Friday, February 20, 2009

What Will Become of the "Check 21" Patent Reform Provision?

A 271 Blog reader brought up an interesting point regarding patent reform and the banking system. Recently, Senate Minority Whip Jon Kyl (R-AZ) introduced the latest Patent Reform Act (S3600), which includes a "Check 21" exception (sec. 13, page 80):

"With respect to the use by a financial institution of a check collection system that constitutes an infringement under subsection (a) or (b) of section 271, the provisions of sections 281, 283, 284, and 285 shall not apply against the financial institution with respect to such a check collection system."

Of course, there is no secret that this provision relates to patent litigation between DataTreasury and practically the entire banking industry.

But, given the current state of banking, will this provision be pitched as part of a "stimulus" effort on behalf of the ailing financial institutions? Certainly, pro-reform groups have recast their arguments in 2009 to focus more on the economic impact of NPE's. And if there was ever a time that Congress would seriously consider such a provision, that time is now.

While patent groups would understandably cry foul over the political expediency of approving a "Check 21" exception, taxpayers might validly argue that, should DataTreasury succeed, taxpayer bailout money would likely be used to settle the matter.

And to spice things up even further, there has been talk of nationalizing certain banks in light of the crisis (a.k.a. "the Swedish solution"). How would this affect the DataTreasury defendants?

Interesting times, indeed . . .

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