Patent trial against Best Buy, other retail giants underway in Marshall

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Posted: Tuesday, April 30, 2013 4:00 am | Updated: 7:46 am, Tue Apr 30, 2013.

by Robin Y. Richardson ryrichardson@news-journal.com

MARSHALL — A patent infringement lawsuit began in U.S. District Court on Monday, pitting a small company against some of the nation’s largest retailers including Best Buy, Home Depot, McDonald’s, Toys “R” Us and The Gap.

Attorneys for Robert Dorf, founder of Alexsam, has filed suit against the retailers for infringement claims in two of his patents related to pre-paid electronic gift card programs.

Defendants named in the suit include: Best Buy Co. Inc., Best Buy Stores LP, Barnes & Noble Inc., Barnes & Noble Marketing Services Corp., The Gap Inc., Direct Consumer Services LLC, The Home Depot Inc., Home Depot Incentives Inc., McDonald’s Corp., P2W Inc., NFP, Toys “R” Us Inc., and TRU-SVC LLC.

In opening arguments Dorf’s attorney, Steven Schroer, told jurors his client Monday, “We’ve got one man who has entered a race and wins the race against the biggest processing company in the world, and that’s why they want to take away the property.”

Schroer said swiping credit cards in a machine in order for a transaction to be approved has been around since the ’70s or earlier. However, he said, Dorf created a way to secure pre-paid cards until they are sold and used.

“What didn’t exist before Mr. Dorf was a means of selling those cards in a secure way. When he started researching the business in ’93, ’94, there were pre-paid phone cards out there but they were sitting in the shelf or in a warehouse somewhere and they were pre-activated, ready to use. So, what Mr. Dorf recognized was that the means was needed to keep those cards (safe) so they wouldn’t work until they were actually sold, and he thought of a way to do that, at the point of sale,” the attorney said.

“What Mr. Dorf did that no one else had ever done was that he figured out that you could put a VIN on the back of one of these pre-paid cards which would send it to the banking network to his special computer where it would then be routed to a place that will activate it … and send the signal back,” the attorney said. “So, his invention was not these little pieces one at a time. He made a system that had multiple elements, putting a VIN on the back of the card, running it through a network of computers, running it through a special computer to a terminal (in order to) activate it, a pre-paid card – no one else had ever done it.”

Defense attorneys argued that Dorf took the ideas from World Dial, a company that he worked for as a salesman.

“He’s not the original or first,” Alan M. Fisch said. “He’s also not the sole inventor. He’s a man with no technical background and no computer knowledge.”

The trial will continue today beginning at 1:30 p.m.