September 25, 2009 / 1:13 PM / in 8 years

UPDATE 3-Western Union wins $16.5 mln in MoneyGram lawsuit

* Jury finds money transfer systems too similar

* Lawsuit begun in 2007

* MoneyGram backed in 2008 by Thomas H. Lee, Goldman Sachs

* Shares of MoneyGram fall (Adds MoneyGram comment, updated shares)

NEW YORK, Sept 25 (Reuters) - Western Union Co (WU.N), a money transfer and payments company, said a federal jury in Texas has ordered a unit of MoneyGram International Inc MGI.N to pay it $16.5 million for patent infringement over a money transfer system.

Western Union alleged that MoneyGram Payment Systems Inc’s “FormFree” system essentially copied its own patented “Money Transfer By Phone” service. It said the systems involve the staging of money transfers through call centers and completing transactions at agent locations.

MoneyGram had argued that no reasonable jury could find patent infringement, in part citing trial testimony by a Western Union technical expert that it said showed the systems were sufficiently different.

A spokeswoman, Lynda Michielutti, said MoneyGram is disappointed with Thursday’s verdict, and is reviewing its options. “We firmly believe that the case is without merit, and we believe we have a solid basis for appeal,” she said.

    Western Union sued MoneyGram in May 2007. Western Union is based in Englewood, Colorado, and MoneyGram in Minneapolis.

    Shares of MoneyGram fell 11 cents to $2.83 in afternoon trading on the New York Stock Exchange.

    Last year, MoneyGram completed a recapitalization that included investments from private equity firm Thomas H. Lee Partners LP [THL.UL] and affiliates of Goldman Sachs Group Inc (GS.N)

    In the first six months of 2009, MoneyGram posted a net loss available to shareholders of $49.4 million, or 60 cents per share, on net revenue of $330 million.

    The case is Western Union Co v. MoneyGram International Inc, U.S. District Court, Western District of Texas (Austin), No. 07-372. (Reporting by Jonathan Stempel, editing by Dave Zimmerman and Steve Orlofsky)

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