Apple, Visa face lawsuit

A small Boston company, founded by the inventor of a popular corporate encryption technology called RSA SecurID, sued Apple and Visa on Sunday, arguing that the Apple Pay digital payment technology violates its patents.

The lawsuit, filed by Universal Secure Registry in U.S. District Court in Delaware, says that CEO Kenneth Weiss received 13 patents for authentication systems that use a smartphone, biometric identification such as a fingerprint and the generation of secure one-time tokens to conduct financial transactions.

In the suit and in an interview, Weiss said he had extensive meetings in 2010 with Visa officials, including its chief executive at the time, to discuss working together on the technology. In the interview, he said that Visa had signed a 10-year nondisclosure agreement to gain access to the technology and assigned engineers to fully understand the details, but then dropped further communication without securing a license.

Weiss said he also wrote to Apple at the same time seeking to license his technology, but the iPhone maker never responded.

Three years later, Visa began work on the Apple Pay technology with Apple, MasterCard and American Express. Apple released Apple Pay to iPhone users in 2014.

Although Apple has heavily promoted Apple Pay as an alternative to paying with a credit card, it has not gained popularity with consumers or merchants. Users enroll a credit card on their phone, then touch a finger to the iPhone’s Touch ID sensor to pay a merchant who has installed a wireless terminal that can receive a signal from the phone.

Universal Secure Registry did not seek a license agreement or royalties from Apple or Visa after the release of Apple Pay. Weiss said the law firm representing his company, patent specialists Quinn Emanuel Urquhart & Sullivan, advised him to file the suit first.

Apple declined to comment on the suit. Visa did not respond to a request for comment.