December 05, 2019

Wells Fargo asks court to stay RDC decision; appeal likely

gavelWells Fargo this week filed a motion with the U.S. District Court for the Eastern District of Texas asking the court to stay the recent jury decision that found Wells Fargo intentionally infringed on USAA's remote deposit capture (RDC) patents and ordered Wells Fargo to pay $200 million in damages.

NAFCU is actively monitoring the lawsuit for its potential implications on credit unions. Following the jury decision, NAFCU provided an update to members via email and a post on the association's widely-read Compliance Blog.

In late 2017, credit unions – as well as other financial institutions – began receiving letters from a firm alleging that the credit union's RDC function infringed on USAA's patents.

In the message to member credit unions, NAFCU Executive Vice President of Government Affairs and General Counsel Carrie Hunt noted that credit unions often "offer RDC to members through a vendor or third-party’s software."

"We continue to encourage credit unions to review the contracts to determine how indemnity is addressed by each vendor or third-party in the event of a lawsuit regarding the software," Hunt wrote.

Wells Fargo's motion asks the court to stay the judgment in the case pending any post-judgment motions, including those related to an appeal or reconsideration of the damage amount. The bank has not indicated whether it will appeal the decision, but a stay certainly would indicate that is a strong possibility.

USAA's second claim against Wells Fargo is set to be heard in January. In a separate case, a California federal court is expected to determine whether the vendor that provides Wells Fargo, and numerous other financial institutions, with RDC technology infringes on USAA's patents.