Since we last reported on United Services Automobile Association’s (USAA) fight against Wells Fargo to Protect Cloud-Based Check Depositing Assets Against Competitors, USAA has dealt a 1-2 punch to Wells Fargo for infringing several of USAA’s remote deposit capture (RDC) technology patents.  Earlier this year, USAA landed a $102M verdict against Wells Fargo, which is on top of a $200M hit from November 2019.  To potentially make matters worse for Wells Fargo, the juries in both cases found that Wells Fargo willfully infringed USAA’s patents, opening them up to treble damages that could amount to over $900M.  While USAA has certainly seen success to this point, they likely have a very long road ahead before seeing any payout from Wells Fargo.

In its complaint in the most recent lawsuit, USAA alleges that Wells Fargo released its own check capture service years after USAA had implemented its RDC technology, and refused to license USAA’s technology when approached by USAA in 2017.  USAA’s attorney, Jason Sheasby, stated, “Wells Fargo has generated $1.2 billion in profit from the use of this system.  We’ll be asking for no less than 85 cents per successful mobile deposit” and further noted that equates to $102,792,510 in damages.  While many of the court documents are redacted, making it difficult to determine arguments put forth by either side, it seems apparent USAA successfully presented their case to the jury and was awarded the damages they sought.

In its first case against Wells Fargo, USAA asserted four patents, including: US 8,699,779, US 9,336,517, US 9,818,090, and US 8,977,571.  Based on USAA’s complaint, the ‘779 and ‘517 patents generally relate to the use of alignment guides to increase efficiency and performance of remote check deposit systems, and the ‘090 and ‘571 patents generally relate to monitoring specific features of a check to increase efficiency and performance of remote check deposit systems.  In its second case, USAA’s patents-in-suit are US 10,013,605 and US 10,013,681.  Generally, the ’605 and ‘681 patents are directed to validating check information (e.g., routing number, deposit amount), converting the file format of a check image, generating a file with information about the check and assisting a user in taking a high-quality check image.

While the results in both these cases are certainly impressive in a post-Finjan world, USAA certainly has a long road ahead before seeing any sort of payout from Wells Fargo.  Wells Fargo stated that it “strongly disagrees with this jury verdict and does not believe it has infringed on USAA’s patent rights.”  Wells Fargo has filed motions for stay of execution of the judgement in each case, which the district court has yet to rule on.  Additionally, Wells Fargo has turned to the Patent Trial and Appeal Board (PTAB) in an attempt to invalidate USAA’s patents.  Wells Fargo filed a series of Inter Partes Review petitions, and the PTAB instituted IPRs for three of USAA’s patents (US 8,699,779, US 9,336,517, and US 8,977,571) asserted in the first trial.

Meanwhile, within the past couple weeks, San Diego-based Mitek Systems Inc. added to the fight against USAA by filing IPR petitions against USAA patents ‘090, ‘799, and ‘571 and ‘517.  Mitek is a leading vendor in the mobile-capture industry and provides the capture control software used by Wells Fargo for mobile check deposits.  Apparently, USAA and Mitek collaborated in the early 2000’s on remote deposit capture, but eventually had a falling out.  The two companies later sued each other regarding the technology in 2012 and eventually settled in 2014.  With the recent high dollar judgments against Wells Fargo, Mitek is undoubtedly fielding questions from its other banking clients in light of USAA’s wins.  It will be interesting to see how things play out between these two parties this time around.

Nonetheless, USAA is without a doubt going to capitalize on these wins, and leverage these large verdicts to drive licensing agreements with banks, credit unions and vendors providing mobile check deposit software.  Wells Fargo was not the only bank USAA reached out to in 2017.  Around the same time, USAA sent letters to roughly 100 banks and credit unions, “inviting” them to license the patent rights to its RDC technology.

Going forward, it will be interesting to see how USAA’s success will affect the financial services industry in terms of licensing agreements and patent assertions against competitors in the industry.  Until recently, patent lawsuits against financial services companies had decreased significantly, in large part due to the Supreme Court’s Alice decision as well as the America Invents Act CBM review program.  However, recently the Alice decision is being applied more predictably and consistently by the USPTO and the courts; additionally, CBM review is scheduled to sunset in September 2020.  As evidence of a shift, these two massive verdicts and Wapp Tech’s ongoing patent suit against Bank of America and Wells Fargo suggest the downward trend appears to have changed direction.