The Bank That Sued Banks Just Became a Tech Company

USAA — a member-owned mutual insurance company that serves military families — has spent the past nine years suing banks because they let customers take photos of their checks.

That was weird.

Now it's doing something weirder. On August 4, USAA and Bank of America announced a patent cross-license agreement giving each company access to the other's entire patent portfolio. AI, machine learning, information security, payment processing, mobile check deposit — everything goes both ways.

This is the first time USAA has done a two-way patent trade. Every earlier deal was a one-way toll booth: another institution paid USAA for rights to use its mobile deposit patents. The Bank of America deal is a swap, not a fee. And Bank of America is the one big bank USAA never sued.

The basic point is that this looks like the kind of patent cross-licensing arrangement that tech companies have been doing since the 1990s. Qualcomm swaps with Samsung. Intel trades with AMD. The logic is simple: if you both need each other's patents to operate, and suing each other would be expensive and uncertain, you clear the air with a blanket deal. Neither side can use its patents as a holdup weapon against the other.

Banks have not played this game. Until now.

To understand why this is a structural move and not a press-release partnership, you need the two postures that just collided.

USAA has been running what amounts to a patent assertion business for a decade. Starting in 2017, it sent warning letters to over 100 banks alleging mobile deposit patent infringement. It has sued Wells Fargo, PNC, BBVA USA, Truist, Regions, and Fifth Third. It won nine-figure jury verdicts against Wells Fargo (settled for an undisclosed amount) and PNC ($218 million, later overturned on appeal). It holds more than 180 patents in its remote deposit capture portfolio, and advertises 2,200 issued patents total.

Then there's Bank of America, which holds nearly 7,400 granted patents and pending applications — by its own count, the most of any financial services company. Its AI and machine learning patent count grew 94% since 2022. And despite sitting on what is arguably the largest patent portfolio in the sector, Bank of America has never sued anyone over a patent. It almost always appears as a defendant in patent cases. When it has been a plaintiff, it was asking courts to declare that it did not infringe someone else's patents, not the other way around. It has filed 15 challenges to cancel other companies' patents at the Patent Trial and Appeal Board but has never had to defend one of its own.

So USAA, the aggressive enforcer with 2,200 patents, is pairing with Bank of America, the silent hoarder with 7,400. One has been weaponizing its small portfolio for nearly a decade. The other has accumulated a massive one and never raised its sword.

The simplest explanation for the deal starts with what Bank of America gets.

It needs clean, irrevocable rights to USAA's mobile deposit patent portfolio. Even though USAA never sued Bank of America, there's no public record explaining why. Maybe USAA privately threatened it and they worked something out behind the scenes. Maybe Bank of America structured its mobile deposit system differently. Or maybe USAA just hadn't gotten around to it — which doesn't make the legal risk zero.

The deal also gives Bank of America freedom to use those patents in any future product without negotiating separately.

What USAA gets is more interesting, because it signals the real strategic pivot. It's exchanging a narrow litigation play for access to the sector's largest R&D patent portfolio. USAA is a mutual company serving 14.5 million military members and families. It's not going public. It doesn't have shareholders demanding innovation theater. But it needs to modernize its banking platform, and Bank of America has built the deepest patent portfolio in the business — particularly in AI and machine learning, which the companies specifically name in the joint announcement.

USAA's investments principal, Mike Chaparro, said the company is open to creating "mutually beneficial licensing agreements" with other banks and credit unions. That language matters. It reads like an invitation to convert more of its one-way toll-booth deals into two-way swaps, and to signal that the litigation era may be closing.

Here is how the two sides probably think about it.

USAA: We spent years monetizing mobile deposit patents through litigation and licensing fees. The jury approach has gotten messier — the PNC verdict was overturned, the Supreme Court declined to review it. Meanwhile, the big banks are building enormous patent portfolios of their own. If we keep only suing and only getting one-way fees, we're going to look like a nuisance. But if we trade our proven patents for access to their AI and infrastructure patents, we look like a collaborator and actually get technology we need.

Bank of America: We have 7,400 patents we've never asserted. They're sitting on the shelf. A cross-license lets us deploy them as bargaining chips. We get clean rights to USAA's mobile deposit patents (which every bank uses) and remove any future legal friction, while our own portfolio — which is bigger and more diverse — becomes a real negotiation asset instead of a vanity metric.

In practice, this is the patent equivalent of two companies saying "let's not waste money litigating who invented what, because we both need each other's stuff anyway."

The odd thing that doesn't get enough attention is what happens next. USAA has signaled it wants more bilateral deals. That means other banks with their own patent portfolios — Capital One, JPMorgan, Wells Fargo — now face a different choice than the one they faced in 2017. They can pay USAA a licensing fee the old way, or they can offer a portfolio swap.

For smaller banks and credit unions that don't have anything to trade, the toll booth probably stays in place. But for institutions that have been quietly building their own patent libraries, the math changes. If your AI and cybersecurity patents are genuinely useful to USAA, you can avoid a licensing fee by offering access.

That turns the banking patent landscape into something that resembles the tech industry's cross-license ecosystem — where the value of your patents depends on whether anyone else needs them, not on whether you've been willing to sue.

Bank of America never sued anyone with its 7,400 patents. Now those patents have a price: however much it's worth to avoid USAA's mobile deposit portfolio. Whether that price is paid in cash, in access, or in both is something neither company disclosed. But the fact that the trade happened at all tells you it cleared both parties' internal valuation.

The machine here is old — patent cross-licensing has been the default way for tech companies to avoid mutual holdup for thirty years. The new part is just that banking, which spent the last decade treating patents as either toll booths or trophies, finally started playing the game that everyone else figured out when the portfolios got too big to ignore.