J.D. Carreker & Associates Inc., maintaining it owns exclusive rights to certain electronic check presentment technologies, has begun notifying rival companies that it intends to defend a patent it has held since 1993.

Industry insiders say the move sets the stage for legal battles over a promising new business. But J.D. "Denny" Carreker, president of the Dallas- based company that bears his name, said he isn't looking for a fight.

"I have no intention of going into lawsuits," Mr. Carreker said in a telephone interview.

Mr. Carreker said that brief letters his company sent to other providers of electronic check presentment software - including Servantis Systems Inc. of Norcross, Ga., and Sterling Software Inc. of Dallas - were intended only to notify the companies of the patent's existence, and to engage them in dialogue about the possibility of licensing and royalty fees.

If Carreker & Associates is successful in enforcing its patent, the company would get a leg up in a burgeoning software business that is expected to play a large role in reducing the more than $800 million banks lose to check fraud each year.

"The only thing we've done with Servantis and Sterling is to say, 'Hey guys, we've done an awful lot of investment (in electronic check presentment), and it looks like you may be taking advantage of some of the technologies, and we want to talk with you about some kind of royalty arrangement,' " said Mr. Carreker.

But onlookers see matters differently.

"The implications are that there might be future lawsuits, unless there was a determination by the patent office or a court of litigation that the patent was invalid," said James Scott, an attorney who is researching the history of electronic check presentment for a client he declined to name.

Arthur R. Doucette, a senior vice president at Servantis, said his company does not plan to take any action beyond composing a letter to Carreker denying patent infringement. Officials at Sterling declined to be interviewed for this story.

Electronic presentment, the transmission of check data in standard formats, is a process that works in conjunction with conventional check processing operations. Information, such as account numbers and dollar amounts, is sent to paying banks ahead of the paper items.

This speeds up collections between banks, which in turn reduces interbank check float and losses due to check fraud, experts said.

A number of the nation's largest financial institutions engage in the practice, including Wells Fargo & Co., First Interstate Bancorp, Old Kent Financial Corp., and Crestar Financial Corp.

Carreker & Associates' product, called Checklinks, was co-developed with Chemical Banking Corp., Bankers Trust New York Corp., and Security Pacific Corp., which has since been acquired by BankAmerica Corp.

Both Servantis and Sterling sell electronic check presentment software to financial institutions, and each has agreements with several banks.

Carreker & Associates emphasized that it is not discouraging financial institutions from using its technology, nor is it threatening to charge royalty fees to banks using Carreker technology.

"Whether (banks) purchase a license to our software or that of another vendor or build their own software in-house, we are happy to enter into royalty-free arrangements with them," Carreker & Associates said in a written statement.

The company also said its patent does not cover the entire electronic presentment process, but only specific inventions developed by Carreker & Associates. These inventions include a sequence number cross-reference file and a central information file of data particular to each partner bank.

However, several industry insiders said the patent is much broader than Carreker's description and questioned whether it would hold up in court.

Mr. Scott noted that the Federal Reserve banks used electronic check presentment for controlled disbursement purposes well before Carreker & Associates' patent application was filed.

The Fed's practices "may render the patent invalid," said Mr. Scott, who is employed by the Cleveland law firm Calfee, Halter & Griswold.

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