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” “Demand waiting for product to be released from overseas banks...over 1.5 bln bank industry cards issued around the world and over 300 mln in United States...violates patent filed in us in 1999. SMME did not register patent around the world, only applied for in US...found Visa and MA to introduce chip cards in US and new it would be in violation of patent. V and MA basically blew us off. Found a lawyer, a tremendously good lawyer, probably the best hired gun that we could have hired, experience with IBM and Intel, based in California. Two markman hearings, one hearing to federal court of appeal in Washington...V and MA have failed in attempting to have case through out. Invalidity has been thrown out by court...contactless cards have an RFID chip in them. Court ruled patent did not cover contactless cards, but at the same time ruled it did cover contact cards. First Markman hearing: our patent does cover contact cards. OUR PATENT DOES COVER CONTACT CARDS.” Appeals court overruled lower court on networks and gave broad interpretation of network that does cover ATM and POS machines. Two main points: V & MA issue card with chip on it that when inserted into a reader accesses a network. Transcripts: even in last handling, judge dismissed out of hand their attempt to have another hearing before him. Dec 3 judge handed out bench ruling with no need for hearing and that he is not going to change previous rulings, case is proceeding, abide by discovery...V & MA have filed a motion to exclude SMME and CEO from viewing commercially sensitive information. Would allow patent attorney to view it. Court has handed down a ruling that their motion to exclude is not accepted (Dec 3). V & MA now filed second motion with same argument with no new arguments or facts. Believe that 500 to 1000 pages are being withheld and that a lot has to do with their marketing plans and network operations. V & MA have sent 25k pages of information, which has been reviewed. There is enough information from their own internal paperwork to prove infringement. Particularly from how their network operates. Nothing on prior art. They have not been able to present any patents or prior art that would be able to invalidate. Jury trial in September of this year. Once discovery is completed on SMME's part they can case in a more detailed manner. Using info given by V & MA to turn around and basically pin them by it. They also have expert witnesses and other facts. The most damning facts are what they are finding in discovery processes. Damages, exactly how much...they have not publicly stated any dollar figures as yet. 100Mm and more is where there head s. In their view it is willful and egregious violation of our patent. Courts are there to protect inventors. USPTO takes 4 to 5 years investigating a patent application. Up to V and MA to turn around and disprove USPTO. They have not even been able to do that with the court in the past two years. Use of patent for contactless cards is foregone. Contactless card market in Europe is 5% maximum. USPTO reexam and stay? Difference from previous trial that was appealed? Cash burn? “We do not need to raise funds for the legal costs...legal costs are being covered from outside the company so we can take this to the supreme court.” Regarding the patent infringement lawsuit, at this time is your intellectual property specifically being asserted against EMV cards? Visa reportedly has said 20 to 60% of cards in North America will be EMV in 2015. MasterCards M/Chip appears to infringe from this uninformed layperson's perspective. Answer: “Yes it does.” expect 1 mln to 5mln unit sales on medical keyright product which has been endorsed by Don Imus. Appeals court made a ruling and sent it back to the lower Federal District for continuation of the hearing. Jones Day for defense may have intimidated new Judge Olguin. Smartmetric says it is wilful infringement. They did present 50 cases of what they said was prior art...we have gone through all of them...a lot were already considered
by the PTO before they granted us our patent...they do not conflict with out patent. Regarding the possibility of an injunction and leverage: “Yes big leverage. Ill give you a hypothetical...what would it be worth to say American Express or Dinners to advertise that it is the only card that can be used around the world.... that is if we give them an exclusive license and lock out Visa and MasterCard You said during the presentation that the patent is valid in the USA? So Visa and MasterCard's technology could be used throughout the world, just not here in that hypothetical example? True, but the USA is the largest card market. Also If a transaction is taking place in London but it connects to say the Visa network in anyway in the USA it ifringes in our opinion. A dual interface card may also infringe, correct? Yes a dual interface card does infringe. From our study of hour their networks operate...... contacless cards default to contact if in the first attempt to read the contactless it fails and we haven't even talked about the Smart Phone NFC market...all I will say is that this is bigger than just visa and mastercard. A technology such as MasterCard's PayPass that the company describes as entirely contactless would not infringe. If it doesnt have a chip that is read on insertion into a reader then it doesnt fall within the patent. at least the areas /claims in the patent that we are currently suing on. Our patent has other claims but i wont go into them at the moment SmartMetric: pay pass SmartMetric: even in the USA.... pay pass/contactless transactions are less than 5% of the total card transactiion market...also the banks put transaction limits on the use of wireless cards SmartMetric: it was $25 it is now $50 the reason why contactless has transaction limits is because it is the least safe way of transaction SmartMetric: its easy to pick up card data that is sent wirlessly Sou Seeker: A perhaps related issue is the willingness of merchants to upgrade to EMV technology. Visa and MasterCard are offering incentives and liability shifting arrangements to help them deal with the costs. SmartMetric: visa have mandated that all atm and retail reading machines have to be able to accept contact cards....... or there will be a liability shift...... no such mandate has been made for contactless cards SmartMetric: the liability shift is not to help them to change it is using a big stick to force them to change. They are saying, if you dont have chip reading machines then you are liable for any fraud in the transaction Sou Seeker: Is there any resource you can recommend for obtaining public records regarding the ongoing trial? SmartMetric: by the way most if not all of the retail reading machines sold over the last 5 years are chip ready... all they need is a software update that can be done remotely Sou Seeker: That is what I though, use the PACER system. It is likely what I will be doing over the next several days. Thank you so much for your time and good luck. Personally, it is not easy to decide whether to invest right away. JoeNatural: slap that ask SmartMetric: well I appreciate your time. I respect everyones decisions Sou Seeker: From your web site it is evident that you have a competing product. SmartMetric: tell me the competing product SmartMetric: please Sou Seeker: Your own cards. Not necessarily the biometric fingerprint reader. SmartMetric: ahhh well SmartMetric: Visa argued to the court in their last filling that yes they viewed SmartMetric as a competitor SmartMetric: we do not have or intend to have none fingerprint reading cards Sou Seeker: I have in my notes, taken from the video on your web site, if correctly remembered that SmartMetric's business is security from, and protection against, identity theft.
yes, our cards protect against ID theft the cards only work after a match with the users fingerprint is made SmartMetric: we will be also have our cards used as access control and identity cards SmartMetric: there are more than just the financial sector that is open for the use of our cards SmartMetric: we have even been approached by a national government that is looking at using our cards as national id cards T-R1_: Meanwhile TTNP going for another HOD SmartMetric: another government looking at using our cards for drivers licenses Sou Seeker: Personally the only thing I tend to use cards for is financial transactions. SmartMetric: well dont be surprised to see in the future a health insurance card with our technology SmartMetric: but heck stockm0n: meanwhile APPA high of the day SmartMetric: the financial market is just so huge you do the math
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