Mitek Sys. v. United Servs. Auto. Ass’n
Authored by: Jeremy J. Gustrowsky
In a recent decision, the Federal Circuit affirmed the dismissal of a declaratory judgment action brought by Mitek Systems, Inc. against United Services Automobile Association (USAA) regarding four USAA patents related to mobile banking technology (U.S. Patent Nos. 8,699,779; 9,336,517; 9,818,090; and 8,977,571). Mitek, which licenses its MiSnap software to banks for mobile check deposit, sought a court ruling that its technology did not infringe USAA’s patents after USAA had previously sued one of Mitek’s customers, Wells Fargo, for patent infringement. Mitek argued it faced a real risk of being sued itself or being held liable to indemnify its customers.
The Federal Circuit agreed with the district court that there was no “case or controversy” between Mitek and USAA sufficient to support federal court jurisdiction. The court noted that USAA had never accused Mitek’s MiSnap software of meeting every requirement of any asserted patent claim. Additionally, there was no evidence that Mitek encouraged or facilitated infringement by its customers, nor that MiSnap lacked substantial non-infringing uses. The court also found that Mitek’s indemnification agreements with its customers did not create a reasonable potential for liability, especially since many agreements had carve-outs or involved third parties not directly in dispute with USAA.
Even if there had been jurisdiction, the court found the district court acted within its discretion in declining to hear the case. The judges pointed out that any dispute over whether MiSnap infringes USAA’s patents would be better addressed if Mitek intervened in future lawsuits brought by USAA against Mitek’s customers, rather than through a separate declaratory judgment action. This approach would avoid unnecessary complexity and ensure that any findings would actually resolve the real-world disputes at issue.
This decision highlights the challenges suppliers face in seeking early court rulings on patent infringement when their products are used by customers who are the primary targets of litigation. The court’s reasoning underscores the importance of a direct and immediate legal dispute and the practical limitations of using declaratory judgment actions in the context of complex technology supply chains.