Defending Against ATM Patent Threats
Pierce Atwood trial attorney and patent lawyer Bob Stier successfully defended a group of 108 banks and credit unions against claims that the ATMs they were using were infringing on patents held by an organization calling itself Automated Transactions LLC (ATL). In the end, after the defendants persuaded the court to conduct an early claim construction to establish the narrow scope of ATL’s patent claims, plaintiff gave up, dismissed its trial counsel, dismissed its claims against all the defendants, and gave covenants not to sue to all the members of the joint defense group.
The story began in the summer of 2012, when scores of community banks and credit unions received letters from Automated Transactions LLC (ATL), claiming that its patented inventions covered every ATM in the country, and threatening lawsuits for patent infringement if the banks did not pay for a sub-license to a portfolio of 13 patents. ATL purposely kept license fees low, typically in the range of $10,000-$50,000, depending upon the number of ATMs at the target bank. Thus, no bank could realistically mount an independent defense to the spurious infringement claims because the cost to defend was so much greater than the cost to settle.
Many of the banks figured they had no alternative, so more than 100 of them paid ATL to go away. But there was an alternative, and that was Pierce Atwood trial lawyer Bob Stier.
Bob Stier, who has more than 30 years of experience handling patent cases nationwide, started digging into ATL’s questionable claims. Bob studied the patents and found that the appellate court with jurisdiction over patent cases had invalidated the oldest and broadest of these patents. In addition, the scope of the other patents had been significantly limited by court rulings, and there were many grounds to attack the validity of the remaining patents and their coverage of the most commonly used ATMs. In short, there was no reason to believe that any bank needed a sub-license.
So in the fall of 2012, Pierce Atwood formed a joint defense group known as the National Automated Transactions Opposition (NATO). Each member of NATO contributed a fee based on the number of ATMs it had, which was less than the cost for a sub-license, and significantly less than the cost to defend a typical patent infringement action.
After 18 months, NATO consisted of 108 community banks and credit unions from seven states. The group funded the successful defense of seven defendant NATO banks that persuaded the Judicial Panel on Multidistrict Litigation to consolidate their cases for pretrial proceedings in the District of Delaware, where the court had already ruled one of ATL’s patents invalid.
In discussing the success of the defense group and the approach used to defend the banks, Bob Stier noted that “it was gratifying to see how the strategy that we adopted and executed played out and successfully protected an entire class of institutions from harassment by an unscrupulous patent troll.” Feedback from clients was overwhelmingly positive, with comments like, “It’s great to get such complete win in this case. This group idea ought to be a template for others to follow in matters such as this,” and “Thank you so much for representing us in this case. I knew from the beginning that this was the right thing to do.”