DataTreasury Dusts Off its Legal Briefs

Bank Technology News  |  March, 2011

By John Adams

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In an attempt to throw a revenue-generating shield around its patented check image capture technology, frequent litigant DataTreasury has filed another infringement suit while the political battle over bank immunity from royalties heats up in Congress.  

DataTreasury’s new suit against Capital One, Regions Bank, North American Bancshares, American Bank of Texas, Legacy Texas Bank, Patriot Bancshares Inc., and Prosperity Bancshares Inc. contends the various defendants infringed U.S. Patents 5,910,988 and 6,032,137, which cover the technology used for capturing and storing data from paper transactions. The legal action was filed in the U.S. District Court for the Eastern District of Texas.

It’s not DataTreasury’s first rodeo—the firm has filed more than 15 prior image capture patent infringement suits against dozens of banks over the past few years, with prior defendants including Bank of America, Wells Fargo and Citigroup.

There’s a lot at stake. If banks have to pay royalties to DataTreasury, the cost could be staggering—perhaps billions of dollars given industrywide check volumes. There’s also a political battle that leaves the patent issue in flux. The most recent patent law reform approved in the Senate early in March [but awaiting further action] removed damage immunity from banks for check image patent infringement.

That immunity was in a prior version of the bill. Sen. Jeff Sessions (R-Ala) sponsored the earlier provision, which would allow banks to avoid paying royalties to DataTreasury for using its check capture methods.

Under the Sessions amendment, DataTreasury would not lose its patent, and would receive a payment of about $1 billion over ten years from the government in exchange for losing its right to collect royalties.