In a messy dispute, USAA Federal Savings Bank and Mitek Systems Inc. have been fighting over a simple issue: who invented mobile remote deposit capture–the ability to deposit a check by snapping an image of it with a phone.

Last week, USAA said it invented this technology to meet the needs of its military membership.

"USAA has invested substantial time and money in the development and implementation of an invention which has revolutionized the banking industry," the San Antonio-based financial services provider 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."

Mitek, which holds five patents on the technology, says this assertion is false.

In an interview, Mitek CEO Jim DeBello expressed dismay and disappointment in the lawsuit and fondness for USAA as a customer, but vowed to fight it tooth and nail.

"We were extremely disappointed in how this has evolved," he says. "It is a business negotiation. We think these tactics are heavy-handed."

In DeBello's chronology, USAA in 2006 began using Mitek's QuickStrokes imaging software, which let customers mail in checks for deposit but does not include mobile deposit capture. "We enabled USAA to offer a very valuable service to their customers, many of whom were overseas," he says. "People were depositing checks from Afghanistan. It's been a tremendous differentiator for USAA."

This year, he says, USAA contacted Mitek to say it had exceeded the limitations in that contract, and the two companies began a license-negotiation process over Mitek's mobile deposit platform that devolved into the legal dispute announced last week.

Meanwhile, in February 2008, San-Diego-based Mitek launched mobile remote deposit capture. The company applied for five patents for the technology in early 2008 but wasn't awarded them until 2010.

"When we first introduced this, there wasn't anybody remotely thinking about mobile remote deposit capture except for us," DeBello says. "USAA falsely claims they were unaware of our technology until 2009. We have evidence in writing, emails, timelines and presentations I made to USAA on their premises in 2008 that this is not so."

USAA formally introduced mobile remote deposit capture in August 2009 (see story).

USAA did not provide anyone to comment but provided a written statement: "USAA's core values of service, loyalty, honesty and integrity drive its every action, including filing this lawsuit against Mitek. USAA is confident that the truth surrounding the innovation of mobile-deposit technology will be revealed in a court of law."

Mitek wants only to defend its intellectual property and rights, DeBello says. "We feel we've been unjustly accused of some very egregious misstatements on behalf of USAA," he says. "We consider this a dishonest filing."

DeBello is interested in keeping USAA as a customer in spite of the legal dispute. "We're happy to partner with USAA, and we remain that way," he says. "We want to foster these good relationships in the industry."

However, Mitek has the resources to fight off USAA's accusations, DeBello says. "We believe it's incumbent for Mitek to defend our legal rights and our inventions,” he says. “That's the heartbeat of this company, but we hope to resolve this case in the most expeditious way possible for our company and our shareholders."

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