Check 21 Act - Patents

Patents

There are a number of patents relating to "check collection systems", including some owned by DataTreasury. Section 14 of the Patent Reform Act of 2007 includes provisions eliminating the right of patent holders to prevent financial institutions from using their inventions. There are fractious lobbying efforts on both sides of the debate and it is feared that enacting Section 14 would result in litigation against the federal government seeking compensation for a taking of private property.
The current court victories of the patent holders are "payment" based, and not "royalty" based. Although the patents are currently being upheld, the court has sold the method to the infringing bank and also set the fee. The courts have also decided that one exchange was created to shield multiple banks from lawsuit, and therefore have nullified the claim that an exchange should only pay once (but allow multiple banks to exchange). Electronic records of checks have existed since the 1950s, and tax refund checks were even printed on punched cards, yet the banks never thought to patent the idea. DataGeneral's patent would suggest that the Federal Reserve Banks are aiding and abetting all the banks in breaking DataGeneral's patent, and have been for years before the patent was issued. (The Federal Reserve Bank is both a bank and an exchange). This "infringement" would also apply to every US post office, since postal money orders are also checks that are submitted to the FED.