Kroger, Excentus End Fuel-Price 'Rollback' Suit

Three-year patent dispute surrounding loyalty discounting concept ends in settlement

Angel Abcede, Senior Editor/Tobacco, CSP

Excentus Kroger

CINCINNATI & DALLAS -- While the ramifications have yet to emerge, grocery chain The Kroger Cos. and loyalty provider Excentus Corp. agreed to a settlement Tuesday in a patent infringement lawsuit tied to the popular fuel "rollback" rewards concept, according to court documents obtained by CSP Daily News.

Resolving a legal dispute that began in 2010, the agreement was a hairpin turnaround, since just last week a joint settlement apparently fell apart. As previously reported, a settlement appeared within reach as the two agreed back on March 28 of this year to dismiss the original lawsuit. That agreement was contingent on a 120-day period in which either party could have, "upon due cause," reopened the case.

That deal fell apart as a federal judge, in a court document filed on July 23, vacated the March dismissal and reinstated the original case--four days shy of 120 days.

As reported in a Raymond James/CSP Daily News Flash, the court documents filed in the U.S. District Court, Southern District of Ohio, Western Division, said all claims and counter claims between both Kroger and Excentus "are hereby dismissed without prejudice consistent with the terms of the settlement agreement between the parties."

The agreement seems to be on solid ground, since nothing in the document notes a waiting period.

Attorneys for both Cincinnati-based Kroger and Dallas-based Excentus did not return calls to CSP Daily News by press time, but both companies released statements.

"We are pleased to put this litigation behind us, and look forward to continuing to offer our customers exciting and valuable loyalty programs of all kinds, including fuel discounts," said Kroger spokesperson Keith Dailey.

"We are glad to have been able to work with Kroger to execute an agreement that works for both of us," said Dickson Perry, founder  and CEO of Excentus. "Our plan is to work with others who want to reward their customers with fuel discounts to avoid disruptive and costly litigation for their companies as we protect the assets of Excentus."

Not everyone was as optimistic going forward. "[The settlement] builds precedent and will make future disputes harder to resolve," said a source within the c-store loyalty arena. "It's a very sad day for U.S. c-stores."

That source spoke to CSP Daily News on condition of anonymity, as did a second source connected to convenience retail and loyalty. That second source said litigation creates an atmosphere "of uncertainty and dread" among retailers examining their loyalty options.

This is not the first such case in which Excentus filed suit against other parties for allegedly violating its patents. In 2009, Excentus sued Pleasanton, Calif.-based Safeway Inc. That suit was settled in 2010.

Then in the spring of last year, Excentus filed a patent infringement suit against a number of companies, including Tulsa, Okla.-based QuikTrip. That case is still in litigation, with many of the parties involved filing countersuits late last year. QuikTrip officials declined to comment on the case when asked to earlier this month.

Another defendant in that lawsuit, Virginia Beach, Va.-based Midax Inc., a loyalty provider, did choose to comment publicly. In a statement released this month, Jim Nevill, president of Midax, called the Excentus patents "invalid," saying, "we know that significant prior art exists, and we firmly believe that evidence should invalidate each of the Excentus patents."

Much of that "prior art" or existing technology or processes "goes back to the 1980s," Nevill said. "In some cases more than 10 years before the first Excentus patent was even filed. In our opinion, it's unfathomable that the patents [were] ever issued in the first place."

Excetus replied with a statement of its own: "The U.S. Patent Office, Excentus and those who have licensed our patents believe that the Excentus fuel loyalty patents are valid. Statements by others accused of infringing these patents to the contrary, such as those recently made by Midax, are common. It is unfortunate that an accused infringer has made statements in the press as opposed to in a court proceeding supported by the clear and convincing evidence required by law to challenge a validly issued patent claim," said Stacey Smotherman, senior vice president and general counsel for Excentus in a statement provided to CSP Daily News.

With the settlement of the Kroger-Excentus case, little is resolved, as court documents did not disclose the terms of the settlement, nor expound upon any of the claims made in the Excentus-related lawsuits--for the most part. Excentus did claim a measure of victory in October of last year, saying the judge in the Kroger case issued a "claim construction order," which Excentus said was "favorable to Excentus for key terms in dispute."

The Excentus claim still stands in contradiction to counter-claims made in the Midax lawsuit, however, which now with the Kroger settlement a done deal, continues the established murkiness around the increasingly popular offer of price rollbacks at the pump.

On its website, Excentus describes itself as providing promotional programs and services using price-rollback discounts at the pump as a consumer reward. Through its patented Fuel Rewards systems and methods, its growing Fuel Rewards Network program provides members with the opportunity to earn free fuel by purchasing goods and services at more than 1,000 retail locations, the company said. To date, Excentus has reached more than 10 million consumers, saving them "hundreds of millions of dollars" on fuel. In addition, Excentus licenses various uses of its patent portfolio and delivers private-label fuel discount programs through its business unit, Centego II LLC. The privately held Excentus was founded in 1996.

Angel Abcede, CSP/Winsight By Angel Abcede, Senior Editor/Tobacco, CSP
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