SMS Alerts Over Credit Card Transactions? Patented! Visa Sued

from the innovation-at-risk dept

Mon, Mar 2nd 2009 3:43pm — Mike Masnick

Let's say you were an engineer at a major credit card company like Visa, and put in charge of watching over new technologies, and thinking about ways that you could make the credit card process better and more secure for card holders. It probably wouldn't take you all that long to come up with a variety of useful measures for checking to make sure certain transactions were legit -- such as alerting cardholders to transactions via SMS. That's nothing particular special or unique, but it's a nice obvious addition, thanks to the fact that SMS text messaging has now become popular. So, you go ahead and implement it... and promptly get sued by some small company that claims a patent on the "invention" of alerting cardholders of transactions by SMS. I'm sure the angry patent system defenders will be quick to show up in the comments claiming that Visa "stole" this "invention," but I'm having a really difficult time understanding how you can support innovation and allow this sort of result to happen.

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Filed Under: credit cards, patents, sms alerts
Companies: cnsc, visa

44 Comments

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D L, 2 Mar 2009 @ 4:15pm

Seems to me
The patent office should just stop accepting patents on ideas/methods that aren't integrated into a product. If they aren't going to do that, I'm going to go patent receiving an alert of a transaction by MMS, complete with restrictions on the pictures of the statements that can be sent. If only judges would start throwing out these kinds of lawsuits.
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Matt, 2 Mar 2009 @ 4:18pm

hmmm
when is intel going to flex the patent they have on suing for patents?

I'd love to see that one.
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Bill W, 2 Mar 2009 @ 4:19pm

Doesn't pass the sniff test
Hmmm, need to communicate ... phone call? already in place ... email? already in place ... AH! SMS! good idea. It's simply the choice of medium. There isn't even any innovation going on here for crying out loud! A clearly OBVIOUS route to ANY practitioner in the "art" ... sheesh!
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ChimpBush McHitlerBurton, 2 Mar 2009 @ 4:20pm

WTF??
I guess I should go out right now and get a "patent" on sending your customers an invoice in the mail. Apparently communication with your customers is something that can be "invented".

These scum should be rounded up and shot. I'm sorry, it's just beyond the pale.
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John, 2 Mar 2009 @ 4:29pm

Amazing
Just wait until the patent that covers alerting anyone of anything over SMS, actually I think that i just found the patent i made where i invented the act of commenting on content of a website. Pleae everyone take down cease and desist, and im going to start sueing everyone with a blog!
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Pjerky, 2 Mar 2009 @ 4:39pm

Patent type dump!
This is one of those times where I say we should just kill patents on the use of something AND make it so that software process patents should have the source code patented, not the process itself. That way if more than 60% of the code is different then the lawsuit is automatically dropped. The ambiguity of current patent law is absolutely appalling.

Patents should only apply to inventions, products, and complex chemistry. It should not apply to concepts such as driving a car or one-click payment systems. It would be like me getting a patent on a handshake an trying to charge people every time they shook someones hand. I also think that if someone can prove that another person/organization came up with something that was patented before another party actually got the patent then the third party patent is automatically revoked.
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D L, 2 Mar 2009 @ 4:45pm

Re: Patent type dump!
Yes, yes, 1000x yes.
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Weird Harold, 2 Mar 2009 @ 5:08pm

Rare situation where I agree with you. Overly broad patents, or patents for common uses should never be issued.

Sort of like Amazon's "one click purchase" thing. A patent on something that is obvious and common, not unique.
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Anonymous Coward, 2 Mar 2009 @ 5:32pm

Re: hmmm
It's Haliburton, bud.
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Bill Brobeck, 2 Mar 2009 @ 5:42pm

Work together to make the patented idea evolve
I have a business method patent for a credit card. It’s called the energy credit card and it allows building owners to be truly zero energy & zero carbon footprint. Innovative, you bet and I'm proud to have it patented. Will it be successful, I hope so. But making it successful will depend on many other factors that will add value to my business proposition.

In other words if you have any kind of patent, use or you might loose it.

To learn more go to http://www.bigsuccess.tv/watch/?contestant=163
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Anonymous Coward, 2 Mar 2009 @ 5:57pm

Hey, I'm all for this. In fact, one of my ancestors has a patent on sending notification long distance via messenger service. It's true... He wrote the message on a piece of papyrus at the direction of the pharaohs. So I'm suing everybody that writes stuff down to give to someone else. I'll charge $15 a page for them to use that technology...

