Mitek's CEO, Max Carnecchia, made the following comments during a conference call on Jan. 30, 2020;
"USAA first sued Wells Fargo for patent infringement based on four patents that all relate to an image auto capture feature on a mobile device. Before the trial, Wells Fargo requested that the U.S. Patent Office perform an additional review of all four patents. Subsequently, USAA dropped two of the four patents from their lawsuit.
At trial, a jury in the Eastern District of Texas found that Wells Fargo infringed at least one of the two remaining patents, but did not specify which. Wells Fargo will likely appeal the decision. That process could take 18 months or more. Following the jury verdict in November, the U.S. Patent Office agreed to review three of the four patents. It is important to understand that the standard the U.S. Patent Office uses in determining to review patents is that they must believe that there is a reasonable likelihood that at least one of the claims in that patent is invalid. So the Patent Office believes at least one of the claims in each of the three patents they will review is invalid.
The Patent Office must complete their review within 12 months. The Patent Office rejected Wells Fargo's request to review the fourth patent. The rejection does not, however, prohibit Mitek or any other party other than Wells Fargo, from requesting a review of this patent with additional information. If the Patent Office invalidates the two patents that issued before the end of the appeals process, then Wells Fargo would not have infringed, as the patents would be invalid.
Alternatively, if one or some of the claims are invalidated, the Federal Appeals Court could decide to reman the case for retrial since the jury did not specify which claim or claims of the two patents was infringed. Of course, none of this matters if the Appeals Court overturns the entire judgment on appeal. Separately, Mitek filed an action against USAA on the same four patents in California, seeking a declaratory judgment from the court that Mitek's products do not infringe those patents. Mitek invented all of its core technology, and our products do not infringe on any USAA patents.
We view the DJ action as an important step to provide certainty to our customers concerning the use of our technology and we intend to vigorously defend their use of our product. The DJ process could take 18 months or more to complete. Lastly, USAA filed a second lawsuit against Wells Fargo, which originally involved five USAA patents related to remote deposit solutions. In that litigation, USAA dropped two of the patents, and the judge in the case found that one of the remaining three patents was invalid.
USAA won a jury verdict in January on the remaining two patents. It is our understanding that no Mitek product was accused of infringing either of the two patents in question as litigation involved broad banking processes and not Mitek's specific mobile deposit features. We believe that Wells Fargo will likely appeal the January verdict as well."
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