 acquisition of Advanta’s mortgage business. Under terms of the settlement Chase agreed to pay $8.75 million to Advanta.
One week before a West Virginia trial over its credit card and collection practices, Cross Country Bank and Applied Card Systems agreed to settle with the State’s Attorney General. The $1.5 million settlement will be used to fund consumer credit education and conflict resolution programs. While both firms did not acknowledge that any of the lawsuit’s claims were valid, the settlement prohibits Cross Country and Applied from debiting customers’ bank accounts without their authorization or to engage in aggressive collection tactics. The West Virginia lawsuit was filed in March 2004 and charged that Cross Country engaged in deceptive marketing of credit cards, offering low credit limits and charging exorbitant hidden fees to consumers who already had bad credit. The suit contends that Applied Card Systems used a wide range of abusive collection practices to coerce consumers into making payments if they contested the fees or defaulted on the account. The lawsuit alleged that Applied called consumers during the night, used obscene language and threatened cardholders with arrest to collect on a credit card account. Six other lawsuits are pending with the state Attorneys General of Pennsylvania, New York, Texas, Minnesota, Wisconsin and New Hampshire. (CF Library 6/4/04; 6/25/04)
A Federal District Court in California has ruled that Teleflora cannot block local retail florists using its software from processing their credit card sales through other vendors. Florists’ Transworld Delivery (FTD) brought the action after Teleflora modified its “RTI” software in 2002 to prevent florists from using any vendor other than Teleflora for credit card processing. The Court stated that users of “RTI who are licensed to use the prior versions of the software are free to reinstall the prior versions of the software and begin clearing credit cards with vendors other than Teleflora, including FTD. FTD primarily markets floral products and services to approximately 20,000 FTD members and other retail locations in the USA.
FreeStar Technology Corporation has filed a counter claim in the
vFinance Investments lawsuit. The lawsuit seeks $54 million in damages.
Freestar has charged vFinance for using a ‘death spiral’ strategy,
violations of the federal securities laws, breach of contracts, including
over-conversion of pledged securities, market manipulation, breach of
fiduciary duty and fraud. The litigation was initiated by vFinance
Investments, Boat Basin Investors, Papell Holdings, Marc Siegel, David
Stefansky, Richard Rosenblum as the result of Chapter 7 Petition for
involuntary bankruptcy filed against FreeStar
NDS Group plc, a digital pay TV specialist, reported that it continues to
supply smart cards to DIRECTV, as part of a card replacement program, and
to other customers to support an underlying growth in subscribers of 1.4
million in the quarter. As of December 31st, there were 31.8 million
authorized cards in use. There has been growth in the UK, US Asia and
Europe, offsetting a small decline in Latin America.
During the quarter, NDS entered into a number of new contracts. NDS won two
contracts in China, one for Guizhou Province and another for Chongqing
Broadcast. For both customers, NDS will provide its full end-to-end
solutions capability, as well as “VideoGuard” conditional access,
“Streamserver” broadcast control software, “NDS Core” middleware,
electronic program guide and interactive applications. Revenues for the
fourth quarter were (pounds)57.0 million, a 2.5% increase over the same
quarter of the previous financial year.
A tiny, online firm based in San Jose, CA and Las Vegas is taking on Citigroup over a dispute with use of the ‘Citicredit’ name. Citigroup recently filed a lawsuit against the small firm claiming it owns anything with the word ‘citi’ in it. This week, CITICREDIT, Inc. filed counterclaims for trademark infringement. The counterclaims allege that Citigroup’s current use of their ‘Citicredit’ service mark has caused mass confusion and irreparable harm to their business. The firm says in Jan 1997 it registered the Citicredit name as an Internet domain name and began using it as a service mark in connection with its online mortgage lending services. In Feb 1997, the company filed to change its corporate name from California Finance and Mortgage, Inc. to Citicredit. Citigroup applied for the mark on July 14, 1999 with the USPTO.
UICI announced that United Credit National Bank (an indirect, wholly owned subsidiary of UICI) had agreed to the issuance of a Consent Order by the U.S. Office of the Comptroller of the Currency. The terms of the Consent Order will govern for the indefinite future the capitalization, funding activities, growth and operations of United Credit National Bank, a special purpose national bank headquartered in Sioux Falls, South Dakota.
The Consent Order requires the Bank within thirty days to submit to the OCC for approval a near term and three year capital plan, the terms of which will demonstrate the ability of the Bank to maintain Tier I capital at levels no less than 10% of risk weighted adjusted assets and 7% of actual adjusted total assets. The capital plan will also set forth the Bank’s plans and projections for the maintenance and sources of adequate capital in future periods.
