Success breeds imitation. But when the source of that success is patented, litigation sometimes follows.
College Savings Bank, Princeton, N.J., which offers specialized certificates of deposit dedicated to funding children's college costs, has filed two lawsuits against a governmental rival.
Last year the bank, which in 1988 patented a method used to fund the payout on its so-called college CDs, lodged a suit charging patent infringement by a Florida state agency that offers a similar product.
After failing to come to terms on a licensing agreement with the state, the bank - which has no branches, makes no loans, and sells only the CollegeSure CDs - decided to assert its patent claim.
In August, the bank added a second suit alleging that the state falsely advertises its program.
"Florida understates the credit risk and overstates the rate of return," said Peter A. Roberts, chairman of College Saving Bank.
That places the state-chartered savings bank at a competitive disadvantage to its nonbank rival, the Florida Prepaid Postsecondary Education Expense Board, Mr. Roberts explained.
Florida's program, begun in 1987, has 271,883 active savings accounts and has amassed $1.5 billion, a spokeswoman said. By comparison, College Savings Bank has about 11,000 customer accounts and $85 million in college CD deposits, Mr. Roberts said.
"If we misrepresented the pledge of the FDIC, we'd be subject to cease and desist orders, possible civil penalties, and possible revocation of our banking charter," Mr. Roberts added.
But Mr. Robert's comments about his government rival have themselves become the subject of a civil suit.
Florida Prepaid is suing College Savings Bank for libel over alleged statements by Mr. Roberts that its marketing materials were either "half- truths" or "lies."
"The time has come for that kind of comment to end," said F. Philip Blank, general counsel for Florida Prepaid. "If he (Mr. Roberts) has got a problem with how it's marketed, he can take his chances in court."
