Visa 2007 Annual Report Download - page 67

Table of Contents
Intellectual Property Litigation
Starpay
On May 8, 2003, Starpay.com, LLC and VIMachine, Inc., which we refer to collectively as Starpay, sued Visa U.S.A. and Visa International in the U.S.
District Court for the Northern District of Texas. Starpay alleged that Visa U.S.A. and Visa International used information provided to it by Starpay in 2000 to
create Verified by Visa and to file a Visa patent application on the technology underlying the "Verified by Visa" product, and that Verified by Visa infringed
U.S. Patent 5,903,878, entitled Method and Apparatus for Electronic Commerce, or the 878 patent.
The original Complaint alleged four causes of action: (1) infringement of the 878 patent; (2) breach of implied and written nondisclosure agreements
covering Starpay's discussions with Visa U.S.A. and Visa International; (3) "fraud on the Patent Office" through the filing of a patent application for an
invention that Visa U.S.A. and Visa International allegedly took from Starpay; and (4) a claim under 35 U.S.C. § 291 that the Visa patent application
interfered with the 878 patent. On July 25, 2003, Starpay filed an Amended Complaint, dropping the third and fourth causes of action, but raising two new
ones in their place: unfair competition under California's Business and Professions Code §§ 17200 et seq. and misappropriation of trade secrets under
California's Uniform Trade Secrets Act. On August 25, 2003, Visa U.S.A. and Visa International moved to dismiss three of Starpay's causes of action. On
February 10, 2004, the District Court Judge dismissed the second claim under the statute of limitations and the third claim as preempted by federal patent law.
On February 23, 2004, Visa U.S.A. and Visa International answered Starpay's remaining causes of action—infringement of the 878 patent and
misappropriation of trade secrets—and filed a counterclaim for a declaratory judgment that Visa U.S.A. and Visa International are not infringing the 878
patent and/or that the 878 patent is invalid. On March 16, 2004, Starpay filed its answer to Visa U.S.A. and Visa International's counterclaim.
The Magistrate Judge held hearings on the issue of the construction of various claims of the 878 patent in October and November 2004 and in
November 2005. On January 19, 2006, the Magistrate Judge issued a Report and Recommendation making findings and recommendations. In February 2006,
the parties filed their respective objections to the Report with the District Court Judge. On September 10, 2007, the District Court issued an order resolving
the parties' various objections and finalized the claim construction. The court has set a schedule that calls for the completion of discovery by April 18, 2008
and the filing of any dispositive motions by May 16, 2008. No trial date has been set.
Cryptography Research
Visa International is a defendant in litigation filed in the North District of California by Cryptography Research, Inc., or CRI. CRI has asserted causes
of action against Visa International for breach of contract, misrepresentation, breach of fiduciary duties, infringement of eight U.S. patents and violation of
U.S. and California competition laws. These causes of action are based upon CRI's allegations that Visa International has improperly used, or induced others
to use, technology allegedly developed by CRI for securing "Smart Cards" against attacks designed to discover secret information, such as the secret key for
performing cryptographic operations. In particular, CRI alleges that Visa International is and, at least since 1998, has been improperly using countermeasures
to Differential Power Analysis, or DPA, attacks that were developed by CRI and which CRI claims to own exclusively.
CRI's original complaint was filed on September 29, 2004, asserting claims for breach of contract, misrepresentation and for infringement of U.S.
patent nos. 6,298,442, 6,304,658, 6,654,884, 6,327,661, 6,510,518, 6,381,699, 6,278,783 and 6,539,092, the Patents in Suit. In response to Visa International's
motion to dismiss, the court ordered CRI to file an amended complaint more specifically identifying its claims and the bases therefor.
On March 7, 2005, CRI filed an amended complaint identifying claims for breach of contract, misrepresentation, fraud in the inducement and
infringement of the eight Patents in Suit. The breach of contract,
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