Digital Transactions Authoritative, insightful and timely information for payments professionals
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Many patent-infringement lawsuits involving payment processing have involved small companies suing processors and banks over rights to technology and business methods over which they claim ownership. But an infringement suit filed on Thursday by bank processor Fiserv Inc. against rival Fidelity National Information Services Inc. (FIS) over electronic bill-payment and account-transfer technology shows that the big boys in payments are ready to go after each other in court.
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Brookfield, Wis.-based Fiserv, through its CheckFree Corp. and CashEdge Inc. subsidiaries, alleges that FIS and its Metavante Corp. subsidiary offer bill-pay and account-transfer services that infringe on two CheckFree patents for electronic bill payment and presentment and one held by CashEdge, a fast-growing provider of person-to-person payments and related services that Fiserv bought last year. Fiserv also said it might add other patents to its infringement claims.
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The suit, filed in U.S. District Court in Jacksonville, Fla., FIS’s headquarters city, seeks a jury trial, an injunction to stop the alleged infringement, and unspecified damages and compensation for expenses.
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An FIS spokesperson did respond to Digital Transactions News requests for comment. A Fiserv spokesperson said the company would not comment beyond its court filing and a press release.
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Fiserv acquired Atlanta-based CheckFree, the leading bill-pay processor, in late 2007. FIS bought Milwaukee-based bank processor Metavante, the No. 2 player in the bill-pay niche, in 2009.
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The CheckFree patent numbers are 7,792,749 (‘749) and 7,853,524 (‘524). Patent ‘749 is called “Dynamic Biller List Generation” and covers a technique to boost usage of electronic bill presentment by notifying users of the availability of electronic bill-pay information.
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Patent ‘524 is called “Systems and Methods for Risk-Based Determination of a Form for Crediting a Payee on Behalf of a Payer.” The patent covers computerized technology in which a consumer from a remote location directs a single source (such as a bank) to initiate payment of his bills and make the proper account adjustments in addition to the actual payments.
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The CashEdge patent is numbered 7,383,223 (‘223) and called “Method and Apparatus for Managing Multiple Accounts.” It deals with technology to transfer funds at one institution to an account at a different institution held by the same customer. It also covers account transfers among multiple accounts held by the same person.
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In all three cases, Fiserv essentially alleges that FIS bill-pay and account-to-account services called Payment Manager replicate steps or technology covered by the CheckFree and CashEdge patents. The U.S. Patent and Trademark Office issued patents ‘749 and ‘524 to CheckFree in 2010; both either continue or partially continue patents dating back to the 1990s. CashEdge, which Fiserv bought for $465 million, received its patent in 2008.
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Senior analyst Nancy Atkinson at Boston-based Aite Group LLC says Fiserv’s motivation for the suit may be to defend one of its key segments before FIS gets too strong in bill pay and related services. “They need to defend that core business,” she says. “I think to some extent they’re trying to delay FIS getting into that core business.” Given their intense rivalry, she adds that rather than settle, “I could see them fighting to the bitter end” in court despite the expenses.
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The suit also is a further example of a business defending intellectual property it calls its own but others will see as already in common use before one entity tried to patent it, according to Atkinson. “This has been a challenge since the late ‘80s, early ‘90s. The USPTO was really designed for the innovation of a ‘thing,’ now it’s being used for a ‘thought.’”
