Update on USAA RDC litigation

In late 2017/early 2018, NAFCU began hearing from multiple credit unions that had received letters from a firm called Epicenter Law which alleged the credit union’s remote deposit capture (RDC) technology infringed on patents owned by USAA. Through these letters, USAA sought voluntary licensing fees from other financial institutions. Rather than making specific demands, these letters invited credit unions to call the firm to discuss licensing USAA patents.

USAA’s efforts to recoup money it spent developing RDC technology also included filing two lawsuits against Wells Fargo last year. USAA, during litigation, went into great detail explaining how Wells Fargo used USAA’s technologies. For example, a few of the patents at issue describe methods and systems for image and criterion monitoring during the RDC process. USAA asserted that these patents solve discrete, technological problems associated with computer systems when capturing images. Ultimately, the district court agreed with USAA’s analysis pertaining to some, but not all, of the patents at issues.

On November 6, 2019, in one of these two lawsuits, a jury in a Texas federal court found that Wells Fargo did infringe on USAA’s patents and awarded USAA $200 million. Wells Fargo stated it “strongly disagrees with this jury verdict and does not believe it has infringed on USAA’s patent rights,” but has yet to publicly state whether it will appeal. So what does this potentially mean for credit unions?

As background, USAA started developing RDC technology in 2005 and holds numerous patents in this area. As part of its efforts, at one point USAA worked with a company called Mitek, and ultimately the two litigated and settled a dispute relating to one another’s RDC patents. The settlement apparently left both parties with their patents but also left legal questions presented in the case unresolved.

 

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