The intellectual property dispute over a mandated payments service being developed by New Payments Platform Australia looks set to escalate, with one of the founders of Sydney-based fintech Controlabill warning that all NPPA shareholders would be infringing his company’s patents if the project proceeds in its current form.
Former major bank executive Stephen Coulter told Banking Day that his company had been engaging with Australian banks since 2006 with a view to negotiating deals for the rollout of Controlabill’s patented platform that includes a mandated payments service.
The NPPA’s mandated payments service (MPS), which is slated to trade under the “PayTo” brand, will allow consumers to authorise third parties to initiate payments from their bank accounts using the New Payments Platform.
Coulter and other owners of Controlabill believe the PayTo service breaches their company’s patents – a claim the NPPA rejects according to documents furnished to the ACCC’s review of its proposed merger with Eftpos and BPay.
The dispute between the parties appears to be intensifying, with another Controlabill shareholder, Bernard Wright, warning in a supplementary submission to the ACCC merger review that the company was considering legal action against NPPA.
In the submission posted on the ACCC website on Monday, Controlabill warns that the intellectual property dispute could have implications for Newco – the corporate vehicle set up to facilitate the planned merger of NPPA with the other payments schemes.
“Advice from our legal counsel is such that we should now seek an interim injunction which may affect this (merger) application,” Wright states in the submission.
“Perhaps, Newco may be dissuaded from acquiring the MPS under this arrangement, because of a potential contingent liability and high likelihood of extensive reputational damage spreading across multiple financial institutions and regulators who have all been involved and informed.”
In an interview with Banking Day last week, Coulter said Controlabill’s intention was not to block the rollout of PayTo, but he insists the NPPA and its shareholders should recognise Controlabill’s ownership of its underlying process.
“We are happy to license it to banks or sell our business to them,” he told Banking Day.
“The (NPPA’s) mandated payments service describes a process identical to that which Controlabill’s patent and presentations set out.
“The NPPA is proposing to provide an integrated platform enabling any customer to easily create, change, manage, suspend or delete any or all of their payment authorities.
“It’s the solution covered by our patents under a different name, without recognising or paying for our intellectual property.”
While Coulter believes the NPPA is using Controlabill’s intellectual property to establish the PayTo business, he also asserts that NPPA’s 13 shareholders – including the four major banks, HSBC, Bendigo, Indue, CUSCAL and the Reserve Bank – would be individually and collectively in breach of his company’s patents when the service was launched.
He indicated that Controlabill had shared sensitive information about its processes for provisioning mandated authorities with most of the country’s leading banks, including those that were now NPPA shareholders.
Most of the banks that engaged in talks with Controlabill signed non-disclosure agreements through which they gave undertakings that