Start paying up.
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OldGeek, 2 Mar 2009 @ 6:00pm

Interesting
What's real interesting is when you Google the company name nothing shows up but news articles about the lawsuit, they don't even have a website. Next up, if you Google their names, for Ivan Ochoa all you find is about a Venezuelan baseball shortstop. The other name, Daniel Davila comes up with stuff about a movie director. Kinda makes you wonder where these guys came from doesn't it??
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ChurchHatesTucker (profile), 2 Mar 2009 @ 6:05pm

It's the free money bunny!
Dibs on Twitter!
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Death to Lawyers, 2 Mar 2009 @ 6:50pm

Death to Lawyers
They are EVIL!!!
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Anonymous Coward, 2 Mar 2009 @ 7:12pm

Re: Work together to make the patented idea evolve
Dear Mr. Shameless Self Promotion,

Thanks, but no thanks.
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Anonymous Coward, 2 Mar 2009 @ 7:19pm

Re: Work together to make the patented idea evolve
LOL, can't even spell "lose" right. FAIL
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Igor, 2 Mar 2009 @ 8:26pm

Whatever. This patent does not stand a chance on re-exam anymore.
This make a good story, but practically-speaking for VISA, this law suite does not matter. These days, such business method patents have no chance at reexamination (I'm sure VISA will appeal to USPTO). In fact, this patent is very weak, because it immediately fails the recent obviousness test: it involves only a few parts (a credit card transaction & sms message) and there are only a small finite number of parts one can chose to apply to the problem of notifying he customers quickly: phone call, sms, mms, email, snail mail. So the court will say that "anyone skilled in the art would easily go through the possible combinations of parts and could select sms -- too obvious".

So, I'd say that VISA may settle for something less then the cost of the lawyers fee it would have to pay to go through the reexamination. That is not much for VISA at all.

All of it is so, if the patent is as simple as you are describing, of course...
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Ryan, 2 Mar 2009 @ 10:33pm

Re: Whatever. This patent does not stand a chance on re-exam anymore.
Why should VISA have to settle? And more importantly, other businesses without VISA's funds would not shake it off so easily. That any money could be made off VISA whatsoever in this instance is appalling. It seems rather callous to shake this off as a lawsuit that may be settled for relatively little money, as opposed to yet another obvious example of why the patent system needs reform to avoid these sorts of incidents altogether.
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Anonymous Coward, 3 Mar 2009 @ 12:14am

I think part of the problem is there are simply too many ideas patented now for anyone to (at effective cost) do solid patent research before approving this sort of patent.

The application should be billed the costs of proving this is good enough to patent. The USPTO should get to do that research on the applicant's dollar before approving or denying these things.

It would cut down on the total garbage patents like this one. It is clear that a patent like this cannot hold up to the basic obviousness tests, and its also clear the patent holder did not attempt to make their idea marketable and get a product out there. It should be thrown out immediately, but more importantly it should have never been issued in the first place.

We need the patent applicant to be responsible for proving their idea is valid, meets the rules, and there is no prior work. They cannot do that in a trustworthy fashion, so we should bill them for the cost of that investigation. You want the rights to an idea? Pay for getting the rights to them all to yourself.
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Worldwide Credit Cards, 3 Mar 2009 @ 1:57am

Not Clever
With the increase in credit cards fraud, alerting cardholders to transactions via SMS is such a smart move.

In fact, it should be made as standard for all credit card issuers.

This will not only minimize the cardholders risk, but the credit card issuers as well.

Perhaps someone is taking it too far in the name of patented protection.
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Gary Loffler, 3 Mar 2009 @ 3:29am

Not sure if I am in trouble or innovative
Our network fax software sends out e-mail notifications of certain problems. A while ago I changed my e-mail address to my cell phone's text message address. So now I get error messages sent to my phone. These could include messages that someone without an account has tried to send a fax.

Does this violate someone's patent? If you already have an e-mail system in place sending a text message instead only requires a change of address, sending plain text instead of html and limiting the characters to around 120. How can a functionality that is already built into most systems not be obvious? What happens if I give my bank my text address instead as my regular e-mail address? Is my bank violating this patent? Am I?
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mobiGeek, 3 Mar 2009 @ 7:19am

Re: Work together to make the patented idea evolve
Oh, this is so concerning....

Your "unique" idea is taking an existing, well-known technology (solar panels), and an existing implementation (metered private feeds to the energy grid), wrapping it with a common business tool (reward/discount program), and backing it with some simplistic accounting.

Yes, there are several moving parts, but I don't see how any of this is "unique". There are several business models that are close to what you are discussing (rewards/discount programs tied to metered usage of something). You simply have merged this with a different meter-able asset.

Different idea from existing? Yes.

