When William Randle left Huntington Bancshares Inc. in 2001, he took with him four patents covering various electronic payment technologies.
Since then he has tried to persuade several major banks to license those patents, but to no avail. Now he has joined forces with a company that has emerged in recent years as an aggressive player in the patent litigation field.
DataTreasury Corp., a Melville, N.Y., company that offers transaction processing and archiving software, is perhaps better known for its legal successes. It claims that its patents are crucial elements of check image exchange systems. It has numerous infringement lawsuits pending against banking companies and technology vendors, and has won some significant licensing deals after filing suits.
Mr. Randle said that he was in no position to mount court battles, but that DataTreasury was already doing so. The net effect of his February sale of the four patents to DataTreasury was to outsource their enforcement, he said.
"Having a patent is one thing, but being able to enforce them is something altogether different," he said Thursday.
A suit DataTreasury filed Feb. 24 in U.S. District Court for the Eastern District of Texas accuses 56 banks, bank holding companies, providers of check image-exchange services, and other technology vendors of infringing on the four patents.
These include Bank of America Corp., Wells Fargo & Co., Wachovia Corp., SunTrust Banks Inc., and First Horizon National Corp. "We don't believe there is any validity to the allegations against Wells Fargo, and we plan to vigorously defend ourselves," wrote Julia S. Tunis, a spokeswoman for that company, in an e-mail. Representatives for the other banking companies either did not return calls or said they could not discuss the suit.
Neither DataTreasury nor Mr. Randle would say how much he got for the patents, but the deal gave him a seat on the company's board.
Ed Hohn, a lawyer with Nix, Patterson & Roach LLP of Daingerfield, Tex., is DataTreasury's lead attorney. He declined to say whether Mr. Randle would share in any settlement payments or licensing revenue, but he added: "What's good for DataTreasury will also be good for Bill."
Mr. Randle said that in the past few years he had offered licensing deals for his patented technologies to several major banking companies. "They came back and said, 'We're not going to do it - not going to license them,' " he said.
As a small-business owner he felt unprepared to initiate a patent-infringement suit. "It takes a great deal of resources to engage them in a process that would end in licensing," he said.
But DataTreasury, already engaged in litigation on similar issues with many of the same companies, was in an ideal position to do so, he said.
Other small patent holders may be drawn to DataTreasury for the same reason, Mr. Randle said. "The mission of DataTreasury is to license patents" and derive value from them, he said.
He conceded that his involvement in DataTreasury's legal efforts is not likely to endear him to banking executives. However, he said, "I have plenty of friends in the banking industry," and they are still taking his calls.
Mr. Randle was a Huntington executive vice president working on an ambitious electronic payments initiative when the Columbus, Ohio, company decided to pull out. He bought the technology, including the four patents, and formed his own company, which eventually became Synoran LLC. Synoran, of Columbus, focuses on automating and streamlining all of a bank's transactions.
The four patents cover technologies for "the electronic transmission of payments information" from banks to clearing houses, Mr. Randle said. They include digital check imaging systems and automated clearing house transactions, such as the accounts-receivable process used to convert paper checks into ACH files.
Rod Cooper of the Cooper Law Firm of Dallas is DataTreasury's patent counsel. He said Mr. Randle's patents overlap in several ways with DataTreasury's.
The company has several cases pending. One of them, against First Data Corp., the Denver payment processor, is to go to trial in July. A suit against MagTek Inc. of Carson, Calif., which sells card readers, is scheduled for trial in October. So is one against The Clearing House Payments Co. LLC, whose SVPCO unit operates a check image exchange network.
DataTreasury has already made some important licensing deals, notably one last July with JPMorgan Chase & Co. Mr. Hohn pointed out that the New York banking company was notably absent from the extensive list of defendants in the new suit - and he hinted that it may be negotiating a licensing deal for the four patents.
"I think that in the coming months JPMorgan will be recognized as the smartest bank on the face of the earth," Mr. Hohn said.
Daniel A. DeVito, who negotiated JPMorgan Chase's July licensing agreement with DataTreasury, did not return a phone call seeking information about a new deal. Mr. DeVito is a partner in the Skadden, Arps, Slate, Meagher & Flom LLP law firm.
Mr. Hohn said that all the defendants in the new case are affiliated with SVPCO or Viewpointe Archive Services LLC of Charlotte, which runs a large check archive and image settlement system. Spokespeople for both companies said they would not discuss the suit.
Robert Hunt, a senior analyst for MasterCard International's TowerGroup market research firm in Needham, Mass., said patent-infringement suits require skills that "someone with a patent may not have."
"I can understand why someone would use a company that does have this expertise," Mr. Hunt said. Mr. Randle has sold his patent rights "to someone with the wherewithal and expertise to undertake a patent fight."
