Many credit unions have in recent years adopted a more retail "look and feel" in their branches, removing the traditional teller line, providing a play area for children, and even installing coffee bars and Internet cafes.
Now, giant thrift Washington Mutual has been granted a patent that covers many of these now-common elements of retail branch delivery.
"U.S. patent No. 6,681,985, which is the first patent issued in the country to describe a full-service branch concept, is another example of how we've been acknowledged as adopting a new approach to banking," said Washington Mutual's team of attorneys and spokespeople who responded to The Credit Union Journal's queries. "The patent describes Washington Mutual's retail banking stores (branches) as places that 'create a welcoming and inviting environment for customers' and are 'in sharp contrast to traditional bank branches.' Instead, they have been 'transformed into a more retail-like environment.'"
According to the patent, embodiments of the invention include:
- Teller towers which remove the traditional barrier of a teller line and allow easier interaction between the customer service representative and the customers.
- A circular or oval layout.
- Concierge desk where customers are greeted and guided to the appropriate service area.
- A kids' play area in many of the company's retail banking stores.
- Access to online banking through wamu.com.
- Bank employees who are hired for their high sales aptitude in order to cross-sell the company's financial products.
If some of this stuff sounds similar to the way your own branches are laid out, the good news is, you still may not need to worry, according to several legal experts."It appears that this patent covers office layout and style, but there is some question about whether it would hold up in court unless you actually set out to copy Washington Mutual's branches," said Eric Richard, CUNA's General Counsel. "As long as you can tell it's not a Washington Mutual office, they should be fine."
Moreover, Richard suggested, it's not as though every financial institution that has a play area for children is in danger of infringing on the patent-a potential infringer would have to have all of the elements listed in the patent, not just one or two.
In Ft. Lauderdale, Fla., Patent Attorney John Rizvi, with the firm Gold & Rizvi, P.A., agreed. "This is different from trademarks," he explained. "A trademark can be about the look and feel of something. But a patent is much more mathematical, if you will. The patent lists the specific elements that would make an infringer, so it is more specific than the 'look and feel' represented by a trademark."
And if, in fact, a financial institution has been utilizing these same elements even before the patent was filed, that institution has a built-in defense: the First Inventor Defense.
"If an institution can show it had been using this business method one year before the effective filing date of the patent, you are covered by this defense," Rizvi offered.
WaMu filed for the patent in October 2000, and it was granted January 2004.
But not all patents are sought for the purpose of going after infringers, Rizvi pointed out. "Sometimes they are obtained from the sheer marketing value of it," he noted. "People see that something has been patented, and they think they are getting a unique value from that. Two years ago there was the KFC case with the 11 herbs and spices-the secret recipe. A scrap of paper was found up in the attic of some home out in the Midwest that listed 11 herbs and spices. KFC denied that it was the original recipe. Even if it was the original recipe, it's not in their interest to admit that because the value is if you want KFC chicken, the only place to get it is KFC. So, even if something, like a play area or teller towers instead of teller lines, isn't unique, the patent means people will perceive it as unique, and there is value in that."
And indeed, Washington Mutual's statements and patent play up the uniqueness of their retail branches. "Washington Mutual has been recognized for its innovation and retail banking strategy, both nationally and internationally," WaMu's legal and public relations team told The Credit Union Journal, noting that Fortune magazine, in its February 2004 edition, cited WaMu as the No. 1 rated company nationally in the innovation category as part of the publication's 2004 Most Admired Companies list.
Similarly, the bank said, WaMu was named "Best Retail Bank-Americas" by Lafferty Group in London.
"We, like any inventor, reserve the right to protect the interest of our intellectual property," Washington Mutual stated.
Another reason an entity might seek such a patent is for the potentially lucrative licensing rights, Rizvi added. Washington Mutual declined to comment on the issue of licensing its invention out to other financial institutions.
Business method patents like WaMu's aren't as straightforward as traditional mechanical patents that cover more tangible inventions, like widgets, he explained, and that has led to some controversy, so much so that such patents can actually backfire on the entities who seek them.
Take the highly publicized Amazon case, in which the online retailer got a patent on its "one-click shopping" that saved customer data so that the customer didn't have to fill out the same information over and over again.
"In that case, Amazon was looked on as a bully, because it was this great big company that was potentially going after all those small start-ups on the Internet," Rizvi commented. "The competitors aren't evenly matched. But with WaMu, where the competitors are equally large or larger, like Bank of America, that bully perception probably isn't an issue."
Except for the thousands of credit unions that are quite tiny in comparison to the mega community bank. "Now that is a legitimate concern," Rizvi conceded.
But there are other reasons such a patent can result in negative PR instead of valuable marketing opportunities.
"If the things covered in Washington Mutual's patent are perceived by the public as not being all that new or unique, there can be an issue," he offered. "Take the IBM patent case."
IBM took the long-standing idea of taking a number-like you would at a deli counter- and being served in order of the numbers instead of forming a line and applied it to the airline industry. Passengers seeking to go to the bathroom wouldn't have to wait in line by the restrooms-a potentially dangerous situation if the plane is flying through bad weather-they could push a button at their seat, which would assign them a number, and when a passenger's number comes up, he knows it is his turn to use the bathroom.
"This was a highly controversial patent because the idea of taking a number instead of having to get in line is hardly a new idea," he advised. "IBM took an idea that has been employed at bakeries, delis and numerous other outlets for years and years and applied it to a different industry."
A similar argument could be made with respect to the play areas covered in WaMu's patent. Similar play areas have been offered at fast-food restaurants and other venues for years; this is simply applying that concept to a new industry.
The catch, Rizvi said, is that WaMu potentially can show that even though the idea of play area isn't unique, bringing it into the banking environment is.
A perfect example of this is Rollerblades. "It's not that no one had ever thought of putting the wheels of rollerskates in a single line before, but that was back when the wheels were metal, and if you tried to line them up like that, all it would take was a single pebble to lock you up and knock you down," Rizvi said. "Rollerblade could show that although the idea itself wasn't new, it was an idea that had been tried by its competitors and had been found not to work, so they moved away from that idea."
But the most straightforward reason of all for getting a patent is to keep other people from copying your success. As Rizvi put it, it creates a legal monopoly for 20 years. If that's the goal, then the expectation would be that the entity seeking patent intends to pursue infringement cases.
When asked how far WaMu would go to pursue potential infringers of its patent, the banks responded, "to a certain extent it would depend upon the circumstances and we would weigh any potential action carefully. However, like any business, we reserve the right to protect the interest of our intellectual property and this would include actions to enforce the patent."
As for the enforceability of some of the elements in the patent, WaMu said it would depend on the facts and circumstances involved, adding, "it is important to note that we have other patents pending for various aspects of our retail banking concept, but for competitive reasons we are not yet disclosing the details."
