PATENT TROLLS: Major victory for Northeast community bankers

A group of New England community banks won a major victory against Automated Transactions LLC, a so-called patent troll that has been filing patent infringement lawsuits against dozens of individual banks, claiming that they infringe patents covering ATMs that not only carry out banking services but also perform retail transactions on the internet.

"Patent troll" generally is defined as a pejorative term used for a person or company that enforces its patents against one or more alleged infringers in a manner considered unduly aggressive or opportunistic.

In response to ongoing threats by Automated Transactions, a group of New England banks banded together in 2012 to form a defense group to resist what their attorney characterized as a "shakedown".

As patent litigator Bob Stier of Pierce Atwood LLC says, "None of these ATMs can be used to buy airline tickets or send flowers, so my clients don't need a license under the patents. But they're still threatened with expensive patent litigation if they don't pay. Unless they join together, it's very, very expensive to stand up for their rights. Of course, the troll knows this, and until now, it has managed to intimidate more than 140 banks into settling." ABA worked with Pierce Atwood on the case.

The situation changed recently when the Judicial Panel on Multidistrict Litigation, a special federal tribunal that oversees related lawsuits pending in different federal courts, granted a motion by community banks in Vermont, New Hampshire, and Massachusetts to consolidate their patent lawsuits with related cases already pending in Delaware. "This is a huge win for my clients," says Stier. "So long as the troll could divide and conquer, banks were at a disadvantage. Today's ruling is a game-changer because it unites the banks against their common enemy."

The lawsuits will now be heard by U.S. District Judge Sue Robinson, a Delaware jurist experienced with patent cases, who previously invalidated one of Automated Transactions' basic patents. Stier noted there are potentially 28 cases pending in ten judicial districts that will be affected by the ruling.

Commonly, such a plaintiff asks for a few thousand dollars in settlement, or much less than what it would cost the bank to litigate. By banding together as this group of New England bankers have-as well as others in other parts of the country-the banks as an industry can effectively rebuff such specious claims.

"Since community banks are now targets, it would be great if more [law] firms crafted solutions that allow community banks to band together," says Lauren Bowers, senior vice president and senior counsel, ABA.

[This article was posted on April 3, 2013, on the website of Banking Exchange, www.bankingexchange.com, and is copyright 2013 by the American Bankers Association.]