In a lawsuit filed in a Federal District Court in Delaware, Apple and Visa have been accused of violating four patents of Universal Secure Registry, a small Boston company, through the launch of Apple Pay. Universal Secure Registry CEO, Kenneth Weiss, received 13 patents for an authentication system that uses a smartphone’s biometric identification, such as a fingerprint, and the generation of secure one-time tokens to conduct financial transactions. Weiss claims that he “was first in the space, and the secure payment technology that he developed goes right to the core of Apple Pay.”
Universal Secure Registry is seeking unspecified damages, but as Apple Pay increases in popularity, a ruling against these companies could cause a significant loss. Universal Secure Registry is also suggesting that Apple and Visa took advantage of their efforts to describe the patented technology when pursuing partnerships with them.
In 2010, realizing the promise of Universal Secure Registry’s new patented technology, Weiss approached Apple and Visa in an attempt to partner with the companies to develop commercial implementation of the technology. Weiss reached out to both corporations with letters and meeting requests to discuss his cutting-edge technology. After they agreed to a 10-year nondisclosure agreement, Visa met with Universal Secure Registry where they were presented details of the patented technology. Visa assigned engineers to fully understand the details of the technology, but they dropped further communications with Universal Secure Registry without securing a license. Apple never responded to communication efforts from Weiss.
Three years later, Visa began to work on Apple Pay technology with Apple, MasterCard, and American Express. According to the lawsuit, Visa dedicated approximately 1,000 people to the project. Users of Apple Pay enroll a credit card on their phone and use the iPhone’s touch ID sensor to pay a merchant that has installed a wireless terminal. The terminal receives a signal from the phone, accepts the payment, and the transaction is then complete.
After the release of Apple Pay, Universal Secure Registry did not seek a license agreement or royalties from Apple or Visa because patent specialists advised the company to file the suit first. Quinn Emmanuel, who is filing the Apple Pay suit on behalf of Universal Secure Registry, also represented Samsung Electronics in some of their long-running patent litigation with Apple over software in its Android-based smartphones.
Universal Secure Registry has also tried to license its technology to larger firms without success and is now building its own device for secure wireless authentication. Weiss says his goal is to invent payment technologies that he can license to other companies. He is hopeful that he, Apple, and Visa can come to some kind of arrangement.
Apple and Visa have not commented on the suit.
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