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Banks lose patent suit DataTreasury awarded $26.6M

By Robin R. Richardson and DD Turner and
March 26, 2010 at 5:12 p.m.

As deliberations were set to begin in DataTreasury's joint patent infringement case, one juror let the jury room, left the federal courthouse and drove away.

"As I told the lawyers in chambers, this is the first time in 15 years this has happened," said Judge David Folsom, presiding judge for the U.S. District Court for the Eastern District of Texas.

Judge Folsom said an exhibit had been called for and it was reported a juror had left the room. "It was determined that the juror had left and did not return, and the jury was told to stop deliberating," he said.

Marshall Stanfield explained he was notified that one of the jurors had left, that three others were looking for him and that his vehicle had left the square. Stanfield said he got the juror identified and was told someone had his cell phone number. After talking with him, the juror agreed to return to the courthouse.

Attorneys for the defense asked that the jury be instructed to begin deliberations anew, and the plantiff's lawyers asked that the juror be removed.

The judge said he would interview the juror on the record, which would be sealed.

Following the interruption and the dismissal of the juror, the jury deliberated until about 6:15 p.m. before finding in favor of DataTreasury and awarding a reasonable royalty of $26.6 million.

The jury found that U.S. Bank and Viewpointe jointly infringed the patents and that it was wilfull.

They also found that U.S. Bank, Clearing House Payments Company and SVPCo also infringed on the patents.

Prior to jury deliberations, closing arguments were Friday morning.

"We talked about how a little more than a year ago, U.S. Bank was a big bank, but they wanted to be a bigger bank," said Anthony Bruster, DataTreasury's attorney.

He said U.S. Bank wanted to be a top mega bank in the nation, but had a problem - the larger they became, the more paper checks they possessed.

"They needed a solution to catch up with the other big banks so they wouldn't be left behind," Bruster said.

"So, they took a shortcut - a valued piece of property owned by DataTreasury."

DataTreasury accused the defendants of jointly infringing the claims of its '988 and '137 patents, which cover an invention for capturing and exchanging digital images of checks. Inventor Claudio Ballard, DataTreasury's chairman, received the patents for the check imaging technology in 1999 and 2000.

"DataTreasury is owed a reasonable royalty and that's the only reason we're here is to determine a reasonable royalty," Bruster said.

Bruster said when the United States Patent and Trademark Office issued the patents, validating the invention as new, Ballard gained the respect of many who invested about millions in the project.

"And, what did he try to do, file lawsuits? No, he tried to do business," Bruster said.

"While some banks decided to license to pay to use this property, U.S. Bank set up these outsources (Viewpointe, Clearing House and SVPCo) to help them infringe this property," Bruster said.

Bruster said DataTreasury started filing lawsuits because the company refused to be intimidated. He said U.S. Bank has come into the court, telling Ballard through multiple witness that his patents do not deserve respect. He said even Viewpointe instructed its employees to conceal information on how "valuable" the property is.

"So don't be misled by the arguments that they make, the confusion that they try to build," Bruster said.

He asked jurors if they found the claims in the patent to be infringed, to award DataTreasury a reasonable running royalty.

"It's time to put the fence back up on DataTreasury's property," he said.

Joe Redden, U.S. Bank's attorney, said the first real issue in the case is determining if Claudio Ballard invented anything new.

"If he didn't invent anything new, his patents are invalid and therefore can't be enforceable," Redden said.

However, he said if the jury did find infringement and determined the patents to be valid to award DataTreasury a lump sum instead of a running royalty.

Redden reminded the jury of the judge's instructions to not take into consideration any other licensing agreements DataTreasury has with banks when making decisions on this case.

"That's only fair because this is U.S. Bank's (case)," Redden said.

Redden said all of DataTreasury's witnesses have a financial stake in the outcome of the case because either they are stakeholders or work for the company.

"Now, if the patents are found to be invalid, the gravy train is over for these people," Redden said.

Redden asked the jury to use common sense when deliberating on the case.

He said the $200 million DataTreasury is asking for is an unreasonable "pie in the sky number" that is dramatically less than what other banks paid to license the intellectual property.

"I would suggest to you it's really no more than modern day bank robbery," Redden said.

U.S. Bank is the first bank that has taken DataTreasury to court to fight the lawsuit. Redden said the other banks that were sued decided to "pay up" to avoid a trial.

"U.S. Bank said, 'No, we're calling your bluff and I'm putting my case in the hands of an East Texas jury," Redden said. "Tell 'em, ladies and gentlemen, it's not right and it's not fair."

In his closing argument, attorney Phillip Philbin, representing Viewpointe, said after eight years of being accused of infringement alone, DataTreasury still has not been able to prove Viewpointe infringed anything.

"Viewpointe is not a puppet," Philbin said, referring to DataTreasury's argument that U.S. Bank directs and controls the company. "Viewpointe is a company that provides archiving services, but it's not the only company that provides archive services to U.S. Bank.

"DataTreasury's trying to make it something other than the real issue of this case - 'Who did what and when?'" Philbin added. "DataTreasury's trying to add Viewpointe to their list. We're not a puppet, we're not a puppet master. We're a successful company."

Clearing House's attorney said his clients are aggravated that they are even involved in the suit.

"They've been accused of being thieves," he said. "That's terrible. They're not. We shouldn't be here."



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