Infamous Check Scanning Patents, That Senators Tried To Bury, Wins First Lawsuit
from the scan-this dept
A couple years ago, there was a really sleazy move by some Senators to try to exempt banks from lawsuits brought by a company called DataTreasury, who held a patent on a method for scanning checks. The only purpose for this legal change was so that banks could avoid having to deal with patent infringement threats and lawsuits for doing something as basic as automatically scanning their checks. What we couldn't understand is why the Senators would single out two specific patents to be ignored, rather than trying to actually fix the patent system. Well, actually, it wasn't hard to figure out: the Senators were trying to do the banks (the same ones they were about to bail out) a big favor -- and doing real patent reform is difficult. Anyway, that story got some publicity and it forced the Senators to back down, so that specific "exemption" never made it through to being law.That said, it doesn't mean that the patents in question was a particularly good patent. In fact, there's a good argument that the patent is exceptionally broad, way beyond a reasonable level, and was the natural progression of where things were headed. Others have pointed out that, depending on what the Supreme Court rules in the Bilski case, this patent might soon get tossed under the new rules anyway. In the meantime, though, it hasn't stopped DataTreasury from collecting $350 million from banks it has threatened, and, as Joe Mullin points out, the company has also won its first patent lawsuit, against US Bank, who will now have to pay somewhere between $27 million and $90 million (depending on how "willful" the infringement is considered). The decision came out of an East Texas jury, so perhaps it's not surprising.
Mullin's article highlights how questionable a patent this is:
Steve Bartlett, CEO of the bank lobbying group Financial Services Roundtable, says DataTreasury's suit against U.S. Bancorp is a prime example of why business method patents need to be reined in. The patents don't amount to an invention, Bartlett says, just a description of a common business practice--processing checks--that has changed over time, as have answering the phone and opening mail. To Bartlett, that such a patent can be used to extract large sums from banks shows how far the patent system has spun out of control.Furthermore, as the lawyers pointed out at the trial, there appears to be tremendous prior art on the patents in question -- and the only way the company was able to secure the patents after they were initially rejected was to add a bit of encryption to it. Under the KSR test, it seems like that alone should invalidate the patents. Taking two known things -- check scanning and encryption -- and combining them shouldn't be patentable. But that's not how the patent system works, unfortunately. US Bank is planning to appeal, and the Supreme Court could help out quite a bit with a smart Bilski ruling (though that may be too much to hope for).
"This particular case involves check processing, which every bank in the nation has been doing for 200 years," says Bartlett. "And yet [DataTreasury] somehow got a patent on it."
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: check scanning, patents
Companies: datatreasury
Reader Comments
Subscribe: RSS
View by: Time | Thread
I've got the...
[ link to this | view in chronology ]
Another checkmark in the con column.
[ link to this | view in chronology ]
Or, you could just take the word of the lobbyist and run with it. After all, it's a lot of work to learn the facts, and lobbyists would never lie.
[ link to this | view in chronology ]
Re:
I think the main point of the article was that this is just another example of an obvious patent being abused. The difference is that it actually got attention by law-makers. However, instead of actually addressing the problem, they tried to sweep it under the carpet. (Also, yes lobbyists are liars, swindlers, and shills. This does not preclude them from making factually correct statements. His motivation is obvious, but the fact remains that they are enforcing a patent on an obvious business practice.)
[ link to this | view in chronology ]
We all know that it was Datatreasury's technology that actually saved the banks, and helped them repay that TARP money so fast. After all they're saving billions of dollars a year no longer having to physically transport those checks around the world. Not to mention the billions of dollars they are making on intrest w/ the additional float time. Oh and yes, lets not forget the billions of dollars a year they are bilking out of the public in newly found overdraft fees! They certainly didn't make that money back the old fashioned way...lending money, because we all know they've been horting it!
[ link to this | view in chronology ]
Re:
I think you're right. Sorry shg.
[ link to this | view in chronology ]
The "non-obvious" Patents
http://www.google.com/patents/about?id=s0sWAAAAEBAJ&dq=5,910,988
http://www.google.com /patents/about?id=BZsDAAAAEBAJ&dq=6,032,137
If you want to get bank information off of paper and into a computer and then transfer it securely to a central location, how is the solution of "take a picture of it and send it as an encrypted message" not obvious?
[ link to this | view in chronology ]
Re: The "non-obvious" Patents
encrypting subsystem identification information and the transaction data;
Why would it have been obvious in 1999 to encrypt subsystem identification information and transaction data in a method for processing checks?
