DataTreasury: using the Acacia strategy against banks?

Jennifer Kingson in the Dec. 25 issue of the New York Times has an article discussing law suits brought by DataTreasury against various financial companies.

The Times article mentions that DataTreasury has only two patents, which describe a way to store and retrieve transaction records electronically. DataTreasury has sued about a dozen companies, including J. P. Morgan Chase & Company, the First Data Corporation, the biggest credit card processor; and the Electronic Data Systems Corporation. The Times article does not mention the patent numbers, but mentions the name Claudio Ballard.

The Time article notes that one company, Affiliated Computer, settled what it viewed as a nuisance lawsuit for an amount which may be $50,000. The Times article did not note that patent holders often make initial low cost settlements to bootstrap their way to settle with others for more money.

The Times article mentions the David vs. Goliath aspect of DataTreasury going after big institutions:

-->But because juries are not sympathetic to big corporations, it is easy for a company like DataTreasury to come across as a David battling a Goliath, said Mr. Bednarek, the lawyer and former patent examiner. "Banks are inviting targets, because they have a lot of money and they can make settlements that are within their noise level that it would be impossible for other groups to do," he said. DataTreasury is represented by Nix, Patterson & Roach of Daingerfield, Tex., a plaintiff's law firm best known for the $17 billion award it won for the state of Texas in tobacco litigation.<--

The Times article also mentions another litigation of this type:

-->LML Payments Systems, a small check processor in Vancouver, British Columbia, announced in late October that it had secured a 2006 trial date for a patent infringement lawsuit against four companies, including the TeleCheck division of First Data and the Nova Information Systems division of U.S. Bancorp.<--

The Times article repeats the canard that "business method" patents started with the 1998 State Street decision of the Court of Appeals for the Federal Circuit:

-->Although banks did not bother to patent these systems, others did, especially after a 1998 court ruling broadened the definition of a patent to include business methods and processes. At the time, the United States Patent and Trademark Office was swamped with technology-related applications, and knew very little about the processing of payments.<--

As many articles have pointed out, various business method patents long antedated the State Street decision.

Of the patents, claim 1 of US 5,910,988 to Claudio R. Ballard recites:

1. A system for central management, storage and report generation of remotely captured paper transactions from documents and receipts comprising:

one or more remote data access subsystems for capturing and sending paper transaction data and subsystem identification information comprising at least one imaging subsystem for capturing the documents and receipts and at least one data access controller for managing the capturing and sending of the transaction data;

at least one central data processing subsystem for processing, sending, verifying and storing the paper transaction data and the subsystem identification information comprising a management subsystem for managing the processing, sending and storing of the of the transaction data; and

at least one communication network for the transmission of the transaction data within and between said one or more data access subsystems and said at least one data processing subsystem, with the data access subsystem providing encrypted subsystem identification information and encrypted paper transaction data to the data processing subsystem.


Claim 26 recites:

A method for central management, storage and verification of remotely captured paper transactions from documents and receipts comprising the steps of:

capturing an image of the paper transaction data at one or more remote locations and sending a captured image of the paper transaction data;

managing the capturing and sending of the transaction data;

collecting, processing, sending and storing the transaction data at a central location;

managing the collecting, processing, sending and storing of the transaction data;

encrypting subsystem identification information and the transaction data; and

transmitting the transaction data and the subsystem identification information within and between the remote location(s) and the central location.

The abstract of the '988 patent states:

A system for remote data acquisition and centralized processing and storage is disclosed called the DataTreasury.TM. System. The DataTreasury.TM. System provides comprehensive support for the processing of documents and electronic data associated with different applications including sale, business, banking and general consumer transactions. The system retrieves transaction data at one or more remote Locations, encrypts the data, transmits the encrypted data to a central location, transforms the data to a usable form, performs identification verification using signature data and biometric data, generates informative reports from the data and transmits the informative reports to the remote location(s). The DataTreasury.TM. System has many advantageous features which work together to provide high performance, security, reliability, fault tolerance and low cost. First, the network architecture facilitates secure communication between the remote location(s) and the central processing facility. A dynamic address assignment algorithm performs load balancing among the system's servers for faster performance and higher utilization. Finally, a partitioning scheme improves the error correction process.

The filing firm was McGuire, Woods, Battle & Boothe LLP. As of December 26, 2004, the patent has been cited by 18 US patents.

One notes the divergence between what is emphasized in the abstract and what is in the above-noted claims. For example, the abstract mentions --system RETRIEVES transaction data at one or more remote Locations-- but claim 1 discusses remote systems--for capturing and SENDING paper transaction data and subsystem identification information-- and claim 26 states --collecting, processing, SENDING and storing the transaction data AT a central location--.

A second patent to Ballard is US 6,032,137, which contains the text: This application is a continuation in part of application Ser. No. 08/917,761 filed Aug. 27, 1997, now U.S. Pat. No. 5,910,988.

The first claims of the '137 patent recites:

A system for central management, storage and report generation of remotely captured paper transactions from checks comprising:

one or more remote data access subsystems for capturing and sending paper transaction data including a payer bank's routing number, a payer bank's routing information, a payer's account number, a payer's check, a payer bank's draft, a check amount, a payee bank's identification number, a payee bank's routing information, and a payee's account number, and further including subsystem identification information comprising at least one imaging subsystem for capturing the checks and at least one data access controller for managing the capturing and sending of the transaction data;

at least one central data processing subsystem for processing, sending, verifying and storing the paper transaction data and the subsystem identification information comprising a data management subsystem for managing the processing, sending and storing of the transaction data; and

at least one communication network for the transmission of the transaction data within and between said one or more data access subsystems and said at least one data processing subsystem, with the data access subsystem providing encrypted subsystem identification information and encrypted paper transaction data to the data processing subsystem.

The '137 patent has been cited by 15 US patents as of Dec. 26.