Apple, Visa sued for alleged patent infringement over Apple Pay

Dive Brief:

Universal Secure Registry, a small Massachusetts-based tech company, has filed a federal lawsuit in Wilmington, DE against Apple and Visa, alleging that Apple Pay infringes on four patents won by USR CEO Kenneth Weiss several years ago, according to a press release from USR.
Weiss, realizing the potential value of his patents, sought several years ago to meet both companies to potentially establish partnerships around the technology, according to the press release. The lawsuit itself further states "during the meeting with Visa, USR made detailed presentations of the patented technology under protection of a non-disclosure agreement." No partnership occurred between USR and Visa, but Visa later collaborated with Apple on Apple Pay, the lawsuit alleges.
At the center of the lawsuit is security technology, specifically biometric authentication, which is used to authenticate mobile payments on a user’s smartphone. Neither Apple or Visa responded to requests for comment on the lawsuit from Bloomberg.

Dive Insight:

Apple is no stranger to patent infringement lawsuits, but not many (if any at all) have centered around Apple Pay. This lawsuit comes as Apple Pay is starting to show significant growth, with Apple CEO Tim Cook recently saying that Apple Pay transactions surged more than 450% over the last year.

That presents Apple Pay as an increasingly large target for any company that believes its has a claim — or can make a claim — on the various technology components involved in Apple Pay. What's a little strange about this particular claim is that Apple apparently never met with or had business dealings with USR. Rather, USR is implying that key technology innovations were passed from Visa to Apple.

Biometric security technology is beginning to move front and center in retail payment security as everyone, consumers included, looks for better ways of protecting private payment data in a world of increasing security threats. Apple was a big supporter early on, and its fingerprint authentication for payments has proven to be a differentiator that mobile payments competitors still haven't quite caught up with.

It will be interesting to see what happens with this lawsuit, if it makes it to court, ends in settlement or perhaps goes another route. News of USR's lawsuit happened to come the same week that the U.S. Supreme Court made a long-awaited landmark ruling that likely will reduce the frequency of patent lawsuits by stating that defendants only can be subject to infringement lawsuits in the states in which they are incorporated. USR filed its lawsuit in Delaware, but Apple is incorporated in California.

It's unclear what happens next, but if USR finds a way to advance its lawsuit in court, it could become a thorn in Apple's side at a time when Apple Pay continues to dominate mobile payments.