USAA Sues Wells Fargo Over RDC Technology

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USAA, the insurance company and bank serving current and former military members and their families, filed a federal lawsuit against Wells Fargo Bank over its use of USAA’s RDC technology.

According to Digital Transactions News, the lawsuit, filed in U.S. District Court in Marshall, Texas, accuses Wells Fargo of infringing on four of its mobile remote deposit capture patents. USAA is asking for unspecified damages.

While Texas-based USAA has only four branches, it does have clientele across the country and around the world. To serve everyone, the company launched a scanner-based remote deposit capture (RDC) service in 2006. Later, it released remote capture services for smartphones.

This appears to be the first legal action USAA has taken since it asked financial institutions to license its technology, for which it holds around 50 patents.

“To date, USAA has invested many millions of dollars and thousands of employee-hours in the development and implementation of its mobile-deposit technologies,” the civil complaint says. “USAA has not licensed its competitors such as Wells Fargo to use these patented technologies.”

Most bank mobile apps now allow customers to make a deposit remotely by snapping a picture of the front and back of a check and upload the images. It appears that USAA is suing Wells Fargo because it is one of the biggest users of remote deposit capture.

Before it filed the suit, USAA says that it approached Wells Fargo last August and “engaged in good-faith negotiations” regarding the patents. But the bank has failed to license any of the patents or otherwise compensated USAA, according to the complaint.

“We’ve been abundantly patient with Wells Fargo,” said Nathan McKinley, a USAA vice president and its head of corporate development, according to American Banker. “Now is the time for us to get the court’s assistance.”

A USAA spokesperson declined to say whether the company planned to sue any more banks.

John Leekley of calls the lawsuit “certainly an interesting development.” He added that very few banks or credit unions have developed their own RDC technology.

“I would estimate at least 95% of all remote deposit and mobile deposit applications at financial institutions are provided by outside vendors,” Leekley tells Digital Transactions News.