Patentably unique? Absolutely not. Sorry. And having a patent doesn't make the idea patentably unique...just another breakdown of our patent system.
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moelarry, 3 Mar 2009 @ 7:19am

after
it's much easier to invent after the fact, plus often claims are not as broad as laypersons like you think. you only own what your claims clearly recite. often times that's more limited than the broad teaching of the full specification. first, you have to understand the claims.
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Yakko Warner, 3 Mar 2009 @ 7:42am

Re: Not Clever
Not when I have to pay 20¢ for every SMS message I receive. I might as well go back to using cash.
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Kirk, 3 Mar 2009 @ 8:29am

Settling lawsuits
Visa might be tempted to settle, considering the relative costs. However, it seem to me that the industry should fight the suit collectively, either in attempting to have the patent revoked, or defending a lawsuit. The cost of legal services would be spread among those who have an interest in the case. The problem is that the individual companies don't see a need to act until they are sued. The industry should take action now. I don't know to what extent any of that would be legal, but it makes sense. Settling just passes the problem to the next poor schmuck to get sued.
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MidwestIP, 3 Mar 2009 @ 9:54am

Has anyone here actually read this patent? I haven't so I'm not prepared to say it is clearly obvious, or that these guys are evil, or whatever the phrase of the day is on this site. Couldn't it be that these guys filed this application when SMS was in its infancy, such that it wouldn't have been obvious to use it in this way? Is that impossible? Now it is, yes. That's not how patent applications are examined, though. I guess what I'm getting at is this - leave the patent analysis to people that actually work in the field.
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Anonymous Coward, 3 Mar 2009 @ 11:17am

Re: Not sure if I am in trouble or innovative
Is my bank violating this patent? Am I?

Of course you are! Now, be a good corporate subject and pay up. Don't make them unleash the lawyers on you.
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Anonymous Coward, 3 Mar 2009 @ 11:22am

Re:
Appeal to reason about specifications, prior art, claim interpretation, file wrappers, etc. are generally not well received by those who have not attempted the foregoing protocol before declaring a claimed invention as obvious and a clear demonstration of the need for significant reform, if not outright elimination of the patent laws.
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DanC, 3 Mar 2009 @ 12:54pm

Re:
I believe the patent in question may be #7357310, which was filed in 2005, and granted in 2008. source

The claims are overly simplistic, detailing nothing more than a generic transmit, authorize, notify, process method.

If this is actually the patent CNSC is suing over, there should be no problem having the patent re-examined and thrown out on obviousness.
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Anonymous Coward, 3 Mar 2009 @ 3:25pm

If this is actually the patent CNSC is suing over, there should be no problem having the patent re-examined and thrown out on obviousness.

If it as easy as you suggest, then perhaps you may be able to direct the USPTO to a specific piece/pieces of prior art that raise a substantial new question about patentability.

Until you find that art you are expressing an opinion concerning reexamination without any factual predicate.

As for the patent itself, while it may seem after the fact to be somewhat simplistic to you, opinions proferred without following the protocol at 28 above are lacking any substantial basis.
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Mike (profile), 3 Mar 2009 @ 4:09pm

Re:
If it as easy as you suggest, then perhaps you may be able to direct the USPTO to a specific piece/pieces of prior art that raise a substantial new question about patentability.

I'm so sick of patent lawyers insisting that prior art = obviousness. They are TWO SEPARATE THINGS. Any reasonable person can tell you that this concept was hardly a breakthrough non-obvious idea in 2005.
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Too old for FSO and too white for Obama Staff, 3 Mar 2009 @ 4:12pm

patent has it's rules
Being sued is a 100% possibility if you are sucessful businesswise in the US, the second ranking country is .....Ireland..go figure.
A patent as defined by US and Haya( Den Haag- Holand International tribune) Laws is a process or Academical or Mathematical definition that can be applied to business or research and bears originality and inginuety enough to be considered unique as a process, as a method or as a solution for mathematical, physics, intelectual, business situations and all other life related matters.
Just to claim that you invented an SMS alert is NOT a patent regulated invention
You must prove and your hired spezialized lawyer will guide you that you are providing a solution to one of the above situations
So patent FAKERS bring it on
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Anonymous Coward, 3 Mar 2009 @ 6:31pm

Re: Re:
Sorry to hear you are sick. I have been laboring with the flu the last couple of days. Hope this is not what you have.
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Anonymous Coward, 3 Mar 2009 @ 6:49pm

Re: Re:
Lawyers insist only that non-obviousness is governed by the relevant provision of Title 35, which provides:

"35 U.S.C. 103 Conditions for patentability; non-obvious subject matter.

(a) A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. Patentability shall not be negatived by the manner in which the invention was made."

Is this patent one that claims something obvious? There is no intellectually honest way to answer the question without following the above noted protocol to flesh out the salient facts.
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TechNoFear (profile), 3 Mar 2009 @ 9:51pm

Prior Art, I have some....
I was involved in creating an SMS system to alert online share traders of activity on their account in real time, including that a conditional trade requirement had been met.

We finished this in 2004 and it has been in production ever since.
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Igor, 4 Mar 2009 @ 3:36pm

Re: Re: Whatever. This patent does not stand a chance on re-exam anymore.
I completely agree, Ryan.

