Friday, August 05, 2005

AND SPEAKING OF DATATREASURY . . . I discovered this article in The Green Sheet, which does a nice job summarizing the actions of DataTreasury and their enforcement of US patents 5,910,988 and 6,032,137 against the entire banking industry pursuant to Check 21.

For those that may not be familiar with it, The Check Clearing for the 21st Century Act ("Check 21") was passed by Congress and became effective on October 28, 2004. Check 21 is intended to foster innovation in the payments system and to enhance its efficiency by reducing some of the legal impediments to check truncation. The law facilitates check truncation by creating a new negotiable instrument called a substitute check, which permits banks to truncate original checks, to process check information electronically, and to deliver substitute checks to banks that want to continue receiving paper checks. A substitute check is the legal equivalent of the original check and includes all the information contained on the original check. The law does not require banks to accept checks in electronic form nor does it require banks to use the new authority granted by the Act to create substitute checks (more information can be found here).

The problem here is that DataTreasury is claiming to have a patent on core features used in the Check 21 process. So now we have a law allowing banks to electronically process checks, but in order to do so, they have to go through DataTreasury's patent. Very valuable stuff.

According to DataTreasury, each year Bank of America processes 9.4 billion checks; Citigroup processes 2.4 billion; Wachovia processes 4.5 billion; and Wells Fargo processes 3.7 billion checks. JPMorgan Chase processed 1.5 billion checks in 2003.

So far, DataTreasury has been successful in its attempts to go after patent infringers. It has entered into licensing agreements with some companies, and at least one company, ACS, is permanently barred from ever using its technology. JPMorgan Chase, which opted to settle with DataTreasury in the infringement suit, is now a DataTreasury licensee. And DataTreasury has made it clear that they will be going after others. DataTreasury is currently preparing to take First Data and Ingenico to trial to resolve its claims against them; it has refiled its claims against Viewpointe Archive, a check-image archiving provider founded by JPMorgan Chase.

7 Comentários:

Anonymous said...

It boggles the mind that DataTreasury was able to obtain patents on these "core features." When I look at the patants, I have to ask myself "how else could one do electronic check processing?" It's rather like patenting the process of opening and closing a door. Processes like this were certainly in operation prior to 1999. In fact, there is no difference that I can see between the patented features and conventional electronic transaction processes in other domains. Part of the secure data involved in this transaction is a check image. That this image is considered to be a legal document could hardly have an impact on the patentability of the transaction processes. This is an application of a set of common design patterns, not a patentable process. If any crime is being committed here, it is in the system that would enable patents to be secured for a design that is substantially the solution that any competent software architecture team would produce after a week or two of design sessions. There's no new idea here -- just the logical solution to a new variant of an old problem.

cayanchameleon said...

“The more original a discovery, the more obvious it seems afterwards.” - Arthur Koestler

Anonymous said...

Another company to look at specific to electronic check conversion and patents is LML Payment. These guys are in court with First Data (telecheck), Nova, and ECHO. Their patent the "988" was filed in 1992.

Anonymous said...

Good Job Claudio
Bob H

Anonymous said...

COMMON SENSE SHOULD RULE DATATREASURY WENT AFTER THE BIGGEST BANK FIRST WHICH WAS JP MORGAN AND AFTER A LONG HARD BATTLE JP MORGAN GAVE IN. THE MARKSMAN ORDER WAS A REAL SURRENDER TO REAL PROPERTY. DATATREASURY IS GOING TO MAKE ALL ITS SHAREHOLDERS VERY RICH UNLESS SOMEBODY GETS THE PATENT DEPARTMENT TO OVERTURN. I DO NOT THINK THAT IS GOING TO HAPPEN TO SOON.

Richard Corfield said...

I think this shows a danger of allowing patents on something as abstract as a process. Before software and process patents came along patents only covered very concrete things. It was possible to patent your implementation of a corkscrew, but not possible to patent the act of opening a bottle of wine. Many more people could come up with other ways of solving the same problem.

Russell said...

I've blogged a longer comment here: http://blog.russnelson.com/economics/patent-obviousness.html

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