Mitek Systems, Inc. (MITK)

[Brenton]

Information Regarding Litigation with USAA

Overview

• Mitek v. USAA
On April 12, 2012, Mitek filed a lawsuit against USAA for patent infringement and breach of contract. Mitek believes USAA is infringing upon five of Mitek’s patents related to its Mobile Deposit® product. Mitek also believes that USAA breached the parties’ license agreement by using Mitek products beyond the scope of the agreed-upon license terms, and by disclosing confidential pricing and other confidential information for a Mitek legacy product installation in a lawsuit filed in Texas by USAA against Mitek. On July 18, 2012 Mitek filed a motion to amend its complaint to include the claims of defamation and violation of the Lanham Act for unfair business practices. These claims are based on the fact that USAA has falsely accused Mitek of misappropriating USAA’s proprietary and confidential information while under contract with USAA and claiming it as its own.

Mitek is seeking monetary damages, injunctive relief, and a finding that USAA willfully infringed Mitek’s patents, breached the parties’ license agreement, defamed Mitek and violated the Lanham Act.


• USAA v. Mitek
USAA filed a complaint against Mitek on March 29, 2012 seeking a declaratory judgment that some of Mitek’s Mobile Deposit patents do not apply to USAA or, alternatively, cannot be enforced against USAA. USAA also falsely alleges that Mitek took unidentified information from USAA and incorporated it into a Mitek patent application in January 2008 and launched its Mobile Deposit based on such information.

Mitek believes that USAA’s claims are without merit. To date, USAA has not provided any evidence of wrongdoing by Mitek, nor has it identified the proprietary and confidential information that was allegedly misappropriated. Mitek launched Mobile Deposit in January 2008 with USAA’s full knowledge, and USAA did not launch its competing product until August 2009. USAA first accused Mitek of wrongfully taking information from USAA to develop a product in April 2012—more than four years after first learning about Mitek’s mobile technology. On April 16, 2012 Mitek filed a motion to dismiss USAA’s lawsuit and is awaiting a ruling from the Court.

Frequently Asked Questions

1. What is Mitek’s lawsuit against USAA about?
On April 12, 2012 Mitek filed a complaint against USAA for patent infringement and breach of contract. Mitek believes that USAA is infringing upon five of its patents--the ‘457 patent, the ‘176 patent, the ‘268 patent, the ‘900 patent, and the ‘514 patent. These patents cover Mitek’s advanced imaging and analytics software to authenticate and extract data from imaged checks and other financial documents. Mitek is also suing USAA for exceeding the transactional limits defined in its license agreement with USAA and disclosing highly sensitive pricing terms that USAA was compelled to keep confidential.

In addition, on July 18, 2012 Mitek filed a motion to amend its complaint to include the claims of defamation and violation of the Lanham Act for unfair business practices. USAA has falsely and publicly accused Mitek of misappropriating USAA’s proprietary and confidential information while under contract with USAA and claiming it as its own. Mitek has given USAA every opportunity to correct its misstatements, but, unfortunately, it has steadfastly refused to do so. Mitek believes these and other false statements were issued in order to harm Mitek’s business.


2. Why did Mitek file the lawsuit?
USAA is falsely claiming rights to aspects of Mitek’s patented technology. As a technology company, Mitek is compelled to protect its intellectual property on behalf of the company and its shareholders. Mitek also takes great pride in being an ethical and responsible business partner to the banking industry and enjoys good working relationships with more than 333 banking partners around the country. Mitek is suing USAA in order to protect its inventions and its business reputation.


3. Why did Mitek file its lawsuit in Delaware?
Mitek is a Delaware corporation, and the agreement with USAA was in accordance with Delaware law.


4. What remedies is Mitek seeking?
Mitek seeks monetary damages, injunctive relief, and a finding that USAA willfully infringed Mitek’s patents, breached the parties’ license agreement, defamed Mitek and violated the Lanham Act.


5. What is the basis of USAA’s lawsuit against Mitek?
The language of USAA’s complaint is unclear. The complaint appears to ask for a declaratory judgment that some of Mitek’s Mobile Deposit patents do not apply to USAA or, alternatively, cannot be enforced against USAA. Further, USAA falsely alleges that Mitek took unidentified information from USAA and incorporated it into a Mitek patent application in January 2008, launched its Mobile Deposit based on such information, and that USAA did not learn about Mitek’s product until it read a Mitek regulatory filing that was published in January 2009.


6. Why are USAA’s accusations false?
It is preposterous for USAA to claim that Mitek stole its confidential information to develop Mobile Deposit. Mitek believes it alone invented and perfected its Mobile Deposit technology over several years. The Company was awarded 12 total patents, five of which are directly related to Mobile Deposit. Mitek initiated frequent communications with USAA about Mitek’s Mobile Deposit product starting in January 2008, and USAA never suggested that Mitek’s product was based upon information originating from USAA before filing the lawsuit in March 2012. Mitek has the email exchanges from that time period and other documentation that support our contentions.


7. What is the origin of the dispute between the two companies?
USAA, according to its own reports, had exceeded the transactional limit covered by its software license. Mitek attempted to get USAA to move from the outdated platform to the current Mobile Deposit 3.3 software at market rates. USAA refused and decided to litigate instead.


8. USAA filed its case in Texas and Mitek filed in Delaware. Will there be two different trials at the same time?
Mitek has filed a motion with the Delaware Court to have both suits heard in Delaware. We are awaiting the Court’s decision.


9. How long will this litigation take?
The timeline is highly dependent on the court and the judge; however, generally IP cases of this nature last two to three years.


10. Would Mitek consider settling with USAA?
Mitek’s first priority is to protect its rights and those of its shareholders and customers.


11. How will this lawsuit affect Mitek’s current or planned product offerings or relationships with its customers?
Mitek is a technology company that is intensely focused on the development and delivery of innovative and high-quality products for the mobile banking sector. Mitek does not expect the litigation to have any impact on its planned product offerings or customers.





Mitek Press Releases Regarding the Litigation


• Mitek Systems Comments on USAA Lawsuit 4/3/12
• Mitek Systems Responds to USAA Lawsuit Allegations 4/11/12
• Mitek Systems Files Patent Infringement Lawsuit Against USAA 4/12/12
• Mitek Systems Sues USAA for Defamation and Unfair Business Practices 7/19/12

Litigation-Related Articles

• Company says it was defamed by USAA (MySanAntonio.com) 7/19/12
• Mitek Adds New Complaints to Patent Dispute with USAA (American Banker) 7/19/12

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Source: http://www.miteksystems.com/usaa-litigation