The legal drama that began March 29 when USAA Federal Savings Bank sued its technology partner Mitek Systems Inc. over patent rights to technology that deposits checks by mobile phone has gotten more complicated.

On April 13, Mitek countersued the San Antonio-based financial-services giant, asserting that USAA has infringed on Mitek’s five patents on mobile remote deposit capture technology.

In its suit, filed in a U.S. District Court in San Antonio, USAA said it invented remote deposit capture technology “to meet the needs of our highly mobile military membership, enabling them to deposit checks with a scanner or smartphone wherever they may be stationed.” The company said “Mitek misappropriated USAA’s proprietary and confidential information while working under contract for USAA, and then took numerous steps to claim it as its own” (see story).

Mitek’s countersuit, filed in a federal court in Wilmington, Del., alleges that “USAA infringes on five Mitek patents relating to image capture on mobile devices, that USAA breached the parties' license agreement by using Mitek products beyond the scope of the agreed-upon license terms, and that USAA breached the parties' license agreement by disclosing confidential pricing and other confidential information for a Mitek legacy product installation in a lawsuit filed in Texas.”

San Diego-based Mitek seeks monetary damages, injunctive relief, and a finding that USAA willfully infringed Mitek's patents.

In an interview, Mitek CEO Jim DeBello described a business relationship gone awry.

“We have had an existing contract, a license agreement that lets them use our recognition platform, which is not optimally designed for mobile deposit, since 2006,” he said. “They contacted us and alerted us that they had exceeded the limitations in that contract, which caused us to have a negotiation that’s been going on for several months to provide them a renewed license with our mobile deposit platform. Regrettably, it ended up in this lawsuit.”

USAA has used Mitek’s technology to conduct image processing of checks deposited by mail for several years. The issue and question is, did the company also use Mitek’s technology to create its mobile deposit capture product Deposit@Mobile?

USAA says it was unaware of Mitek’s mobile deposit capture product, which Mitek rolled out in February 2008, when it released its Deposit@Mobile in August 2009. The financial-services company says it does not use any Mitek technology in this product.

Mitek says it emailed USAA employees in January 2008 to announce its Mobile Deposit product and that DeBello and other Mitek executives briefed USAA on the new product under a nondisclosure agreement.

Unless they settle out of court, it seems these two companies will need to prove to a court that their engineers invented this technology independently.

What do you think about this? Send us your feedback. Click Here.

 

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry