USAA wins another remote-deposit patent victory, this time over Truist
Truist Bank has agreed to pay licensing fees to USAA for the use of mobile-check-deposit technology that USAA says it invented.
USAA has entered into a settlement and patent-licensing agreement with Truist Bank that resolves their litigation over remote deposit capture. Truist will now have to pay USAA for the right to let customers deposit checks through their phones, though the financial particulars of the arrangement weren’t disclosed.
This is USAA’s second such deal in less than two months. It signed a similar patent-licensing agreement with Discover Financial in August.
The latest settlement highlights how determined USAA is to get banks that offer mobile deposit capture to pay licensing fees for use of the technology, which it claims it invented.
“USAA remains willing to enter into mutually beneficial licensing arrangements with all banks and credit unions, regardless of their situations,” said Nathan McKinley, USAA vice president and head of corporate development.
“We continue to work with even more banks to create reasonable licensing agreements that benefit their customers,” McKinley added.
Truist Bank, a unit of Truist Financial, declined a request for an interview. “We are pleased to have this matter resolved,” a Truist spokeswoman said.
USAA sued Charlotte-based Truist in August 2022. In April, Truist tried to move the trial from the U.S. District Court for the Eastern District of Texas — a venue in Marshall, Texas, with a reputation of being friendly to patent holders and where the suit had been filed — to the U.S. District Court for the Western District of North Carolina. That request was denied.
The backstory
More than a decade ago, the imaging-technology company Mitek and USAA were partners developing mobile-check-deposit technology together. They had a business dispute, parted ways and later sued each other over the patents each had on the technology. These cases settled out of court, and terms of the agreements were not made public. Mitek went on to sign up thousands of banks to use its version of this technology. Mitek did not respond to a request for an interview or comment for this story.
In early 2017, USAA sent letters to more than 1,000 financial institutions that offer mobile check deposits, including many Mitek customers, demanding that they pay USAA licensing fees for the technology.
In June 2018, USAA filed two lawsuits against Wells Fargo (a Mitek customer) for infringement of the disputed patents in the federal court in Marshall, Texas.
It later sued PNC in December 2020 and Truist in 2022, all in the same court for the same thing.
For the most part, these cases have been going USAA’s way. In USAA’s two lawsuits against Wells Fargo, Marshall juries found Wells Fargo liable to pay $300 million. The companies reached a settlement; the full details were not disclosed.
In May 2022, a Marshall jury found PNC liable for $218 million.
USAA still faces challenges. PNC brought three USAA mobile deposit patents before the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board and got them invalidated in February of this year. This decision could be used to overturn the verdict on the earlier USAA v. PNC case. The U.S. Court of Appeals for the Federal Circuit will have to decide whether to uphold the Marshall court’s verdict or the Patent Trial and Appeal Board’s decision.
Mitek has also been fighting back. On Nov. 1, 2019, the third day of the first Wells Fargo trial, Mitek filed a complaint against USAA in U.S. District Court for the Northern District of California, seeking a declaratory judgment that Mitek and its customers have not infringed on any of USAA’s patents.
USAA successfully got Mitek’s request for a declaratory judgment moved to the Marshall, Texas, court and then dismissed by Chief District Judge Rodney Gilstrap. But Mitek appealed that decision and in May 2022, a U.S. appeals court revived Mitek’s lawsuit seeking a judgment that its mobile-check-deposit software does not violate USAA’s patent rights.
What happens next
“USAA’s license agreements with Discover and Truist almost certainly create more pressure on other banks to sign licenses with USAA as well,” said Eugene Mar, partner at Farella Braun and Martel. “You’re seeing more and more banks who have done the cost-benefit analysis of fighting versus licensing and are choosing to license.”
Robert Cote, an intellectual property attorney and founder and CEO of Cote Capital, says USAA’s legal strategy is formidable.
For one thing, the company has obtained 130 different patents for this technology.
“They’ve broken those patents up into multiple lawsuits so that they have multiple shots at the goal,” Cote said. “That’s important. It mitigates the risk that any one patent challenge or jury trial would deny their claim.”
Another wise move, in Cote’s view, is bringing these cases in the Marshall, Texas, court.
“The good thing about the Eastern District of Texas is they believe in the jury trial system and they will fix the trial date,” he said. “So you can get to trial in under a couple of years versus many other federal courts where it could take many years to get to trial, which can be a problem when it’s expensive to bring that action. Having a place you can go where there’s speedy justice, win or lose, is important.”
“If I were [USAA], I would be feeling very, very good about the future,” Cote said. “I can hear the cash register ringing.”
Still, banks could continue to challenge USAA’s patents before the U.S. Patent Office’s Patent Trial and Appeal Board, as PNC has done.
“There are patent review proceedings still ongoing that could pose a continued deterrent to converting from litigation to licensing, and building a very, very large and lucrative licensing program now on a per-check and or lump-sum basis across thousands of banks,” Cote noted.
And Mitek could still win its appeal. A court could find that Mitek and its bank customers are not infringing on USAA’s patents.
