Patent Infringement Lawsuit Over Self-Checkout App

As reported in the San Antonio Business Journal, a patent infringement lawsuit has been filed in the U.S. District Court for the Western District of Texas by a Canadian start-up that is accusing Texas-based H-E-B Grocery Co. of developing an app using unlicensed technology, breach of contract, and unfair competition.

Toronto-based Digital Retail Apps Inc. (“DRA”), the company responsible for commencing the lawsuit, sells both software and hardware for self-checkout kiosks in retail stores under the brand SelfPay. It is also the holder of multiple patents pertaining to its technology – specifically, U.S. Patent Nos. 8,720,771 and 9,934,506.

H-E-B is a privately-held supermarket company based in San Antonio that launched a self-checkout mobile app that enables customers to scan and pay for their grocery items without waiting in line for a cashier. It is this mobile app that ultimately led to the legal dispute.

DRA is alleging that H-E-B representatives witnessed a sales presentation back in 2014, after which they exchanged contact information and toyed with the idea of striking a deal for some time before H-E-B ultimately backed out. Fast-forward one year from the sales presentation to 2015, and H-E-B orders a trial kit from DRA in addition to downloading its software. Allegedly, DRA was led to believe H-E-B was interested in a potential pilot program, but the supermarket then rolled out a rival mobile application without engaging in any further discussions with DRA. A few years later, H-E-B launched its own competing product, a self-pay mobile application designed for use in its grocery stores. DRA alleges that H-E-B, by downloading its software, agreed to its license terms – those terms included restrictions around copying the software as well as patent infringement.

As reported by Winsight Grocery Business, DRA founder and inventor Wendy MacKinnon had the following to say: “It took a lot of time, skill and hard work to design these products and raise capital to make and market them. We worked with H-E-B in good faith, but their interest in our product was dishonest. They took our ideas for themselves, violating our patents and their contractual obligations to us.”

Authors: Jaclyn Tilak and Anna Condon, 2018/2019 Articling Student-at-law