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Advisory: DataTreasury Patent Infringement

June 6, 2013

DataTreasury Corporation (“DataTreasury”) has filed a new round of lawsuits against banks and their service providers relating to two patents which claims systems and methods for remotely capturing and centrally processing document images and data. On May 28, 2013, DataTreasury filed three separate lawsuits in the Eastern District of Texas against various software companies which provide imaging and payment processing services (the “Service Provider Defendants”), as well as the banks utilizing those imaging and payment processing services (the “Bank Defendants”). DataTreasury sued Jack Henry and Associates (“Jack Henry”) and various bank utilizing products and services provided by Jack Henry relating to imaging and payment processing solutions. Separately, DataTreasury filed suit against Fidelity National Information Services Inc. (“FIS”) and banks using FIS’ imaging and payment processing services. Similarly, DataTreasury Corp. against Fiserv Inc. (“Fiserv”) and banks using Fiserv’s check capture and processing systems and services. In connection with each lawsuit, DataTreasury sued the Service Provider Defendant and the Defendant Banks alleging patent infringement claims for infringing US Patent Nos. 5,910,988 (“the 988 Patent”) and 6,032,137 (“the 137 Patent”).

Claims by DataTreasury are not new. In fact, DataTreasury began enforcing its patents in 2002 through several infringement lawsuits. DataTreasury’s patents are directed to a method for remotely capturing and centrally processing document images and data. Many financial institutions have already settled with DataTreasury through licensing agreements. However, other companies, like US Bank challenged DataTreasury’s patent. According to certain sources, DataTreasury has netted more than $350 million in licensing fees from banks. That being said, challenges to the validity of DataTreasury’s patents continue. Re-examination proceeding number 90/012537 was initiated on September 13, 2012. That re-examination proceeding is currently pending. The Patent Office has rejected certain claims of the patents in light of new prior art. While various financial institutions have challenged the validity of DataTreasury’s patents, many have taken licenses in settlement of the patent infringement claims.

With respect to the most recent round of lawsuits, the Defendant Banks have several options that should be evaluated in responding to these lawsuits. As a preliminary matter, each bank should review its Software and Services Provider Agreements with its provider (whether Fiserv, FIS or Jack Henry) to determine if its service provider has a duty to defend and/or indemnify the bank against the patent claims asserted by DataTreasury. The Provider Defendants should have an incentive to defend claims asserted against their bank customers who use their check imaging and storage products and services. Additionally, in order to reduce costs, the Bank Defendants can join together in joint defense groups to defend against the claims and share costs of defense.

Cox Smith has previously assisted clients in both obtaining defense and indemnification from software providers under similar situations, as well representing groups of defendants in a joint defense arrangement to fight against such claims of patent infringement. We would welcome the opportunity to visit with you about the lawsuits asserted by DataTreasury and the options that you have in responding to these lawsuits.

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