A federal judge in Texas ruled this week that Minneapolis-based U.S. Bank must pay nearly $54 million for willfully infringing the patents of a small, privately held company that developed procedures for electronic check processing.

DataTreasury Corp. of Plano, Texas, sued a number of banks in 2002, alleging that they stole its check processing technology. The case was so complex that the judge broke it into three phases, with U.S. Bank taking a lead role in the initial "bellwether" phase.

In March, jurors found that U.S. Bank and Viewpointe Archive Services, which processes a large share of the nation's checks, had willfully infringed on DataTreasury's patents. Jurors awarded damages of $26.6 million against the two firms. U.S. Bank is a co-owner of Viewpointe.

Wells Fargo and several other defendants scheduled for phase two of the case settled over the summer for an undisclosed sum, joining a large number of other banks that have negotiated settlements with DataTreasury.

On Monday, U.S. District Judge David Folsom, sitting in Marshall, Texas, doubled the jury's award against U.S. Bank on a post-trial motion from DataTreasury for punitive damages. He could have tripled the award, but wrote that a 100 percent penalty seemed appropriate for the bank, which he noted has about $54 billion in assets.

The ruling comes as Bank of America; LaSalle Bank, which was acquired by Bank of America in 2007; and Sun Trust Bank of Atlanta are preparing to defend themselves against similar infringement allegations in phase three of the trial.

"Bank of America and the other defendants set for trial in October need to take notice [of Folsom's ruling], because this decision by the court could set potential damages in that case of somewhere between $2 billion and $3 billion," DataTreasury spokesman Eric Wetzel said.

U.S. Bank remains adamant that it did nothing wrong. "We are disappointed with the court's recent rulings, but remain confident that U.S. Bank did not infringe the patents at issue and that the patents will ultimately be held invalid," spokesman Steve Dale said Tuesday in a prepared statement. "U.S. Bank will pursue all avenues to protect its rights and will appeal."

When DataTreasury started out in the late 1990s, it discussed a joint venture with Chase Manhattan Bank, now known as J.P. Morgan Chase. But according to the company, J.P. Morgan Chase instead helped start competitors Small Value Payments Co. and Viewpointe, which together process most of the nation's checks.

DataTreasury alleged that J.P. Morgan Chase re-engineered its technology to avoid licensing fees. The bank admitted the infringement and settled with the company in 2005. It now pays licensing fees. In 2006, DataTreasury sued dozens of other financial institutions, many of which have settled with company.

Court filings indicated that Bank of America has the most to lose in the dispute with DataTreasury. It faces about 55 percent of the alleged damages -- $868.7 million -- and handles about 62 percent of the alleged check volume, according to an order Folsom issued in January. By contrast, U.S. Bank's share of the alleged damages was just under $202 million, or 13 percent.

Dan Browning • 612-673-4493