Already grappling with legal issues, the Wall Street giant — Wells Fargo & Company (WFC - Free Report) — has been slapped with another federal lawsuit. A federal lawsuit has been filed against the bank by San Antonio-based USAA, the big insurance company, for infringement on the latter’s patented technology.
The lawsuit has been filed in the U.S. District Court in Marshall, TX. USAA has accused the bank for violating four of its mobile remote deposit capture patents through which users were permitted to deposit checks using mobile devices.
USAA demands fine for infringement damages, including interest and attorneys' fees.
Story So Far
For the past year, USAA has been asking hundreds of financial institutions for licensing its RDC technology. Finally, it took the first legal action by filing the lawsuit against Wells Fargo. Per this suit, in August 2007, USAA had requested Wells Fargo to negotiate a licensing deal, which was ignored by the bank. Therefore, USAA demanded reinforcing of its patents, along with damages. Notably, the company holds about 50 patents associated with its mobile deposit of checks.
“Wells Fargo is one of the biggest adopters of remote deposit capture,” said Nathan McKinley, USAA’s head of Corporate Development, which includes commercialization of the company’s intellectual property. “We believe they are leveraging the technology to improve their bottom line, and they failed to take a license,” McKinley noted.
Per the lawsuit, 21 million active mobile-banking customers of Wells Fargo are accessing this technology, as of February.
Spokesperson for Wells Fargo refrained from comments on the pending litigation.
The lawsuit states its “improper for Wells Fargo to use, without permission, patented technologies that USAA has spent immense resources to invent, develop, implement and perfect.”
The aforementioned mobile-deposit technology was initiated by USAA in 2009. “We developed mobile check deposit technology using our members’ money to help military families because their lifestyle often made getting to the bank difficult,” McKinley said. “We believe the industry has been able to save billions using our mobile check deposit technology. We also believe the industry is aware USAA developed it,” he further added.
Currently, Wells Fargo is caught in a horde of litigations over several malpractices which have come into the spotlight. It is going to be a long and expensive journey for Wells Fargo till it gets all the dust settled.
The bank’s performance over the past six months underlines investors’ disappointment. Shares of Wells Fargo have declined 5.4%, significantly underperforming the industry’s marginal increase of 0.3%.
Wells Fargo currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Fifth Third Bancorp (FITB - Free Report) has been witnessing upward estimate revisions for the last 60 days. Additionally, the stock gained nearly 5%, in six months’ time. It currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Northern Trust Corporation (NTRS - Free Report) has been witnessing upward estimate revisions for the last 60 days. Over the past six months, the company’s share price has been up more than 9%. It currently carries a Zacks Rank of 2 (Buy).
The Bank of New York Mellon Corporation (BK - Free Report) has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 5.5% in the last six months. It carries a Zacks Rank of 2, at present.
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