Gas discount plan inventor sues Giant Eagle over patent rights
By Kim Leonard
Published: Monday, February 4, 2013, 6:14 p.m.
Updated: Monday, February 4, 2013
A Dallas technology company is suing supermarket operator Giant Eagle Inc. over sales of up to $1 billion tied to the retailer's popular fuelperks! gas discount program, claiming the grocer infringed on its patents.
Excentus Corp., which said it provided software to run the fuelperks! gas and grocery cross-marketing program, claims in a lawsuit filed on Friday in U.S. District Court in Pittsburgh that the grocery chain never obtained a license to use its technology despite a decade-long business relationship.
Giant Eagle spokesman Dick Roberts said the claims are similar to those Excentus made in a suit filed in Texas, which a judge dismissed on jurisdictional grounds. Excentus attorney Jeremy A. Mercer couldn't be reached for comment.
“We believe that the recent claims are wholly without merit, and our expectation is that they will be dismissed in this instance as well,” Roberts said.
O'Hara-based Giant Eagle on Monday confirmed that it stopped offering free diabetes prescription medications and antibiotics in mid-January at in-store pharmacies, citing rising drug costs.
Giant Eagle said it made the “difficult but necessary” move to put the more than 300 drugs it had offered at no charge onto its list of $4 or $10 generic drugs.
Since 2009, 3.2 million customers used the program.
Giant Eagle intends to end its foodperks! grocery savings plan tied to fuel purchases on Feb. 13. On Monday, it began offering customers 3 cents a gallon off fuel purchased when they scan Advantage Cards at GetGo gasoline pumps. The discount won't apply if the customer is redeeming fuelperks! rewards.
With 230 supermarkets and more than 180 GetGo fuel and convenience stores, Giant Eagle is Western Pennsylvania's leading grocer. It reported sales of $9.9 billion for the year ended June 30, triple the company's $3.3 billion for 2002.
The lawsuit said Giant Eagle began talking to Excentus in 2001 about a gas loyalty rewards program and “was so impressed with the Excentus technology and future plans” that it became one of Excentus' largest shareholders after investments in 2004 and 2005.
David Shapira, Giant Eagle's executive chairman, and Daniel Shapira, one of the owners of the privately held company, joined the Excentus board. Giant Eagle “committed to support Excentus' current and future business and plans,” the lawsuit said.
The relationship deteriorated when Giant Eagle didn't share information, including details about its growing gift card sales tied to fuelperks!, the lawsuit claims. By 2008, Giant Eagle's sales of other retailers' gift cards, promoted through fuelperks!, reached $500 million to $1 billion, Excentus said.
The grocery chain wouldn't make fuelperks! part of Excentus' planned nationwide coalition to give shoppers incentives to earn fuel discounts.
“While continuing to use the Excentus patents without a license,” the company said, “Giant Eagle also threatened to form its own coalition through use of its gift card sales” to compete with Excentus' plan.
The Shapiras, as directors of Excentus, breached their duties of loyalty and good faith, the lawsuit said. It asks that the court force the company and the Shapiras to turn over profit earned as a result.
Shop 'n Save, which has about 100 stores in the region, uses Excentus technology for the fuel portion of its PumpPerks loyalty program.
Giant Eagle said its 10-cent-per-gallon fuel discounts for every $50 spent on grocery and other purchases won't change. It said the foodperks! program required an estimated 4 million Advantage Card customers to do more planning and about 92 percent of them saved less than $40 over the preceding 12 months.
In grocery retailing, “There is always price competition,” retail expert Burt P. Flickinger III said. “What some of the leading regional retailers are moving to is more of an everyday low-price strategy,” such as Shoprite stores, which overlap with Giant Eagle in some regions.
Giant Eagle continues to expand. It opened discount supermarket Good Cents Grocery + More in November in Ross, next door to a competing Bottom Dollar Food store, and said it would rebrand its Valu King stores elsewhere to the Good Cents name.
Kim Leonard is a staff writer for Trib Total Media. She can be reached at 412-380-5606 or email@example.com.
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