The Canadian processor LML Payment Systems Inc. has settled its patent-infringement lawsuit against three U.S. financial companies.
LML, of Vancouver, British Columbia, said Monday that First Data Corp., Nova Information Systems Inc., and Electronic Clearing House Inc. had all agreed to license its technology for converting checks to automated clearing house transactions at the point of sale.
A trial had been scheduled for April against First Data, of Denver, and its merchant processing units Telecheck Services Inc. and Telecheck International Inc.; Nova, the merchant processing unit of U.S. Bancorp of Minneapolis; and Electronic Clearing House, of Camarillo, Calif., which is known as Echo, and its XPressChex Inc. subsidiary.
Patrick H. Gaines, LML's chief executive and president, called the settlement "a very positive event" for his company. "That adds a great deal of credibility and momentum to our licensing program," he said in an interview Tuesday.
An LML subsidiary, LML Patent Corp., claimed in a suit filed in July 2004 that the companies violated its patents on crucial business processes involved in POP check conversion, named for the Nacha code for converting checks to ACH transactions at the point of purchase. (Nacha, the electronic payments association, defines the rules for ACH payments.)
In the settlement with First Data, LML agreed to license certain of its patents. Jeff Fowler, a spokesman for Telecheck, said, "We're pleased to have reached an agreement." He would not discuss details of the settlement.
A U.S. Bancorp spokeswoman would not comment on the settlement.
Joel Barry, the chairman and CEO of Electronic Clearing House, said in a press release: "We are pleased to put the LML patent issue behind us. While we were confident in our own legal position, we felt reaching a settlement prior to a long and costly trial was the best option."
Some other companies have found a lucrative business in suing banks for infringing on their patents on specialized business processes. One, DataTreasury Corp. of Melville, N.Y., has won licensing agreements from companies including JPMorgan Chase & Co. and Zions Bancorp. for its patented process of creating and storing digital check images. DataTreasury has cases pending against First Data, Wells Fargo & Co., Bank of America Corp., Wachovia Corp., and others.
Perhaps the most successful patent holder is Ronald A. Katz Technology Licensing LP of Los Angeles, which has struck agreements with more than 100 companies for its portfolio of patents covering the integration of computers and telephones in corporate call centers. The Katz firm sued Citigroup Inc. and several other companies last July in what observers called the biggest test of its patents to date.
