Money & the Law: USAA racks up victories in patent fight Business

It’s unusual to see large financial services companies resolving disputes they have with each other through litigation. That’s because, as lawyers who do commercial litigation will tell you, such litigation is a high-stakes form of gambling involving unpredictable outcomes. This is especially true if a jury is to decide a case.

None of this, however, has discouraged United States Automobile Association (USAA) from suing other financial services companies it believes have infringed on patents it claims to own involving “remote deposit technology.”

That technology allows you to deposit a check using your cellphone and your bank’s mobile device app.

Using your phone, you take a photo of the front of the check and, after endorsing the check, a photo of the back. You then touch an icon on your phone and, voila, your check is deposited into your account. After that, you will have no further use for the original check and you can tuck it away in a file, shred it or feed it to goats.

USAA asserts it “created mobile deposit capture technology,” and a few years back sued Wells Fargo in federal court in Texas claiming infringement of its remote deposit patents. This resulted in two jury verdicts in USAA’s favor, awarding it damages totaling a tick over $3 million.

USAA also sued PNC Bank in another Texas federal court claiming patent infringement; this month, it obtained another jury verdict in its favor. This time, the damage award is $218 million and, since the jury decided PNC’s actions were intentional, the judge handling the case has authority to increase the damage award. Although overturning a jury verdict is always an uphill climb, PNC, in keeping with tradition, says it will appeal the decision.

In any event, the lawyers involved in this case would seem to have gainful employment for the next couple of years. In the afterglow of these legal victories, USAA has said it is open to licensing other companies to use its patents. It just wants to be “reasonably compensated” for its investment in this technology.

In another remote deposit legal action, a company called Mitek Systems has brought a preemptive-strike lawsuit against USAA in a California federal court. In this lawsuit, Mitek seeks a determination that its remote deposit technology does not infringe on USAA’s patents and it can safely continue to market its product.

Backing up a step, patent law is intended to encourage and reward inventions. It does this by giving a patent holder, for a limited time, a monopoly on whatever invention the patent covers. The tests for obtaining a patent involve novelty and usefulness, and the invention must be something that is not obvious. New technology frequently gets divided up into multiple slices, each of which may be eligible for patent protection. So, in this instance, USAA doesn’t claim to own the whole idea of ​​remote check deposits. But it does claim to own patents covering how parts of remote deposit technology work when built into a smartphone app.

Also of note here, software, which involves copyright law and patent law, seems to invite disputes about infringement. (There are, after all, multiple ways to make and bake a cake.) As a for-instance, the software used in the pioneering BlackBerry mobile device has generated infringement litigation all over the planet.

USAA has thus far been successful in defending its claim to be the inventor of important parts of remote check deposit technology. Whether it can retain that trophy remains to be seen.

Jim Flynn is with the Colorado Springs firm of Flynn & Wright LLC. You can contact him at


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