Wednesday, June 28, 2017

Urgent Alert - Intellectual Property Issues in Banking Software

Rarely do I deviate from 6 newsletters a year, but I am issuing this “Urgent Alert” because it contains information that will help you to best protect your bank should so-called intellectual property issues arise.

One of the non-financial terms that I always try to negotiate in software vendor contracts involves intellectual property. Because of the rise of so-called “patent trolls” and the ease with which patents are being given, banks need protection from such claims. The best way to handle this is to ensure that your vendor offers language indicating that they will defend any such claims that are brought against your institution. Now is a good time to review your current contracts to ensure that they contain such a clause. If they do not, contact your vendor and request that such language be added. I can supply sample language if you need it, but in almost all cases the vendor will have suitable language that can be added to your contract. The most likely reason you don’t already have this language in a master agreement is if you have just renewed such an agreement over and over, never updating the language.

Several banks have already received a letter regarding a certain issue surrounding mobile check capture. It is likely that your bank will too. I want to encourage you to refer any such claims directly to your software vendor(s) so that they can help you to manage this. Please don’t respond directly to these letters, as your vendor(s) are well aware of the situation and are best positioned to respond. I would also advise you to alert your state and national banking trade associations about the receipt of such a letter, as these organizations are also working to help the industry manage such claims.

My purpose in writing this alert is to make you aware of both the general issue of your needing protection in the case of intellectual property disputes, and the specific issue concerning mobile check deposit that I expect you will see shortly in the form of a letter.

Remember, I am not an attorney, and you should always consult an attorney about legal matters. Please let me know if you have questions or if I can assist you in any way.

Trent Fleming

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