What first strikes me is how a patent could have been issued as it does
not seem to be an invention to clear checks, yes, previously done manually
and then started electronically. As we know, for a patent to be issued it
has to be new. I mean, how did they get a patent for this, as it seems to
have been used before?
In fact, patent got issued in States only after a 1998 decision covering
patent to include business methods and processes (1) , and banks didn’t
just noticed the importance, the impact it would have. Data Treasury got
the patents in 1999, 2000.
In Canada, while the Patent Act, s.2 definition covers ‘process’, here the
questions are what “process” means in our case ? How is “process”
interpreted ? In Fact, a Canadian court would probably not think this was
a process. It would better be a “business method”(2), which is not
patentable, according to the Patent Act.
We know that in the United States, battle is heating up both in courts and
in political side. Indeed, that end of July 2007, United States Senate
passed an amendment effectively preventing banks from being sued from
companies like Data Treasury for using cheque encryption processes. All
this makes it clear that there’s a big lobby money involved.
And in courts, the Markman hearing (3)before a Judge held just two and a
half weeks ago, by company defendant (First Data Corp.) against plaintiff,
Data Treasury, but First Data although the defendant, went on the
offensive and went to US Patent office asking for the patents
re-examination, saying that both patents, in 1999 et 2000 shouldn’t have
been issued. And while the US Patent office although did not have to agree
with request to reexamine, it is in process of doing so. Process of
reexamination can take time, perhaps prompting Data Treasury to be
litigious and ultra confident, hoping to “play poker”. I mean hoping for
settlements because the cost of litigation will be too high for the ones
they sue, it’s better to just settle, i.e. JP Morgan etc…So that there is
no definite pronouncement from a court and DataTreasury keep the power. It’
s really just about money. And when we search about the terms of the
settlement for those who settled in the US, it appears that they are
“confidential”…so we don’t know how much they pay (4)!!
Now all of the big banks are involved, and Data Treasury has a fight in
the US side with the reexamination and in the Canadian side with the
courts. Here another question can be raised: can you do this in Canada
like it has been done in the US, go to the Patent Office and ask for
re-examination ?
Actually there’s also several important points to highlight. For example,
is the action made right after the US senate amendment, by the banks, a
coincidence?
It seems like it was deeply thought as, obviously, a lot of money is being
involved. The 3 banks were really smart in going on the offensive, and all
together. All 3 major banks are doing it together, they join forces and
obviously won’t settle. It clearly gives us an idea of how much money can
be involved and shows how they thought about it a lot. Plus they know it’s
being reexamined in the US so they know they are not gonna pay. They
strategized, like in a war. This attitude is highly unusual because
usually they are competitors and here they join, making a united front.
They prefer to fight, litigate, than pay them off in order to get a
license. They obviously think that they are right.
It really sounds like it’s very easy to get a patent. And even more in the
U.S, as David Vaver said, “In the United States, reforms comes as often
from the courts (…) as from the Congress. U.S courts (…) they often search
for results that best advance U.S economy policy” . It really seems that
it has been the case here. As we said in class, patent law is a tool of
the economy planning by a central government, there are no concrete
rights. Basically, more money gets involved if a patent is issued.
But is that normal that this privately held company started in 1998, right
after this significant ruling, with the purpose of just getting two
patents and protecting them; doing up until First Data went to the PO and
asked for the reexamination while before, everybody was settling and
paying…etc ? It seems that it happens because lobby works very hard.
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1-One to watch: DataTreasury Corp, see site
http://271patent.blogspot.com/2005_01_01_archive.html
2-Intellectual property law, David Vaver, p.128 c)
3-http://en.wikipedia.org/wiki/Markman_hearing pre-trial hearing in the
United States court system during which a judge hears testimony from both
parties on the appropriate meanings of the relevant key words used in the
claims of a patent, the infringement of which is alleged by the plaintiff.
4-Fro example, http://datatreasury.com/index.asp, see “Merrill Lynch
license” (8.14.06-MerrillLynchLicense.pdf) “The terms of Merrill Lynch’s
licensing agreement are confidential”.