Monticello Enterprises LLC v. Petco Animals Supply Stores Inc et al.

Case Overview & Background

This patent infringement litigation is an appeal to the Federal Circuit from a dispute originally filed in the Western District of Texas. The plaintiff, Monticello Enterprises LLC, is a non-practicing entity (NPE) that holds and asserts a portfolio of patents related to digital and mobile payment technologies. The defendants are Petco Animals Supply Stores Inc. and its parent, Petco Health & Wellness Company Inc., a major national retailer of pet supplies and services. This case is part of a broader litigation campaign by Monticello, which has filed similar infringement suits against other large retailers, including Starbucks and Macy's, asserting the same family of patents.

The dispute centers on Petco's use of modern payment systems that facilitate customer purchases across its various platforms, including its website, mobile app, and nearly 1,500 physical stores. Monticello alleges that Petco's acceptance of contactless payment methods like Apple Pay, Google Pay, and Samsung Pay, as well as its "Pay in 4" service offered through Klarna, infringes upon its patented technology. The six patents-in-suit generally describe systems and methods for conducting payments using mobile devices and application programming interfaces (APIs). The patents include:

• 11,468,497: System and method for receiving data at a merchant device from a user device over a wireless link.
• 11,461,828: System and method for receiving data at a merchant device from a user device over a wireless link.
• 10,121,186: System and method for in-app payments.
• 10,643,266: System and method for providing simplified in-store purchases and in-app purchases using a user-interface-based payment API.
• 9,824,408: System and method of using a browser application programming interface for making payments.
• 11,004,139: Browser payment request API.

The case's procedural journey began in the U.S. District Court for the Western District of Texas, a venue that has been notably popular for patent plaintiffs, including NPEs, due to its historically fast timelines and rules perceived as favorable to patent holders. After the district court granted summary judgment in favor of Petco, finding the patent rights were exhausted, Monticello appealed to the Federal Circuit. The case is notable for several reasons: it represents a typical large-scale NPE assertion campaign targeting the retail sector's adoption of ubiquitous third-party payment technologies. Furthermore, the litigation has run in parallel with validity challenges at the USPTO, where defensive patent aggregator Unified Patents successfully prompted the rejection of all challenged claims of the '497 patent in an ex parte reexamination, a significant development that weakened Monticello's overall position.

Key Legal Developments and Outcome

This litigation moved swiftly from filing to a dispositive judgment at the district court level, a trajectory largely dictated by a powerful defense based on patent licensing. The case is now on appeal, while the validity of one of the asserted patents has been successfully challenged in a parallel administrative proceeding.

District Court Proceedings (W.D. Texas, Case No. 6:23-cv-00761)

• 2023-11-09: Complaint Filed
  Monticello Enterprises LLC filed a patent infringement lawsuit against Petco Health & Wellness Company, Inc. and Petco Animals Supply Stores, Inc. in the U.S. District Court for the Western District of Texas. The complaint alleged that Petco's use of mobile and web-based payment systems, such as Apple Pay and Google Pay, infringed six of Monticello's patents. This case was part of a broader campaign that included similar lawsuits against Starbucks (6:23-cv-00763) and Macy's (6:23-cv-00753).

• Consolidation of Cases
  The separate lawsuits against Petco, Macy's, and Starbucks were consolidated for pre-trial purposes before Chief Judge Xavier Rodriguez. This allowed the defendants to coordinate their defense and file joint motions.

• 2024-04-18: Motion to Dismiss Hearing
  The court held a hearing on a motion to dismiss filed by the defendants. However, the parties agreed to consolidate the cases and for Monticello to amend its complaint, which rendered the pending motion moot.

• Joint Motion for Summary Judgment of Non-Infringement
  The consolidated defendants filed a joint motion for summary judgment, arguing they were protected from infringement claims by an "authorized sublicense." Their defense centered on a license agreement between Monticello and Allied Security Trust I (AST). Under this agreement, AST was permitted to grant sublicenses to its members, which included Apple, Google, and Samsung. These companies, in turn, provided the accused payment systems (Apple Pay, Google Pay, Samsung Pay) used by the defendant retailers. The defendants argued that they were authorized downstream users of this licensed technology and therefore could not be liable for infringement.

• 2026-02-27: Report and Recommendation on Summary Judgment
  Magistrate Judge Derek T. Gilliland, to whom the motion was referred, issued a Report and Recommendation (R&R) advising that the defendants' motion for summary judgment be granted. The R&R concluded that Petco and the other retailers were authorized to use the accused payment systems under the terms of the sublicenses granted to Apple, Google, and Samsung.

