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Jury tells Wells Fargo to pay USAA $200m over cheque imaging patent infringement

A Texas jury has found that Wells Fargo wilfully infringed on remote deposit capture patents held by USAA, awarding the online military bank $200 million in damages.

USAA filed suit in Texas last June, alleging Wells Fargo Mobile Deposit infringed on certain of its patents related to mobile cheque capture.

USAA holds around 50 patents connected to its technology that lets members deposit cheques by scanning them with mobile phones, and in 2017 began asking banks for licensing fees.

After Wells Fargo failed to license the technology, USAA went to court, resulting in this week's $200 million award.

USAA filed a separate suit for additional patents related to the mobile remote deposit process against Wells in August 2018. That case is scheduled for trial in January.

Regarding other cases, USAA says it "continues to seek opportunities to create reasonable and mutually beneficial licensing agreements with banks and credit unions".

Nathan McKinley, VP, corporate development, USAA, says: "We hope the industry acknowledges this verdict as further evidence of the enforceability of these patents.

"Our goal is to be reasonably compensated for the benefits we believe the industry has received from using USAA’s pioneering efforts."

Wells Fargo tells Texas Public Radio that it "strongly disagrees" with the verdict. The bank licenses its remote capture system from Mitek Systems, which was embroiled in its own legal battle with USSA.

In 2012 USAA filed suit claiming that Mitek stole its trade secrets and technology when developing its remote mobile deposit capture system. Mitek in turn pursued the bank for alleged patent infringement before a settlement in 2014.

Wells Fargo tells Texas Public Radio: "We believe this is an industry issue involving numerous other banks that license remote mobile deposit technology from the same vendor, not USAA."

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Editorial | what does this mean?

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

Comments: (4)

Russell Bell - Fastbase Ltd - Wellington 08 November, 2019, 03:20

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In the 2014 settlement between USAA and Mitek they agreed both companies' patents would remain intact, neither side paid the other. Each party agreed to dismiss its remaining claims against the other under the settlement agreement.

Perhaps that's why USAA are pursuing Mitek's customers (e.g. Wells Fargo) because to go after Mitek directly would by a breach of the settlement agreement.

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Chandrashekar Gopalarao - Infosys Technologies Ltd - Bangalore 08 November, 2019, 04:30

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Trying to get my head around this 'logic'. A owns some property. B steals it. A & B get to an understanding that it's ok for B to keep the stolen property. B in turn sells part of the property to X, Y & Z. A sues X, Y & Z because he can't sue B. Fantastic 'logic'!

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Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 08 November, 2019, 15:34

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@RussellBell:

TY for sharing the details of the USAA-Mitek settlement, which makes it easier to understand this lawsuit / settlement.

I'm no lawyer but just as Google has made everybody an expert, binge watching SUITS has made me bold enough to predict the next episode in this legal thriller:

If Wells Fargo's lawyers were smart enough to insert an indemnity clause in their agreement with Mitek, WF will simply pass on the $200M bill to Mitek to pay (and Mitek will likely file Chapter 11). If not, WF will cough up the $200M fine on its own and treat it as a rounding error on the billions of fines it has already paid up for other legal infractions!

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Russell Bell - Fastbase Ltd - Wellington 10 November, 2019, 20:09

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If USAA had believed a court would support their claim that the technology was "stolen property" they wouldn't have settled with Mitek on those terms in 2014. Why they changed their view and why a jury has backed them now is a mystery.

To my mind these patents are indefensible for the same reason so many other software patents are; the claimed invention was obvious, trivial, lacking novelty or any inventive step. But courts are ill-equipped to grapple with software patents and the outcome of such battles is often a function of the financial muscle wielded by the parties.

Permitting legal attack on a competitors' end customer (rather than the competitor themself) seems very peculiar. Perhaps Wells Fargo are a soft target now, on the ropes battered by a long list of scandals, but even if they don't deserve much of our sympathy this is a poor precedent.