Solidus Networks, Inc. d/b/a Pay By Touch

Solidus Networks, Inc. d/b/a Pay By Touch was a privately held biometric-payments company founded in 2002 by John P. Rogers and headquartered in San Francisco. It was backed by venture and hedge-fund investors including Plainfield Asset Management, Och-Ziff (OZ Management), Farallon Capital, Highbridge, the Gordon Getty family trust and Ron Burkle, and reported raising roughly $300 million in equity and debt. Press accounts put headcount at about 700 in 2006; it is no longer operating.

Operations. Pay By Touch ran a tokenless, finger-scan authentication network at retail point of sale: enrolled consumers placed a finger on a reader to authorize a debit from a linked bank, credit or loyalty account. Ancillary lines included biometrically authenticated check cashing (BioPay Paycheck Secure), loyalty/personalized marketing (S&H greenpoints, SmartShop), and merchant card processing acquired through InterCept Payment Solutions (2004), the assets of CardSystems Solutions (2005) and IPS Solutions/iPAY (2005). The company said it held more than 50 U.S. patents.

Litigation posture. The two tracked cases show a genuine two-way dispute between operating competitors, not NPE activity: BioPay, LLC v. Solidus Networks (D. Del., Jan. 18, 2005) and Solidus Networks v. BioPay, LLC (D. Del., Feb. 15, 2005) — one defendant appearance, one plaintiff appearance. Both were filed in the District of Delaware rather than a plaintiff-friendly venue such as the Eastern District of Texas. The rivals merged in January 2006, when Pay By Touch acquired Herndon, Va.–based BioPay for $82 million in stock and cash, assuming BioPay's patent portfolio.

Context. Financial and leadership turmoil followed. Solidus Networks filed Chapter 11 in Los Angeles on Dec. 14, 2007; it discontinued biometric operations on March 19, 2008, and core assets were sold to a lender consortium, YT Acquisition Corp., with processing units sold separately.