USAA continues to take on its large-bank rivals with patent suits. A court in Marshall, Texas, has awarded the San Antonio company $218 million in damages over its claims that PNC Bank infringed four USAA patents related to remote check deposit technology.
The U.S. District Court for the Eastern District of Texas, which is known to be friendly to patent lawsuits, earlier ordered Wells Fargo to pay $302 million to USAA in two separate but similar patent infringement cases.
“This verdict further validates our position that we created mobile deposit capture technology,” said Nathan McKinley, vice president of corporate development at USAA, in a statement. “PNC has benefited from our technology and we look forward to working with banks to create reasonable and mutually beneficial license agreements.” USAA declined a request for an interview.
PNC is planning to seek relief via post-trial motions at the trial court and to appeal the verdict to the Court of Appeals for the Federal Circuit. The Patent Trial and Appeal Board (PTAB) has granted PNC’s request to review the validity of one of USAA’s patents. PNC believes that the challenged claims of this patent should be invalidated through the PTAB process. If this happens, it will impact the verdict.
“While we respect the jury process, we are disappointed in the jury verdict,” a PNC spokeswoman said in a statement. “This, however, is just the first of many steps as we work through the post-trial and appellate process. It is very important to note that there are significant proceedings pending in the United States Patent and Trademark Office later this year in which the Patent Trial and Appeal Board will determine the validity of a patent from the trial. In fact, the PTAB has stated that based on the preliminary record PNC ‘has made a strong showing.’ Even before the trial, USAA dropped infringement assertions with respect to two other USAA patents under PTAB review. We remain confident that in the end we will prevail as to all of the patents USAA has asserted.”
The origins of this dispute date back more than a decade. USAA and technology company Mitek were once partners in co-developing mobile capture technology, which lets a person take a picture of a check on a smartphone and then turns it into data a bank’s core system can consume. The companies had a falling out. Both introduced their version of the technology around the same time (Mitek in 2008, USAA in 2009) and filed their own patents on it. In 2012, they sued each other multiple times over who actually invented the product and who owned the intellectual property behind it.
Today, thousands of banks use Mitek’s version of mobile deposit capture technology. In 2017, USAA sent letters to 100 of Mitek’s largest bank customers warning them they were violating USAA’s patents and needed to sign a licensing agreement. In 2019, USAA began suing these banks, starting with Wells Fargo. In 2020, it filed its suit against PNC.
The Marshall, Texas court presided over by Chief Judge Rodney Gilstrap, which has taken all the USAA cases so far, tries an outsized number of patent suits. In September, the Wall Street Journal reported that “since 2011, Judge Gilstrap has heard nearly 15% of the more than 47,800 patent cases filed in federal courts.”
More than 75% of patent lawsuits against banks were filed in Texas in 2020 and 2021, according to Anthony Blum, a partner at Thompson Coburn.
“Patent holders have become very comfortable filing in Texas, particularly against banks and institutions that have physical presences there,” Blum said. “While some districts find patents ineligible at high rates at very early stages in litigation, this is not true for Texas.”
To fight back, some banks, including Truist, have recently joined an anti-patent aggression group, the Open Invention Network.