Senator to Shield Banks From Patent Lawsuit
Senator Jon Kyl, a member of the Senate Judiciary Committee, is pushing for legislation that would protect banks from a patent infringement lawsuit. As reported by CNNMoney.com, the suit is related to electronic imaging and the processing of checks. While the Judiciary panel is scheduled to look at a patent reform bill today, it’s been hinted that if Kyl has his way, banks would be shielded from having to shell out money for damages in any possible cases.
The plaintiff, DataTreasury Corp., owns a patent for digital check processing, and is currently suing Bank of America and Wells Fargo & Co. Some banks, such as JPMorgan Chase & Co., have already settled with DataTreasury.
Banks moved toward the digital processing and imaging of checks in 2003, after Congress passed a law that encouraged them to do so. Furthermore, a recent report by the Congressional Budget Office found that DataTreasury could be entitled to $1 billion or more in patent royalties if it succeeded in its litigation efforts.
This isn’t the first proposal of this type to be suggested, as Sen. Jeff Sessions offered a similar proposal last year. However, Sessions’ proposal came under fire because it targeted ongoing litigation, and Sessions also owned stock in two banks that could have gained from the provision.
Senator Kyl’s bill differs from Sessions’ because it does not completely protect the banks. Instead, Kyl’s plan contains a clause that would void the provision if a federal court finds that the legislation amounts to a government taking of DataTreasury’s patent rights.
For the much troubled banking-system, this provision could potentially save a lot of trouble and capital. But would passing this legislation set a dangerous precedent?
PAUL PRINCIPATO on Tue, 31st Mar 2009 9:42 am
It came as no surprise that Senate Minority Whip Jon Kyl (R-AZ) (and apparently with a straight face) has recently introduced HIS Patent Reform Act (S610), a copycat of the Bill he proposed last September (S3600) in the wake of the failure of the other patent reform bill then pending in the Senate and contrary to (S515) and (HR1260) currently pending in Congress.
It again includes a “Check 21″ exception (sec. 13,): “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.” Although a small Technology Company named Data Treasury and its patents were NOT specifically mentioned, the intent of the exception is aimed directly at Data Treasury and its ongoing litigation against the banking industry for infringing upon its “Check Collection” remote image capture technology.
Sen. Jeff Sessions originally sponsored this exception in the then pending reform bill, but he later withdrew his support expressing doubts about its legality. Kyl’s proposal has one key difference from the one Sessions offered: It attempts to keep the federal government from shouldering any financial liability for blocking DataTreasury’s pursuit of patent damages against the banks. Under Kyl’s bill, the bank-immunity provision would be voided if a federal court found that the legislation amounted to a government “taking” of DataTreasury’s patent rights. This exception, as written, pollutes a legitimate legislative effort with ex post facto and probably unconstitutional provisions having the lofty purpose of allowing banks infringing Data Treasury Patents to negate and or dramatically reduce the damages they face. So rather than face a jury, where they obviously fear losing, the banks decided to call on their friends in Congress for legal protection. So what was the purpose of his adding this exception with the Gov’t provision to the bill other than to protect the banking industry depicting a clear and crass example of who gets bought in Congress? Legislation should not be used to grant retroactive legal immunity to large corporations that willfully ignored the property rights of a small, innovative company. And no elected official who has pledged to maintain the integrity of our legal system should be a party to such a travesty. Senator Kyle by championing this exception should be made (with a clear answer devoid of spin) to explain why exactly, banks should be immune to patent law that applies to everybody else.
This is the Industry that Sen. Kyl Champions:
From: Chief executive (U.S.) 5/1/2002 –Author PRINCE, C.J.
“It’s not every CEO who freely admits to swiping other people’s ideas—although, truth be told, the vast majority of successful chief executives have probably taken the liberty. But ask Richard Kovacevich, CEO OF WELLS FARGO, whether he prefers inventing ideas or stealing them and he’s quick with his response. “Oh I would much rather steal an idea,” the 57-year old CEO says matter-of-factly. “Quite frankly, it’s much easier mentally. I have no pride about that.” Such disclosure was for the purpose of marketing new technology and while his comments may have been in another context, they clearly set a tone and standard for his senior executive’s actions over the ensuing years.
