DataTreasury, located in Plano, Texas, United States, develops, acquires and licenses technology for secure check image capture and storage. The company has a patent portfolio relating to these technologies which it is has been enforcing since 2002 through several patent infringement lawsuits directed at numerous banks it alleges are infringing the patents. Several banks have settled.
Claudio Ballard founded DataTreasury in 1998 to market technology that processes electronic checks and other documents and related payment-processing tools utilizing patents prosecuted and filed prior to DataTreasury's founding, and then assigned to it by Ballard's holding company, CSP Holdings LLC.[1][2]
The company now has about 1000 shareholders and has generated over $350 mm in licensing revenue in the past four years. Ballard is now only a small percentage shareholder and the company has only two employees.[3][4]
In 2006, DataTreasury sued dozens of financial institutions, many of which have settled with the company.[5]
On March 26, 2010, a jury provided DataTreasury Corp.'s first courtroom victory over U.S. Bancorp. The jury found that U.S. Bancorp had infringed on DataTreasury patents.[6][7][8]
In April 2011, Ted Doukas sued Data Treasury claiming that he was a financial backer of Claudio Ballard when Ballard was working on the image capture technology and was therefore entitled to one half of the proceeds from the invention. The total amount sought is $15 billion.[9]
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The secure check imaging technology claimed by the DataTreasury patents was invented by Claudio Ballard in July 1994.[10] He got his idea when he would meet regularly with his father at a local pizza diner after his mother died. When he saw the shoe boxes full of receipts that the restaurant kept for records, he realized that, if he could develop a secure method of image storage and replace the shoe boxes, it would be a tremendous help to these small businesses.[10]
Claudio built the original working prototype in 1995 at his own expense while he was unemployed. He filed his first patent application in August 1997 after receiving angel investment funding from an acquaintance, Peter Lupoli, who was impressed with the prototype's capabilities.[10] Patents were issued in 1999 and 2000 respectively[11] and, in 2002, DataTreasury licensed their first imaging system, eImageVault, to Bank Hapoalim of Israel.[12]
Claudio Ballard founded DataTreasury in 1998 in Melville, NY.
DataTreasury has had as many as 100 employees.[13] In 2004, the New York Times characterized DataTreasury as "a company whose only business, other than one client, appears to be suing other companies."[14]
In 2002, DataTreasury sued a number of banks and other companies for infringing the Ballard patents.[15][16]
Some financial institutions, including JPMorgan Chase and Merrill Lynch, settled the suits,[16][17] while suits against 56 other financial institutions are continuing.[16] These suits were put on hold pending the outcome of a reexamination of the patents, but after the USPTO confirmed the validity of the patents, the cases are now moving forward.[16]
Simultaneously with the suits, the United States Senate version of the Patent Reform Act of 2007 (S. 1145) moved forward with an amendment to Section 14 of the Act, supported by a number of financial services companies, which would prevent DataTreasury from collecting damages on the patents. However, the Congressional Budget Office (CBO) predicted that if such a provision were passed, owners of check-processing patents (such as DataTreasury) would sue the federal government, arguing that their property had been unlawfully seized. The value of this lawsuit could reach $1 billion, this being the CBO's estimate for royalties to which the companies might otherwise be entitled.[16][18]
At the heart of the dispute is image-capture and sharing technology managing hundreds of billions of paper checks written each year.
In 2003, the U.S. Congress passed the Check Clearing for the 21st Century Act, known as "Check 21". The act allows banks to take digital images of checks, exchange those images with other banks, and destroy the original paper copies. This process generated an estimated $2 billion to $4 billion in annual savings by eliminating the expense of shipping hundreds of billions of paper checks around the country, according to a DataTreasury source.
DataTreasury, founded in 1998, received two patents covering its check-imaging technology in 1999 and 2000. According to the company Web site, DataTreasury began discussing a check-imaging joint venture with officials from Chase Manhattan Bank (now known as JPMorgan Chase), but the bank launched a separate check image processing venture called Viewpointe Archive Services LLC with IBM Corporation and another bank. DataTreasury filed the first in a series of lawsuits against dozens of banks in 2002. U.S. Bank was one of several banks to invest in Viewpointe, which is also a party to the litigation set for trial next week. JP Morgan settled with DataTreasury in 2005.[19]
Banks have alleged that DataTreasury bought up patents for the system that underlies electronic transfers and is trying to shake down companies for licensing fees, saying that DataTreasury's patents are "an example of what's wrong with patent law."[13] Others have characterized the company as a patent troll.[13][20][21] DataTreasury has stated that Ballard is the inventor of the system and built the company to sell it before the banks stole the idea.[13]
In February 2006, DataTreasury purchased four patents from WMR e-Pin, LLC. These patents were U.S. Patent 5,265,007, U.S. Patent 5,583,759, U.S. Patent 5,717,868, and U.S. Patent 5,930,778. On February 24, 2006, DataTreasury filed a complaint in the United States District Court for the Eastern District of Texas accusing over 30 banks and other companies of infringing the patents.[22] These cases are still pending.
J.P.Morgan Chase settled with DataTreasury.[23]
The following banks and corporations have settled their lawsuits with DataTreasury and/or taken a license.[27][28]
In November 2005, First Data Corporation filed a request for a reexamination of the DataTreasury Ballard patents citing numerous earlier publications that it felt either anticipated the DataTreasury inventions or made them obvious. In 2007, the USPTO upheld both patents and further allowed DataTreasury to claim additional inventions that were disclosed but not claimed in the original applications.[29][30]