NPP Australia is preparing to launch court action against Controlabill unless its directors stop airing claims that the NPP’s soon-to-be-launched mandated payments service infringes patents owned by the Sydney fintech.
NPPA chief executive Adrian Lovney warned Controlabill directors in a letter sent on 30 September that his organisation was poised to initiate proceedings in the Federal Court seeking injunctions and revocation of Controlabill’s patents.
Copies of Lovney’s letter and an attached draft statement of claim were made public by the Australian Competition Tribunal, which next month is scheduled to assess whether Controlabill can challenge the Australian Competition and Consumer Commission’s September decision to approve NPPA’s merger with Eftpos and BPay.
Lovney’s letter was submitted to the tribunal as evidence by Controlabill which believes the NPPA’s mandated payments service known as “Pay To” will copy or breach its patents.
In the draft statement of claim attached to Lovney’s letter, the NPPA asserts that Controlabill is “unjustified” in claiming that its patents have been infringed.
“NPPA now demands that you immediately cease and desist from making any further unjustified threats (in) relation to infringement by NPPA of any patents owned by Controlabill,” Lovney tells Controlabill directors in the letter.
“If you continue to make unjustified threats against NPPA, we may, without further notice to you, commence proceedings against Controlabill seeking a declaration that the threats made by Controlabill are unjustified, an injunction to restrain Controlabill from making further unjustified threats and damages under section 128 of Patents Act.
“Enclosed is a draft Originating Application and Statement of Claim that NPPA has prepared to this end.”
The legal battle between the parties appears to be developing into a high stakes contest that could potentially lead to delays in the merger of the three domestic payments schemes and stall the rollout of NPPA’s Pay To platform.
In an affidavit lodged with the tribunal, Controlabill director Gavan Farley stated that loans and investments he made in the company would be impossible to recover if the merger proceeded because Controlabill’s shareholders would be disadvantaged.
“Controlabill since registering as an Australian Company in early 2006 has invested hundreds of thousands of dollars in developing intellectual property and securing patents around payment authorities/mandates, management, bill smoothing, bill payments and budgeting,” he stated in the affidavit.
“Controlabill has net liabilities of more than $300,000 and accumulated losses of more than $600,000.
“The merger will remove any opportunity of achieving income to offset these losses and repay shareholders and directors their direct contributions, let alone any potential for growth in value for their money, time and patience.”
Farley also stated that most of the major shareholders of the NPPA, BPay and Eftpos had received detailed briefings on Contralabill’s intellectual property under non-disclosure agreements between 2006 and 2019.
The NPPA declined to comment on the letter sent to Controlabill directors in September and on the draft statement of claim that is earmarked to be filed with the Federal Court’s NSW registry.
However, a NPP spokesperson rejected allegations that the soon-to-be-launched mandated payments service infringed Controlabill’s patents.
“NPPA have responded in detail to the many letters, unjustified threats