Banks seek Protection From Check 21 Patent

WASHINGTON - In one of the final acts of the Senate last month, lobbyists for the nation's biggest banks convinced members of the Judiciary Committee to pass a patent reform bill with a provision protecting them from litigation over Check 21 technology, a battle that has already cost them millions in license fees.

The process to electronically process and exchange checks and other financial instruments is currently dominated by a handful of big banks, which not only control MasterCard and Visa, but the fledgling electronic exchanges. SVPCO, for example, one of the leading image exchanges, is owned by the 20 biggest banks.

The patent provision, championed by the Financial Services Roundtable (the lobby for the big banks) and the two card networks, would protect the banks from patent infringement suits involving electronic check clearing technologies.

A lobbyist familiar with the bid said the provision is aimed at a tiny Texas company called DataTreasury, which holds several patents on the technology and has won millions in license fees by suing the banks and other providers. The company has filed suit against JP Morgan Chase, Zions Bank, as well as several other players in the Check 21 market, like NCR, Diebold and RDM Corp. (c) 2007 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com