E-Pass allowed to continue patent case against Palm

An appeals court judge Wednesday overturned a lower court’s ruling that handheld devices from Palm did not infringe on a patent held by E-Pass Technologies, clearing the way for the resumption of litigation between E-Pass and Palm, Microsoft and HP.

The case involves a patent held by E-Pass that covers a portable device that can store credit cards and documents electronically, as well as conduct transactions, said Stephen Weiss, an attorney with Moses & Singer in New York representing E-Pass. E-Pass believes that PDAs made by Palm and HP infringe upon that patent, he said.

E-Pass, based in McLean, Va., first filed a lawsuit against 3Com, Palm’s former parent company, in February 2000.

Judge D. Lowell Jensen of the U.S. District Court for the Northern District of California granted Palm’s request for summary judgement in August 2002, but E-Pass appealed that decision to the U.S. Federal Court of Appeals for the Federal Circuit.

With Wednesday’s decision, the appeals court decided that the Judge Jensen erroneously concluded that Palm devices did not infringe upon E-Pass’ patent because the PDAs were larger than a credit card.

The device at issue is an “electronic multi-function card,” which was described as about the size of a standard credit card in the patent. Since PDAs are much larger than a credit card, the literal standard of patent infringement did not apply to Palm’s products, Judge Jensen concluded.

The appeals court ruled that the patent holder was only suggesting a type of electronic multifunction card, not specifying the size of the device, according to a copy of the ruling. Since the E-Pass patent was meant to cover an electronic device that would replace the wallet, E-Pass is now referring to the infringing devices as wallet-sized, Weiss said.

The Palm case now returns to the discovery phase, where it ended when the California court granted Palm’s request for summary judgment. E-Pass will also resume litigation that had been stayed pending the appeals court’s decision against the former Compaq, now a part of HP, Weiss said.

E-Pass is seeking damages and an injunction against Palm and HP PDAs, as well as any wallet-sized device that can store credit card numbers and make purchases, Weiss said.

A Palm spokeswoman downplayed the decision, saying it was only a small step in an ongoing case.

Grant Gross of the IDG News Service, contributed to this report.