[ link to this | view in chronology ]
If the patent holder doesn't offer a product for sale that the infringer could have used, the damages should be very limited.
If there is a product available, the damages should be limited to the net loss in sales.
Or, limit damages to a small multiple (like 10x) of the amount paid by the patent holder in Intellectual Property Taxes.
Not that I like the idea of another tax structure, but if payment were voluntary and it helped stop these abusive awards, I'd support it.
[ link to this | view in chronology ]
Surprise!
[ link to this | view in chronology ]
Agreed. I can't believe they can do this......
So can Resses sue any candy maker that combines chocolate and peanut butter?
[ link to this | view in chronology ]
Re:
and i was under the impression that it was a process that was patented, not a product per se.
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Patent for everyone
[ link to this | view in chronology ]
Re: Patent for everyone
Is it a one time pad?
If not, then I doubt your claim
[ link to this | view in chronology ]
Is nothing worthy of a patent?
If the claims were allowed because of the inclusion of insignificant encryption, then the solution for the infringing banks is simple. Just don't use the insignificant encryption and carry on processing checks THE OLD WAY.
[ link to this | view in chronology ]
Re: Is nothing worthy of a patent?
The implementation factor is key to patents. It takes a specific implementation to be guarded by a patent.
[ link to this | view in chronology ]
Re: Re: Is nothing worthy of a patent?
...and so the patents in question are to specific implementations of methods for processing checks. Apparently the specific implementations involve encryption and other specific steps.
[ link to this | view in chronology ]
Re: Re: Re: Is nothing worthy of a patent?
[ link to this | view in chronology ]
Re: Re: Re: Re: Is nothing worthy of a patent?
In this case the examiner and several courts came to the conclusion, that AT THE TIME THE INVENTION WAS MADE, it would not have been obvious to one of ORDINARY skill in the art.
After looking at the Wright Bros. plane and then, in hindsight, at a seagull in flight, an arrogant onlooker might say the plane was obvious too....yet no one had done it before....
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Is nothing worthy of a patent?
please, go buy a clue
[ link to this | view in chronology ]
IBM, just another greedy transnational destroying US job creation.
IBM floods the patent system with large quantities of minor incremental inventions. One aspect of their vision for Patent Deform is First to File which will greatly aid their efforts to cloud real inventors patent rights. It will lead to patent system flooding, where the number and type of minor incremental patents will greatly increase, further bogging down the patent office.Everyone needs to remember that when IBM followed in Microsoft's footsteps as seems to always be the case nowadays they were really asking for a free pass to take others inventions.
While I think I understand why TechDIRT carries Microsoft and IBM water I do not understand why people buy their propaganda and then are surprised when the reality of how they and for that matter all the members of the Coalition for Patent Piracy & Fairness and the Coalition for 21st Patent Deform and HARMonization operate surfaces.
Ronald J. Riley,
Speaking only on my own behalf.
President - www.PIAUSA.org - RJR at PIAUSA.org
Executive Director - www.InventorEd.org - RJR at InvEd.org
Senior Fellow - www.PatentPolicy.org
President - Alliance for American Innovation
Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
Washington, DC
Direct (810) 597-0194 - (202) 318-1595 - 9 am to 8 pm EST.
[ link to this | view in chronology ]
Re: IBM, just another greedy transnational destroying US job creation.
[ link to this | view in chronology ]
Re: Re: IBM, just another greedy transnational destroying US job creation.
[ link to this | view in chronology ]
Re: Re: Re: IBM, just another greedy transnational destroying US job creation.
[ link to this | view in chronology ]
Re: Re: IBM, just another greedy transnational destroying US job creation.
[ link to this | view in chronology ]
Re: Re: IBM, just another greedy transnational destroying US job creation.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
A patent, is a patent, is a patent!
OK ladies and gentlemen. How about this scenario?
You`re traveling at 85 miles per hour on Florida Interstate
(I-75). The speed limit is 70 miles per hour. You explain to the State Trooper, that stops you, that you don`t like the 70 MPH. speed limit and decided that 85 MPH. is more to your liking. The Judge listens to the same pathetic story. The Judge now advises you that you have willfully and intentionally broken the law. Your fine instead of $125 it is $375 (triple the amount)for a willful and intentional violation. US Bank has willfully and intentionally infringed Data Treasury`s Patents!(YOU CAN`T CHANGE THE LAW,OR INFRINGE A PATENT, BECAUSE IT`S NOT TO YOUR LIKING!) IF YOU DO SO YOU PAY THE PENALTY!
[ link to this | view in chronology ]
=Reeeeeeetarded
[ link to this | view in chronology ]