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Remote Deposit Capture Lawsuit Industry Update

Because the League and Synergent are always looking out for your credit union’s best interests, we want to provide an update about an important development impacting the financial services industry. Two weeks ago, a U.S. District Court jury awarded USAA $200 million in a patent infringement lawsuit against Wells Fargo. The lawsuit involves USAA’s remote deposit capture (RDC) technology.

Background

Several years ago, USAA launched a campaign to receive reasonable compensation for benefits it believes it brought to the financial services industry for its RDC technology. USAA began targeting technology vendors, banks, and credit unions with patent licensing demands. In 2018, USAA filed a patent infringement lawsuit against Wells Fargo in federal court. In its suit, USAA alleged Wells Fargo’s mobile deposit technology infringed on certain USAA patents related to mobile check capture.

On November 6, a federal jury in East Texas awarded USAA $200 million in damages after finding that Wells Fargo infringed on two of the company’s patents. USAA has filed a separate suit for additional patents related to RDC against Wells Fargo. It is scheduled for trial in January of 2020.

Synergent’s RDC Offering

Synergent partners with Ensenta for our RDC offering. Ensenta sublicenses the technology from Mitek, who settled a dispute with USAA over alleged RDC patent infringements in 2014.

Ensenta, owned by Jack Henry & Associates, Inc., issued the following response after the USAA/Wells Fargo verdict:

Since USAA announced in the spring of 2017 a campaign to target financial institutions for licensing fees for mobile/remote deposit solutions, Jack Henry & Associates (Jack Henry) has been closely monitoring the situation.

On November 6, 2019, a jury awarded USAA $200 million, finding that Wells Fargo infringed several of USAA’s patents relating to technology that allows users to deposit checks using mobile devices. Jack Henry does not consider this jury verdict as cause for alarm for several reasons:

  • There may be appeals and other legal maneuvers that could change the outcome.
  • Another suit is currently pending challenging the validity of the USAA patents. 
  • Jack Henry has several patent licenses covering the Remote Deposit Capture (RDC) process.
  • In September 2019, a jury found that Jack Henry’s RDC products did not infringe patents asserted by PPS Data LLC (a wholly owned subsidiary of Zions Bancorporation).

Please be assured that Jack Henry will live up to our contractual obligations as it relates to our clients’ use of our products. We will continue to monitor the cases as they unfold and communicate with our clients accordingly.

On Your Side

The League and Synergent are monitoring this matter closely and will continue to do so on behalf of our credit unions.  Keeping Maine’s credit unions protected and apprised of ongoing developments is our highest priority. This issue is far from over, as we expect the Wells Fargo case will enter a lengthy appeals process.

In addition, Synergent’s legal counsel has thoroughly reviewed the contract with Ensenta and maintains the strong indemnification clause provides Synergent protection for lawsuits and any liability.

How Should Your Credit Union Respond?

Recognizing how important RDC services are to your credit union and members, the League and Synergent will remain vigilant on this issue and encourage you to do the same. While we don’t anticipate this to happening, please notify the League and Synergent immediately if you receive any communication from USAA suggesting patent infringement. We also ask that you contact us if you learn of any local financial institution receiving this type of communication. Those of you who may not be working directly with Synergent for your members’ RDC solution, might consider reviewing your credit union’s vendor contract terms regarding intellectual property representations and warranties, indemnification, and limitation of liability.

Contact 

If you have additional questions or concerns about how this verdict might impact your credit union, please Ben Jordan, SVP of Information Technology, at bjordan@synergentcorp.com.