To immediately supplement the capital of the Bank and in order to maintain combined Tier I and Tier II capital at the Bank at a level in excess of 10% of total risk-weighted assets (as disclosed in the Bank’s December 31, 1999 Call Report as currently filed with the OCC), United CreditServ, Inc. (the Bank’s direct parent and a wholly owned subsidiary of UICI) contributed $10,065,000 in cash to the capital of the Bank on February 25, 2000. The OCC is currently conducting an ongoing examination of the operations and capital adequacy of the Bank, following the previous announcement by UICI in December 1999 of significant losses in the fourth quarter of 1999 attributable to charges to the credit card loan loss reserves at the Bank.
A liquidity and capital assurances agreement, dated May 15, 1998, provides that, upon demand by the Bank, UICI will purchase certificates of deposit issued by the Bank to assure sufficient liquidity to meet the Bank’s funding demands and will contribute capital to the Bank sufficient for the Bank to comply with its stated policy of maintaining Tier I capital at a level equal to at least 10% of total risk-weighted assets and a total risk-based capital ratio of at least 12%. Total risk-based capital includes both Tier I and Tier II capital.
Under the terms of the Consent Order, the Bank is prohibited from accessing the brokered deposit market and from soliciting or accepting deposits over the Internet. The Bank had, as of February 21, 2000, voluntarily suspended soliciting or accepting brokered deposits. As of February 28, 2000, the Bank has $310 million of certificates of deposits outstanding, the majority of which are scheduled to mature over the next 12 months. At February 28, 2000, the Bank held approximately $125 million in cash, cash equivalents and short term U.S. Treasury securities.
The Consent Order requires the Bank, until further notice from the OCC, to cease all activities with American Credit Educators, Inc. (ACE) and American Fair Credit Association, Inc. (AFCA), independent marketing associations through which the Bank has marketed its credit card programs to customers with limited or impaired credit records. The Consent Order further requires the Bank, until further notice from the OCC, to cease all transactions with affiliated parties (including UICI but excluding Specialized Card Services, Inc., the servicer of the Bank’s credit card accounts), and to conduct an immediate review of all agreements with all third parties to assess whether such agreements are on terms fair and reasonable to the Bank. The Bank, in particular, has engaged PricewaterhouseCoopers LLP to independently review the terms of all agreements between the Bank and Specialized Card Services, Inc. (an indirect wholly owned subsidiary of UICI and the servicer of the Bank’s credit card accounts).
The Bank is further prohibited under the terms of the Consent Order from introducing new products or services, without accompanying policies and procedures reviewed and approved by the OCC providing for, among other things, appropriate risk management, internal control, management information and data processing systems. Under the terms of the Consent Order, the Bank is generally prohibited from increasing its assets in the future unless the OCC has approved a capital plan submitted by the Bank and the Bank is in compliance with the capital plan.
Separately, UICI announced that UICI and the Bank had been named as party defendants in separate suits filed in U.S. District Court in Colorado by American Credit Educators, Inc. (ACE) and American Fair Credit Association, Inc. (AFCA), the independent marketing associations through which the Bank formerly marketed its credit card programs. In the suits, ACE and AFCA have alleged, among other things, that UCNB has breached its marketing agreements with ACE and AFCA. ACE and AFCA are each controlled by Phillip A. Gray, the former head of UICI’s credit card operations. Neither UICI nor the Bank has yet answered the complaints. UICI believes that UICI and the Bank have significant counterclaims and meritorious defenses to the allegations, and UICI intends to vigorously pursue the counterclaims and assert those defenses.
UICI, headquartered in Dallas, Texas, is a diversified financial services company offering financial services, health administrative services and insurance through its various subsidiaries and divisions to niche consumer and institutional markets. UICI provides health insurance through its insurance subsidiaries, UGA-Association Field Services and Cornerstone Marketing of America; enrollment, billing and collection claims administration and risk management services for healthcare payors and providers through UICI Administrators; credit cards for individuals with no credit or troubled credit histories through United CreditServ; financial services and products for college, undergraduates and graduate students, including providing federally- guaranteed student loans through the Educational Finance Group; and manages blocks of life insurance and life insurance products to select markets through its OKC Division. UICI also holds a 44% interest in HealthAxis.com, Inc., a leading web-based insurance retailer providing fully integrated, end-to-end, web-enabled solutions for health insurance distribution and administration.