For years, DataTreasury Corp. tried to sell its technology to the banks, but instead of buying or licensing the technology, several big banks expropriated it and began using it to change the way they processed checks. DataTreasury’s technology created a windfall for the banks. According to the industry’s own experts, the banks save $20 to $40 billion annually because of the switch to digital processing. Of course, that switch would not have been possible without DataTreasury’s technology, which was covered by patents that the banks callously ignored. Understandably, the company has sued for damages. The banks initially responded by trying to get the patents invalidated with some legal jujitsu. But the U.S. Patent and Trademark Office upheld the validity of DataTreasury’s patents in their entirety. Since then, via ongoing litigation, the Data Treasury patents have withstood the best legal challenges the banks could buy, and that some of the more responsible banks have admitted the validity of the patents by licensing them. And every entity that has been sued almost surely had opportunity to negotiate a license before being sued. This exception has the backing of the Coalition for Patent Fairness, (Fairness by definition – freedom from dishonesty and injustice), a group of high-tech companies backed by (The Financial Round Table.) The Financial Round Table is an institution that represents the country’s’ one hundred largest banks. These banks have a serious financial problem. A finding of willful infringement, will subject them to treble damages. Are they trying to slide an, (unconstitutional) exception through in the name of (honesty and justice)?
It is abundantly clear that the Banking industry motivated by their unbridled power and greed are prepared to do whatever they believe is necessary to achieve their goals to avoid having to pay a reasonable royalty on Data treasury’s validated Patents. We are on very dangerous grounds with congressional tampering with the constitutional right of intellectual property protection. These are high-quality patents; to not enforce patent rights would be a discredit to those who fairly and lawfully use these licenses.
PAUL PRINCIPATO on Tue, 31st Mar 2009 10:18 am
So what was the purpose of his adding this exception with the Government protection provision to the bill other than to protect the banking industry depicting a clear and gross example of who gets bought in Congress? We are on very dangerous grounds with congressional tampering with the constitutional right of intellectual property protection. These are high-quality patents; to not enforce patent rights would be a discredit to those who fairly and lawfully use these licenses.
Inspector Cluseau on Tue, 31st Mar 2009 11:53 am
Inspector Cluseau wrote:
I said it before and I`ll continue to say it until this crew (The Coalition for Patent Fairness) stops there attempt to perpetrate a hoax on the American public!!! The Coalition for Patent Fairness is a group of one hundred and fifty high tech companies. They are backed by the (Financial Round Table.) The Financial Round Table represents the countries one hundred largest banks. Data Treasury is suing these banks for patent infringement. A substantial number of banks have come to terms and have signed licensing agreements with Data Treasury. The banking industry has spent in excess of ONE BILLION DOLLARS to fight this case and to justify there illegal infringement .To date ,they have not won a single court battle. They attempted to buy there way out of this dilemma, with an unconstitutional amendment sponsored by Rep Jeff Sessions. By the senators own admission ” I don`t know how (the provision ) can pass a constitutional muster.”
These banks, now have a serious financial problem. (*They are presently involved in a patent infringement lawsuit*). A finding of willful infringement, will subject the banks to treble damages. (Three times the amount, that a jury would award, as per existing patent legislation.) The potential cost to the banks! Billions of dollars! If passed, the amendment would have shift a one billion dollar expense, from the banks, to the American tax payer., By Senator Sessions own admission, “I don’t know how (the provision) can be modified to pass a constitutional muster. This Senator was attempting to add, an unconstitutional amendment, to the Patent Reform Bill. I question his motivation. I assure you, It had nothing to do with honesty, justice or a burning desire to perform his civic duty. The Senator stated,” I think this has more to do with lobbyists, than it has to do with merit”. ( Lets call a spade a spade). This action involved lobbyists, buying politicians! (It had nothing to do with merit!)
NOW THERE AT IT AGAIN ! —Senate Minority Whip Jon Kyl (R-AZ) has recently introduced the latest Patent Reform Act (S3600). In it includes a “Check 21″ exception. The latest Patent Reform Act (S3600). In it 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 INSTITUTIONS WITH RESPECT TO SUCH A CHECK COLLECTION SYSTEM” WHO`S PAYROLL ARE THESE GUYS ON??? WHY SHOULD BANKS NOT BE LIABLE FOR PATENT INFRINGEMENT??? THIS ISSUE SHOULD BE RESOLVED IN THE COURTS, NOT BY A GROUP OF PAID OFF POLITICIANS’. Come on Minority Whip Kyl HOW ABOUT A REPLY?????
(Coalition for Patent Fairness )— Not even in anyone’s wildest dreams, does this name fit!
Fairness by definition —( FREEDOM FROM DISHONESTY AND INJUSTICE.)— ONCE AGAIN, WHO DO THESE GUYS THINK THEY ARE FOOLING?
Inspector Cluseau.
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