Robin Y. Richardson

Wells Fargo, the nation’s fourth largest bank, will have to pay United Services Automobile Association (USAA) — a reciprocal interinsurance exchange for military service members — a total of $200 million for infringing its patents related to remote check deposit technologies used in mobile banking systems, a federal jury in Marshall decided Wednesday.

The jury also determined that Wells Fargo willfully infringed the two patents-in-suit.

“Wells Fargo has taken advantage of USAA’s pioneering efforts in mobile deposit technologies by incorporating — without permission — USAA’s technological innovations into its Wells Fargo Mobile Deposit system,” the lawsuit, filed by USAA in 2018, states.

USAA representatives said this technology has led to a revolution in consumer banking.

“Nearly every US bank and credit union uses this technology, benefiting some 87 million U.S. consumers,” USAA reps said.

USAA was seeking $300 million in the case for three years of infringement, starting from December 2016 to the date of the trial. USAA representatives expressed how pleased they are that the jury ruled in the plaintiff’s favor.

“The verdict acknowledged the value of USAA’s innovation on behalf of members,” Nathan McKinley, USAA vice president of corporate development, said in a statement. “We hope the industry acknowledges this verdict as further evidence of the enforceability of these patents.

“Our goal is to be reasonably compensated for the benefits we believe the industry has received from using USAA’s pioneering efforts,” he said.

The jury trial kicked off last week in Marshall’s federal courthouse, with U.S. District Court for the Eastern District of Texas Chief Judge Rodney Gilstrap presiding.

USAA was represented by the Irell & Manella LLP, of Los Angeles, California, in the case. The Irell team on the case includes partners Jason Sheasby and Lisa Glasser, and associates Tony Rowles, Andrew Strabone and Benjamin Manzin-Monnin.

CLOSING ARGUMENTS

In his closing arguments Wednesday, Sheasby gave a history of USAA, noting that the company is comprised of 12.4 million armed service members and their families. It was founded by a group of Army officers in San Antonio who pulled their money together in the 1920s to create a mutual. He said the technology in the case was created to better service the service members and their families. The technology in the case allows banking customers to easily and conveniently deposit paper checks into their accounts from their smartphones — wherever they might be in the world, the lawsuit states.

“Many of them live paycheck to paycheck,” said Sheasby. “And USAA is not going to allow (one of) the largest banking (companies) to (infringe).”

“You’re here to deliver justice,” he told jurors.

Sheasby contended that it’s no accident that Wells Fargo’s system functions the same as USAA’s.

“They had access to our app,” he said. “We found screenshots of our app. We found screenshots that they knew the app was covered by our patents.”

In his closing arguments, Wells Fargo’s attorney Thomas Melsheimer, of Winston & Strawn LLP, of Dallas, contended that the screenshots were irrelevant.

“The patents in this case do not involve how one patent looks compared to another,” Melsheimer argued.

He said it’s not about aesthetics, but how the program works.

“We have not taken any of their technology and we don’t owe them any money,” said Melsheimer.

“Folks, all we did was fairly compete,” Wells Fargo’s co-counsel, Jack Hill, of Ward Smith & Hill PLLC, of Longview, added.

Hill and Melsheimer further argued that their client, Wells Fargo, proceeded as a legitimate business should by purchasing its software from a legitimate vendor, Mitek. The defendant brought in a representative from the company to testify to the multiple ways to do the auto capture feature.

“Mitek’s software captures the image and then analyzes,” said Hill.

“That’s a different way than what these patent claims describe. That’s a new way,” said Melsheimer.

Hill further contended that Well Fargo’s auto-capture product had been on the market for more than a year before USAA even obtained the patents in suit.

“What you will see is we tried to investigate and have a discussion with USAA and before that discussion could conclude we were sued,” Hill argued.

Hill argued that the $300 million USAA sought in the case was unreasonable and that the auto-capture feature served no great benefit.

“Wells Fargo has built its success fairly and by the hard work of its employees and by lawfully building its technology or lawfully buying its technology,” Hill said. “When you’re wrongfully accused, you stand up for that. That’s what we’re doing here.”

Sheasby, representing USAA, said contrary to what the defendant argued mobile remote deposit capture is an incredible powerful tool for banks, saving the institutions millions. The fact that Wells Fargo successful deposited 231 million checks over the three-year time period using the infringing auto capture MRDC in dispute proves that, he contended.

Sheasby additionally noted that the patents in the case were filed in 2009. When they were granted in 2015, he said Wells Fargo had an obligation under the law to stop using the technology.

“They said video-frame processing is not the same as auto-capture; well, the manual says something different. It says automatic capture,” Sheasby argued.

“They chose not to (turn it off) after we marked our product in 2016,” Sheasby argued. “They chose not to when we approached them (about a license) in 2018.

“If it’s worthless, turn it off,” he argued.