• 2026-03-18: Final Judgment
  Chief Judge Xavier Rodriguez adopted the Magistrate's R&R in part, granted the defendants' motion for summary judgment, and entered a final judgment dismissing all of Monticello's claims. The court's order analyzed the license agreements and found that the retailers were "Authorized Third Parties" who obtained an "Acquired Item" (the payment systems) from the initial sublicensees (Apple, Google, etc.), shielding them from infringement liability.

Appeal to the Federal Circuit (Case No. 26-1730)

• 2026-04-23: Notice of Appeal
  Following the adverse final judgment, Monticello Enterprises LLC filed a notice of appeal to the U.S. Court of Appeals for the Federal Circuit. The appeal challenges the district court's summary judgment ruling on the authorized sublicense defense. The case remains open and pending before the appellate court.

Parallel USPTO Proceedings

• 2024-04-26: Ex Parte Reexamination of '497 Patent Filed
  Unified Patents, an organization that challenges patents asserted by non-practicing entities, filed a request for ex parte reexamination of U.S. Patent No. 11,468,497, one of the patents asserted against Petco. The request challenged the validity of the patent claims based on prior art.

• 2024-06-14: Reexamination Granted
  The U.S. Patent and Trademark Office's Central Reexamination Unit (CRU) granted the request, determining that a "substantial new question of patentability" existed regarding the claims of the '497 patent.

• 2024-11-07: Final Rejection of Claims
  The CRU issued a final office action rejecting all challenged claims of the '497 patent. This finding significantly weakens Monticello's position with respect to this patent, both in the pending appeal and in any future litigation, as it indicates the patent claims are likely invalid.

Plaintiff's Counsel for Monticello Enterprises, LLC

The legal team representing Plaintiff-Appellant Monticello Enterprises, LLC consists of attorneys from the intellectual property boutique Antonelli, Harrington & Thompson LLP. This team has represented Monticello throughout the district court proceedings and now on appeal.

• Matthew J. Antonelli | Lead Counsel

  • Firm: Antonelli, Harrington & Thompson LLP (Houston, TX)
  • Experience: A founding partner of his firm, Antonelli has extensive experience in patent litigation across the country, including in popular patent venues like the Eastern District of Texas. He has handled all phases of litigation, from Markman hearings to trial, and is also a registered patent attorney with experience in USPTO reexamination proceedings.

• Zachary M. Nidecker | Counsel

  • Firm: Antonelli, Harrington & Thompson LLP (Houston, TX)
  • Experience: Nidecker's practice focuses on patent litigation. Public records show his involvement on behalf of Monticello in the underlying district court case against Petco and other retailers. (Experience details are based on district court filings as his firm's website does not provide an individual profile).

• Joseph M. Matalon | Of Counsel

  • Firm: Antonelli, Harrington & Thompson LLP (Houston, TX)
  • Experience: While sharing a name with a prominent Jamaican business executive, the attorney Joseph M. Matalon is associated with Antonelli, Harrington & Thompson and has been named in its litigation filings. Specific details regarding his patent litigation experience are not widely available in public sources.

Counsel for Defendants-Appellees Petco Animal Supplies Stores, Inc. and Petco Health & Wellness Company, Inc.

As the appeal at the Federal Circuit was filed in late April 2026, the attorneys for Petco have not yet formally filed their notice of appearance on the appellate docket (Case No. 26-1730). However, the legal team that successfully defended Petco and its co-defendants in the U.S. District Court for the Western District of Texas (Case No. 6:23-cv-00761) is expected to continue its representation.

The district court representation was led by the intellectual property group at Bartko Pavia LLP.

Lead Counsel

• Stephen C. Steinberg | Lead Counsel
  • Firm: Bartko Pavia LLP (San Francisco, CA)
  • Experience: A trial lawyer and partner, Steinberg co-chairs his firm's Intellectual Property and Privacy practices and has litigated patent cases involving web browsers, networking technologies, and mobile phone accessories.

Additional Counsel

While specific roles for the appeal are not yet confirmed, the following attorneys were integral to the district court defense for Petco and the jointly-defended parties.

• Michael G. Lorig | Counsel

  • Firm: Bartko Pavia LLP (San Francisco, CA)
  • Experience: Lorig is a seasoned intellectual property litigator with experience in patent, trade secret, and copyright cases. His patent work has spanned technologies from software to medical devices.

• Bryan P. Clark | Counsel

  • Firm: The Webb Law Firm (Pittsburgh, PA)
  • Experience: Clark's practice focuses on patent litigation and he was involved in retaining expert witnesses for the joint defense group in the district court proceedings.

• B. Russell Horton | Local Counsel

  • Firm: George, Brothers, Kincaid & Horton, LLP (Austin, TX)
  • Experience: Horton served as local counsel for the defendants in the Western District of Texas, a common role for attorneys admitted to practice in the specific district where a case is heard.