Dive Brief:
- USAA last week secured its latest win in its ongoing battle against financial firms it claims are infringing on its mobile deposit capture technology patents.
- The San Antonio-based insurance and financial services company said it has signed an agreement with Discover Financial Services that provides the card network with a license to more than 130 USAA patents, allowing the firm to continue offering its customers remote deposit capture technology. Terms of the deal were not disclosed.
- The deal spares Discover from becoming the latest firm to join a legal battle that has pitted USAA against some of the largest banks in the U.S., including Wells Fargo, Truist and PNC.
Dive Insight:
USAA claims it has the rights to the tech that lets customers deposit checks using their phones. USAA sent letters to 100 banks in 2017, offering a “licensing program” to pay for the capabilities, warning the banks they were violating the company’s patents.
Discover and USAA did not respond to Banking Dive’s requests for comment.
USAA, which caters to U.S. military service members and their families, began collaborating with identity verification software firm Mitek in the early 2000s on remote deposit capture technology. The two companies, however, had a falling out, described at the time as a contract dispute.
The two firms separately launched similar mobile deposit capture products — first Mitek in February 2008, then USAA in August 2009.
After a series of legal battles over the rights and licensing of the technology, the companies settled in 2014. Both kept their patents.
For the last decade, USAA has been trying to secure licensing deals with firms that use the technology in an effort to be compensated for innovations it claims it pioneered.
In a statement last week, Nathan McKinley, USAA’s vice president of corporate development, said USAA will continue to pursue deals with additional banks that use the tech.
“We look forward to working with more banks to create reasonable licensing agreements that benefit their customers,” McKinley said.
Discover, for its part, has seen its share of turmoil over the past month. Its CEO, Roger Hochschild, resigned abruptly Aug. 13 as the card network grappled with a host of regulatory issues. Investors have since filed a class-action lawsuit, claiming the company misled them regarding risk management and compliance protocols.
USAA secured victories against Wells Fargo in 2019 and 2020, when it won two nine-figure judgments against the bank totaling more than $300 million, regarding its mobile check deposit patent-infringement cases.
The San Francisco-based bank settled the two lawsuits with USAA the following year for an undisclosed amount, according to Bloomberg Law.
In a civil suit against PNC over the tech, a judge ordered the Pittsburgh-based bank to pay $218.5 million to USAA in May 2022. But after PNC requested a review of USAA’s patents that were subject in the trial, the U.S. Patent and Trademark Office's Patent Trial and Appeal Board sided with PNC, ruling three of USAA’s patents on mobile check deposit technology are invalid, according to Law360.
PNC expressed confidence that it would successfully defend its use of the technology.
“We remain confident that in the end we will prevail as to all of the patents USAA has asserted,” PNC spokesperson Christina Anderson wrote in email to Banking Dive last year.
