USAA wins patent suit against Wells Fargo

The United Services Automobile Association – an insurance company and savings bank better known as USAA that serves military families – won a patent infringement claim against Wells Fargo Bank for using USAA’s patented mobile remote deposit capture technology. The decision, which is expected to be appealed, throws into question whether other banks and credit unions offering mobile RDC could be on the hook with USAA, too.

The jury decision to award USAA $102.8 million, reached earlier this month in a U.S. District Court in Texas, came on the heels of a November 2019 jury verdict awarding $200 million in damages to USAA, to be paid by Wells Fargo for infringing on other USAA mobile RDC patents.

Mobile RDC (also known simply as mobile deposit) has become a standard product offering at financial institutions large and small. Much of the technology that undergirds these product offerings is licensed by Mitek Systems Inc., a California firm that lays claim to having developed mobile image capture. Mitek reports that thousands of financial institutions offer its technology and that at least 70 million consumers now use smartphone apps to deposit checks at banks and credit unions.

Mitek and USAA were early collaborators on mobile deposit technology, but the two companies parted ways in 2006 over a contract dispute. Mitek launched its mobile deposit technology two years later, and USAA announced its own mobile deposit product a year after that, in 2009.

In 2012, USAA sued Mitek alleging the technology company had “misappropriated” proprietary and confidential information from USAA in creating its mobile deposit offering. Mitek counter-sued, alleging USAA infringed on several Mitek patents in creating its mobile deposit product. Mitek also alleged that USAA was in breach of a licensing agreement for Mitek technology. The two companies agreed to out-of-court settlement two years later, the terms of which never were disclosed.

USAA to pursue claims against other banks, credit unions?

About two years ago, USAA began sending letters to banks and credit unions offering mobile deposit insisting that they were in violation of USAA’s mobile deposit patents. Not long after, failing negotiations over licensing fees, USAA filed two patent-infringement lawsuits against Wells.

“Wells Fargo has taken advantage of USAA’s pioneering efforts in mobile deposit technologies by incorporating – without permission – USAA’s technological innovations into its Wells Fargo Mobile Deposit system,” USAA wrote in its filing with the U.S. District Court for the Eastern District of Texas. “USAA recognizes that the advent of mobile check deposit has revolutionized the consumer banking experience, with considerable benefits for both banks and customers. But it is improper for Wells Fargo to use, without permission, patented technologies that USAA has spent immense resources to invent, develop, implement and perfect.”

Nathan McKinley, vice president of corporate development at USAA, in a statement following the Jan. 10 jury decision, indicated USAA is prepared to go after other financial institutions for mobile deposit licensing fees. “This verdict further validates our position that we created mobile deposit capture technology,” McKinley said. “Wells Fargo, and the rest of the banking industry, has benefited from our technology, and we look forward to working with banks to create reasonable and mutually beneficial license agreements.”

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