AND SPEAKING OF DATATREASURY . . . I discovered this article in The Green Sheet, which does a nice job summarizing the actions of DataTreasury and their enforcement of US patents 5,910,988 and 6,032,137 against the entire banking industry pursuant to Check 21.



For those that may not be familiar with it, The Check Clearing for the 21st Century Act ("Check 21") was passed by Congress and became effective on October 28, 2004. Check 21 is intended to foster innovation in the payments system and to enhance its efficiency by reducing some of the legal impediments to check truncation. The law facilitates check truncation by creating a new negotiable instrument called a substitute check, which permits banks to truncate original checks, to process check information electronically, and to deliver substitute checks to banks that want to continue receiving paper checks. A substitute check is the legal equivalent of the original check and includes all the information contained on the original check. The law does not require banks to accept checks in electronic form nor does it require banks to use the new authority granted by the Act to create substitute checks (more information can be found here).



The problem here is that DataTreasury is claiming to have a patent on core features used in the Check 21 process. So now we have a law allowing banks to electronically process checks, but in order to do so, they have to go through DataTreasury's patent. Very valuable stuff.



According to DataTreasury, each year Bank of America processes 9.4 billion checks; Citigroup processes 2.4 billion; Wachovia processes 4.5 billion; and Wells Fargo processes 3.7 billion checks. JPMorgan Chase processed 1.5 billion checks in 2003.



So far, DataTreasury has been successful in its attempts to go after patent infringers. It has entered into licensing agreements with some companies, and at least one company, ACS, is permanently barred from ever using its technology. JPMorgan Chase, which opted to settle with DataTreasury in the infringement suit, is now a DataTreasury licensee. And DataTreasury has made it clear that they will be going after others. DataTreasury is currently preparing to take First Data and Ingenico to trial to resolve its claims against them; it has refiled its claims against Viewpointe Archive, a check-image archiving provider founded by JPMorgan Chase.