USAA may soon demand even more tech fees from banks

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If you are a bank executive who cringed at USAA’s plan to charge a licensing fee for mobile remote deposit capture, brace for more: The San Antonio company holds the rights to plenty of other technologies that it could demand payment for.

Outside of mobile RDC, USAA has spent the past decade or so greatly beefing up its patent portfolio and could potentially look to enforce a wide range of intellectual property rights, said Richard Knight, who was USAA’s chief patent counsel from 2005-2009.

Its portfolio includes more than 700 technology patents, including 50 around RDC, said Knight, who runs his own intellectual property consulting practice and says he has no current business ties to USAA. Though the company is somewhat vague about its long-term intentions, Knight predicted that it will try to assert more of its legal rights, as it has recently done with mobile RDC.

“This could just be the tip of the iceberg,” Knight said.

A USAA spokesman confirmed that the company has more than 700 patents —761 to be exact, according to the U.S. Patent and Trademark Office’s database — and said it will “continue to actively manage its patent portfolio and return value to our membership whenever appropriate.”

A good example, he said, was a deal this year with the firm Persistent, which will develop a commercial version of a risk-based authentication engine that relies on USAA patents and security algorithms.

“In those cases where our innovations could mutually benefit the broader consumer market [and the company’s military members], we will license or sell our intellectual property,” the spokesman said.

Indeed, USAA has been one of the most active financial institutions in requesting patents, according to the Financial Patents Blog.

USAA’s patent claim on the core use of mobile RDC will probably stand up, said a digital banking executive unaffiliated with USAA who asked not to be named because of the legal sensitivity of such issues. And its other technologies probably rest on sound footing if it chooses to get more aggressive on the intellectual property front than it has traditionally been.

“They likely have a ton of other patents that are equally as defensible, so I don't expect this to be the last one,” the digital banking executive said.

However, such fights can be long, arduous and seemingly repetitive.

USAA was involved in a legal battle with the tech vendor Mitek over patents related to mobile RDC technology that ended in 2014 with neither side paying the other.

Mitek vows to continue to innovate and offer services around the technology.

“We are generally aware that a law firm representing USAA has been approaching banks, but we have not been involved in any discussions with USAA or their law firm and can’t comment on their licensing efforts at this time,” a Mitek spokeswoman said. “However, in just a few months we will be celebrating the 10th anniversary of Mitek’s launch of Mobile Deposit. … Our extensive patent portfolio protects the investment of our customers and partners. Innovation is our lifeblood.”

USAA has said that it hopes to resolve any mobile RDC licensure issues with minimal legal wrangling or disruption to the industry.

Such clashes probably have been brewing for years.

Knight said USAA hired him more than a decade ago because it realized it was lagging others in creating a robust patent portfolio around its proprietary technology.

“When I arrived they were not patenting a lot; they had patented a few things here and there, but they looked at the market and saw the likes of [JPMorgan] Chase and Citi who had patented thousands [of technologies],” Knight said. “They brought me in to build their patent program from the ground up.”

The mobile RDC patents “are fairly old patents,” and the slow-moving nature of the patent system means USAA could have more patents on potentially industry-changing technology in the works, Knight said.

It typically takes about five years for a patent to be issued, and only then does the application become public, he said. Before being issued, potential patents are listed as “published applications,” and the specific details are unavailable for public consumption.

There are other potential reasons USAA waited a decade to try to enforce its RDC-related patents. It may have wanted to wait until the technology became ubiquitous in the industry, and seeking gains from innovation may have become a priority after Stuart Parker took over as CEO in 2014.

“We are in an innovation age,” Knight said. “Protected information is one of the only competitive differences now that set apart one business from another.”

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