After securing a $200 million verdict this past November in a patent infringement trial against Wells Fargo Bank, the United Services Automobile Association (USAA) has returned to Marshall’s federal court this week to fight the bank in more ongoing litigation over remote check deposit technologies used in mobile banking systems.

This time, USAA is seeking $102.8 million in the case.

In the case, USAA, a reciprocal interinsurance exchange for military service members, claims Wells Fargo — the nation’s fourth largest bank — infringed two other patented inventions related to consumer remote deposit technology.

“The patents are, generally speaking, directed to improved computing systems that enable commercially-viable remote check deposit systems, including those used by Wells Fargo, for example, by determining and validating the routing number on a check, converting the file format of a check image, generating a log file containing useful information about the check, converting the file format of a check image, generating a log file containing useful information about the check or its image, and/or assisting the user in taking a high-quality check image, for example by instructing the user regarding the proper distance away from the check to hold the camera,” the lawsuit states.


USAA claims that Wells Fargo released its remote deposit capture product years after USAA had implemented its system, and refused to license USAA’s product when approached about it in 2017.

“Wells Fargo has generated $1.2 billion in profit from the use of this system. We’ll be asking for no less than 85 cents per successful mobile deposit,” said USAA’s attorney, Jason Sheasby, of Irell & Manella law firm of Los Angeles, California, noting that equates to $102,792,510 in damages that they are seeking.

“Wells Fargo had the right to use our ideas, but the moment our patent was granted, they had two options — vacate or ask permission,” said Sheasby.

Citing Article 1, Section 8, Clause 8 of the U.S. Constitution, Sheasby noted in opening arguments on Monday that Congress grants patent rights to protect innovation.

“When someone is using our patent, they either must vacate or seek permission,” he said.

Giving USAA’s history, Sheasby noted the company was founded in 1922 when 25 Army officers met in San Antonio and decided to insure each other’s vehicles. Since its founding, membership has grown and is open to active U.S. military members, those honorably retired in the armed services and their families.

Sheasby argued that USAA’s applied research revolutionized the banking industry. Since no branches existed, the company developed an anytime, anywhere system that connected their members to them digitally, allowing checks to deposit in real time.

“USAA’s invention was widely heralded throughout the United States as groundbreaking and powerful,” he said, referring to it as cutting edge. “USAA was at the forefront of this technology.”

Sheasby referred to an August 2009 article featured in the New York Times on USAA being an innovator in mobile banking by allowing customers to deposit checks by Iphone.

Giving a timeline, Sheasby noted that USAA created its first working prototype in 2005. In October 2006, patent applications were filed. The Mac application was added, Iphone application in 2009, Android application in 2010, the Ipad application in 2011, and any mobile browser also in 2011.

He argued that in 2011, Wells Fargo did not have the capabilities to create their own remote deposit check capture system.

“Wells Fargo coveted USAA’s applied research,” said Sheasby.


In her opening arguments, Wells Fargo’s attorney Danielle Williams, of Winston & Strawn LLP, of Charlotte, North Carolina, contended that the case is about respecting the rules, respect for property rights and respect for the process in place to assess those property rights.

Reminding that both patents-in-dispute were filed July 2017 and issued July 3, 2018, Williams argued that USAA filed the lawsuit weeks later, in August 2018, claiming that the patents were a continuation of “some old, earlier” filed applications from the original patents filed on Halloween 2006.

“The law allows USAA to file application of these old, original applications, but only if… to get the benefit of the Oct. 31, 2006 date, the original application has to include specifications of the invention claimed in the 2018 application,” Williams argued.

“The evidence will show the claims in the 2018 patent, for the first time, talked about using a mobile device for check deposit,” she contended. “The old 2006 specification only described using a desktop or laptop computer connected to a separate scanner or camera. This is all that was described.”

“In 2006 USAA didn’t write down what it is now claiming it’s invention is, so it’s 2018 patents are invalid,” Williams argued.

She further contended that the 2006 patents used the terminology PDA for personal digital assistant, which didn’t refer to Iphones or smartphones, but TVs and MP3 players instead.

“The specification from 2006 does not include what they’re trying to claim today,” Williams reiterated. “The evidence will show USAA is claiming they wrote down their invention in 2006. The rules require USAA to write down their invention in clear specific terms.”

Further, she said Wells Fargo does not use OCR or optical character recognition as the USAA patents-in-suit requires.

Noting history about the bank, Williams said Wells Fargo, which opened in the 1850s, boasts more than 5,500 branches and has more than 13,000 ATMs across the country to serve its customers, including those in the armed forces.

Denying any infringement, she said Wells Fargo has always been an innovator, being first in Internet banking, remote deposit capture and mobile banking.

“Wells Fargo has never been sitting on the sideline,” Williams said.

Just as the first Iphone emerged in 2007, Wells Fargo was the first to offer mobile banking in 2007 — years before USAA filed the patents in the case, she pointed out.

Williams further argued that Well Fargo’s fraud prevention measures were already in place at least in 2005 before the patents-in-suit.

“USAA didn’t prevent these fraud prevention features and nobody has ever paid USAA to (license the patents),” she said, claiming USAA is trying to take credit for work it didn’t do.

“This case is about respect for rules,” said Williams. “If you didn’t write down your invention in 2006, you can’t claim it in 2018. It’s that simple.”

The case continues today in Marshall’s Sam B. Hall Jr. Federal Building and United States Courthouse, with U.S. District Court for the Eastern District of Texas Chief Judge Rodney Gilstrap presiding.

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