Two developers of handset-based prepaid technology are headed to court over alleged patent and trademark infringement.
Telemac Corp. has filed a complaint in U.S. District Court in Oakland, Calif., against Topp Telecom Inc. of Miami, charging the company with patent and trademark infringement and unfair competition.
“We have a broad patent on debit technology. Based on our analysis, several of their components [in their prepaid handset] violate the patent,” said a Telemac spokesman.
Topp President and Chief Executive Officer E.J. Pollak said his company “plans to vigorously defend Telemac’s alleged claim and aggressively pursue its counterclaim against Telemac.”
Topp has denied all material allegations of the complaint and has filed a counterclaim seeking a declaratory judgment that Telemac’s patent is invalid.
Telemac says it was the first to develop a switch-independent prepaid accounting and billing solution that is embedded directly into the handset. It has an exclusive license with Philips Consumer Communications to incorporate the prepaid technology, trademarked Telemac’s Debit Technology, into all wireless handsets manufactured by Philips. The U.S. Department of Commerce approved Telemac’s patent in December 1996.
Topp introduced last year its own handset with built-in debit technology, the TracFone, designed for quick retail sale. The phones are sold in more than 5,000 retail locations throughout the United States, including more than 3,000 Radio Shack stores, said the company. Topp resells airtime from cellular carriers and says it will have coverage in all U.S. cellular markets within two months.
