Check-Depositing Tech Dispute Heads to Texas

     (CN) – Companies fighting over the patents behind remote-check depositing must do so in Texas where an earlier action is already pending, a Delaware federal judge ruled.
     The dispute stems from a 2006 license agreement in which Mitek Systems provided United Services Automobile Association (USAA) with the technology to remote deposit checks.
     About a year and a half after Mitek launched its Mobile Deposit Program in January 2008, however, USAA launched a competing service.
     USAA, a reciprocal inter-insurance exchange, filed suit against Mitek for declaratory judgment in March 2012.
     The complaint in the Western District of Texas slams five of Mitek’s patents as unenforceable. USAA claims that Mitek had unfairly demanded more money for additional licensing, and that Mitek stole USAA’s confidential information to apply for the patent and develop the Mobile Deposit program.
     Mitek then sued USAA about two weeks later, but it filed for infringement of the same five patents, as well as breach of contract.
     This complaint, in the District of Delaware, also claims that Mitek disclosed sensitive pricing and exceeded transaction limits defined in their license agreement.
     USAA said the Delaware complaint should be dismissed in keeping with the “first filed” rule, but Mitek countered that the forum-selection clause within the license agreement should get deference.
     Though Mitek says the Texas action was wrongfully filed in anticipation of its own suit, Chief U.S. District Judge Gregory Sleet noted that “accusations alone are not the same as actual threats of litigation.”
     To determine jurisdiction, Sleet looked at where the alleged infringement occurred.
     Since USAA’s service is global, its actions likely occurred in both districts, but Sleet noted that USAA designed, tested and operated its mobile application in Texas.
     Both parties are incorporated in Delaware, but Mitek principally operates in San Diego and USAA principally operates in San Antonio.
     As such, the convenience factor weighs in favor of the West Coast, where both companies would have easier access to their books and records. Though the digital age has made this factor a bit outdated, Sleet said it cannot be wholly ignored.
     “USAA has met its burden of demonstrating that the interests of convenience and fairness strongly favor transfer,” the 18-page decision states. “Despite the plaintiff’s choice of forum, the private interest factors, taken together, weigh overwhelmingly in favor of transfer. The public interest factors emerge about even; most are neutral, while the ‘practical considerations’ and ‘familiarity of the trial judge with the applicable state law’ factors pull gently in opposite directions. The neutral stance of these public interest considerations is not enough to overcome the weight of the many private interest factors recommending transfer.”
     Mitek’s forum-selection clause is just one of many factors that went into the decision, the judge noted.
     To ensure that Mitek pursues its breach of contract claim in Texas, Sleet opted to transfer the case rather than dismiss it.
     USAA is represented by Larry Macon of Atkin, Gump, Strauss, Hauer & Feld.

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