Newsroom

January 21, 2020

RDC litigation update in new Compliance Blog post

Compliance BlogIn the latest post on the NAFCU Compliance Blog, NAFCU Vice President of Regulatory Compliance Brandy Bruyere breaks down recent updates in the lawsuits between USAA and Wells Fargo related to remote deposit capture (RDC) technology patents, and provides information on things for credit unions to consider when offering such services.

Bruyere provides background to the lawsuits, which dates back to late 2017/early 2018 when USAA sent credit unions letters alleging that the credit union’s RDC technology infringed on patents owned by USAA. Through these letters, USAA sought voluntary licensing fees from other financial institutions and invited credit unions to call the firm to discuss licensing USAA patents.

“In its ongoing efforts to be reasonably compensated’ for making investments in and holding various patents for RDC technology, USAA filed two lawsuits against Wells Fargo in the summer of 2018,” Bruyere writes. “In the first of these lawsuits, a jury found in favor of USAA and determined that Wells Fargo willfully infringed on two of USAA’s patents.”

This first case is still ongoing as Wells Fargo asked the court to stay the jury decision and is likely to appeal it.

Earlier this month, the trial began in the second lawsuit and the jury – after just four days – again determined that Wells Fargo willfully infringed on some of USAA’s RDC patents.

"Now with two wins under its belt, USAA could decide to increase its efforts to secure licensing fees from financial institutions that the bank believes are infringing on its patented technology, including credit unions," Bruyere writes. "Should USAA take this kind of route, the use of RDC technology will increasingly be an area of litigation risk for credit unions.

"Credit unions that offer RDC to members generally do so through a vendor or a third-party’s software. We continue to encourage credit unions to review these contracts to determine how indemnity is addressed," she adds.

NAFCU is actively monitoring these lawsuits for potential implications for credit unions and will continue to provide up-to-date information as these issues develop. Sign up to receive new Compliance Blog posts.