Several big banks are at risk of losing upwards of two hundred million each in a lawsuit filed by Data Treasury Corp. based out of Plano, TX.
The suit alleges that JP Morgan Chase (NYSE: JPM) took the company’s check imaging technology and started Small Value Payments Co. and Viewpointe Archive Services to process checks.
According to a report by the Minneapolis/St. Paul Business Journal, JP Morgan Chase settled with Data Treasury back in 2005. At that point, Data Treasury sued a bevy of banks across the nation.
There are about a dozen banks in all that are still fighting the suit that has been ongoing nearly a decade now. The suit is seeking a combined $1.6 billion in damages, with $200 million of that against U.S. Bancorp.
U.S. legislators passed the Check Clearing for the 21st Century Act back in 2003, which allowed for banks to take digital images of checks and exchange those images with other banks, thus being able to destroy the paper copies.
The business was estimated to save $2 to $4 billion annually for the banking sector as it eliminated the need to ship checks around the country.
Data Treasury Corp, founded in 1998, received two patents covering its check‐imaging technology in 1999 and 2000. Around that time the company started negotiating with Chase bank on a check-imaging joint venture. However, the bank ended up launching its own imaging venture with IBM Corp.
