Recent suits targeting ATM technologies show surge in patent infringement lawsuits against banks

Recent lawsuits filed by Amadora Systems LLC against various banks highlight the increasing legal risks associated with technologies used in the banking sector. According to RPX, the financial services sector experienced a year-over-year 63% increase in non-practicing entity (NPE) patent suits in the first half of 2024.^[1] Bank risk managers should recognize the importance of addressing potential intellectual property (IP) vulnerabilities and ensuring adequate insurance coverage.

Background

Amadora Systems LLC has accused several banks of infringing patents related to surveillance technologies integrated into ATM systems. The complaints allege that these banks, by utilizing ATMs equipped with video and audio monitoring capabilities and transaction notification systems, have violated Amadora's patents. This litigation represents a broader trend where financial institutions are targeted for using technology that they did not directly develop, bringing them into complex legal disputes over IP rights.

Key takeaways

• Historical context: Patent trolling against financial institutions is not a new phenomenon. It has been a persistent issue for over a decade as the sector has become more digitized and interconnected. The trend is likely to continue and even accelerate with the adoption of new technologies, such as generative AI, which already has numerous pending IP-related cases.
• Unforeseen liability: Banks are vulnerable to patent infringement claims even if they did not manufacture the technology, with traditional insurance policies often excluding these types of claims.
• Indemnification complexities: Disputes may arise with ATM suppliers over who is responsible for legal defenses and potential damages, complicating the litigation process. Additionally, even when contractual indemnities from the suppliers are available, smaller firms may not have the financial resources to indemnify a large number of targeted customers and are themselves unlikely to carry IP insurance to cover those indemnities. That may lead to banks being forced to incur defense costs and/or damages or settlement costs.
• Inadequate traditional insurance: IP claims are generally excluded from most corporate insurance policies, leaving banks uninsured for the risk. While many large firms are comfortable retaining the financial risk of patent troll cases, regional and smaller firms may not be as comfortable. Regardless, firms of any size can benefit from assistance in quantifying their IP exposures and the associated financial costs of those risks to determine whether there is value in purchasing an IP insurance policy.

As the financial sector becomes increasingly reliant on technology, the risk of IP litigation remains a significant concern. Financial institutions should proactively manage these risks by reviewing indemnification clauses, assessing potential IP exposures and considering comprehensive IP insurance solutions. This proactive approach will not only mitigate financial risks but also provide greater security against the evolving landscape of patent litigation.

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).

Footnote

1. Q2 in Review: PTAB Reforms Face New Challenges as China Targets Foreign Pools Return to article undo

Authors

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Kimberly Cauthorn

Senior Director, IP Leader

email Email phone +1 214 536 7696

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Anthony Rapa

FinTech Subvertical Leader, Financial Institutions & Professional Services – North America

email Email phone +1 212 915 8506

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