It sucks when someone sues you, when they have no pretty much case. But it has nothing to do with the patents. Rather, it is about being a successful company.

This is one of the effects of the US system. And it is not all bad -- while we'll have more frivolous suites, we'll also have more "just" suites that would had been rejected by a different system, more prone to rejecting all suites.

We should always try to improve the system, but we should never forget that it is a balancing act.
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Igor, 4 Mar 2009 @ 3:50pm

Re: Settling lawsuits
Kirk, how is it so that "Settling just passes the problem to the next poor schmuck to get sued"?

If 10 Monster companies fight the suite collectively and win, how is it a deterrent against a "poor schmuck" getting sued for something else?
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DanC, 5 Mar 2009 @ 8:46am

Re:
If it as easy as you suggest, then perhaps you may be able to direct the USPTO to a specific piece/pieces of prior art that raise a substantial new question about patentability.

To answer your question bluntly, there really should be no need for any specific piece of prior art.

The claims listed in the patent are blatantly generic, and judging by the tone of your comment, it would seem you haven't bothered to actually read it for yourself. Anyone with a passing understanding of cell phones and text messaging would quickly grasp that the process covered by this patent was obvious well before 2005, when it was filed.
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Anonymous Coward, 5 Mar 2009 @ 9:21am

Re: Re:
At this point in time reexamination requests are limited to new art in the form of publications. Find such a publication, submit a request for reexamination (either ex parte or inter parties) and what you note may prove to be true. Then again it may not. Perhaps the references cited in the body of the patent itself may already contain disclosures of what you deem particularly relevant, in which case any additional publication that merely repeats what has already been cited and considered is nothing more than cumulative and would not meet the recited standard of a publication that raises a new and substantial question concerning the patenability of one or more claims of the patent in question. This is one of the areas that is contained in the most current iteration of proposed patent reform legislation.

FYI, I did take a look at the patent and its claims, and, yes, the allowed claims are likely to raise some eyebrows. However, whether or not the patent defines a new, useful and nonobvious invention does, at a minimum, require consideration of the patent, the cited references and the file wrapper (a compendium of all proceedings before the USPTO pertaining the the application as originally filed).

In the absence of reviewing and assimilating the significance of the above information, one cannot say with any degree of certainty that a patent was wrongly issued, simply because all of the salient facts have not been considered.

An accurate characterization of this patent would be to say "It looks obvious to me, but I need to do some investigating." Anything less is intellectually dishonest.
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DanC, 6 Mar 2009 @ 12:40am

Re: Re: Re:
An accurate characterization of this patent would be to say "It looks obvious to me, but I need to do some investigating." Anything less is intellectually dishonest.

If by investigating, you mean quickly realizing that the capability to use text messaging to send automatic replies existed well before 2005, then you are correct. And before text messaging, the same process was implemented via email. The patent attempts to take an incredibly basic process, add "via text messaging", and treat it as a new, novel idea. It's really no different than the patents that tacked on "over the internet" to pre-existing concepts.

So stating that the patent covers a process that was obvious at the time of filing is not intellectually dishonest in any way.
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Stop N Text, 9 May 2009 @ 10:44pm

SMS alerts
This just makes it more difficult for us in the mobile industry to give more services
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Anonymous Coward, 15 Dec 2009 @ 2:22pm

Lots of prior art
http://www.shelteroffshore.com/index.php/offshore/more/sms_alerts_hsbc_uae/

This service has been active in India for a long time...
http://www.newswit.com/enews/2003-08-13/1419-india-centurion-bank-launches-sms-alerts/

h ttp://www.v3.co.uk/vnunet/news/2118938/uk-banks-tackle-credit-card-fraud?vnu_lt=vnu_art_related_arti cles

I don't know how can the USPTO be so stupid and grant a patent to an idea that is 3 years old!
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Ax, 12 Jul 2011 @ 12:47am

Online Purchase Text Confirmation
It is crazy that a company like paypal (for starters) would not enable a separate sign up and login for each users account where they could use alternate login/pass to register their cell phones for SMS confirmations of all online paypal purchases.

This way if your Paypal Account(and probably email account)gets hacked, hopefully your SMS login was not, enabling you a window to stop the madness.

They text could state: You have made a purchase from http://www.goodreference.biz for $49.99.

You could even add.. Reply with agree or disagree, depending on the time lag.

Paypal can charge it's customers $10 a year, and pay a licensing fee.
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Hogstrom, 25 May 2012 @ 1:32pm

Re: Seems to me
Unfortunately, innovators that lack the kind of capital to actually implement an innovative idea would be at a disadvantage. So, to a certain extent, the system favors those that have good ideas and allows them to protect the intellectual property.

I agree, that some ideas that get the patent nod are more common sense than major innovations. Not sure how to solve that. Like, 1-click buttons, patented (and implemented) by Amazon.
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