MIAMI, July 29 /PRNewswire/ -- Yesterday, the United States District Court
for the Southern District of Florida confirmed its earlier June 26, 2008
dismissal of the declaratory judgment complaint filed by Insured Deposit
Conduit, LLC (Indeco) against Community Bank Funding Company and Robert Colvin
for lack of jurisdiction, by denying Indeco's motion for reconsideration of
the earlier dismissal order.
(Photo: http://www.newscom.com/cgi-bin/prnh/20080729/LATU555LOGO)
Indeco's lawsuit involved the Capital Market CD (CMCD), a patented product
created by Community Bank Funding Company (previously IPFS) to assist
community banks in raising deposits.
By way of background, beginning in 2003, Robert Colvin, the founder of
Community Bank Funding Company (CBFC previously IPFS) applied for a patent
from the US Patent Office for a system that facilitates the securitization of
Certificates of Deposits. In 2005-2006, while the patent application was
pending, Indeco tried to duplicate the process. CBFC, protecting its rights,
sent letters to Indeco and its business partners advising them of the
potential infringement. On April 17th, 2007 the patent, entitled Methods and
Systems for Securitization of Certificates of Deposit (Patent # 7,206,761),
was issued.
On October 16, 2007, Indeco filed its complaint with the Florida District
Court. The complaint asked the Court to declare CBFC's patent invalid and
unenforceable. Indeco's complaint also asked the Court to declare that a
hypothetical Indeco CD program, materially different from the 2005-2006
program, and which Indeco had neither commercialized nor took concrete steps
to commercialize, did not infringe the patent. Because Federal District
Courts can only hear actual "cases and controversies" between parties, and do
not render advisory opinions based on hypothetical claims, the Florida Court
granted CBFC's motion to dismiss Indeco's complaint for lack of subject matter
jurisdiction. Since Indeco's CD program was hypothetical in nature, the
Florida Court also did not have jurisdiction over CBFC's counterclaim for
patent infringement. As a result, the Court also dismissed CBFC's
counterclaim, without prejudice.
Designed by CBFC, the CMCD program is the only securitized CD program
available anywhere in the world today. In short, the CMCD program provides a
mechanism where-by institutional investors can purchase large blocks of AAA
rated notes, where the collateral for the notes are fully insured by the FDIC.
The recipients' of the funds from the program are FDIC insured community banks
that issue CDs into the program. Through the patented process, community banks
can consistently raise competitively priced funds from large institutional
investors that they would otherwise never be able to do business with. As a
result of the program, community banks benefit by securing a new source of
deposits, while large institutional buyers benefit through the addition of a
new AAA rated security backed 100% by FDIC insured CDs.
"We are very pleased by the decision the court made today," said Robert
Colvin, Founder of CBFC. "We have worked long and hard to create this unique
solution for community banks and to think someone could take simply step in
and claim it for their own was intolerable," Mr. Colvin remarked. "As the need
for deposits continues to grow in the community bank industry, the CMCD
provides a solution which allows institutions to cost-effectively reach a
broad audience of institutional investors that would otherwise be unreachable.
Through the patented methodology created by CBFC, community banks now have
available a source of funds from a completely new investor base to complement
deposits raised in their local markets," said Robert Colvin.
About Community Bank Funding Company (CBFC)
Community Bank Funding Company, headquartered in Aurora, Colorado and
backed by Denver-based Republic Financial Corporation, provides innovative
funding solutions for the countries 8,500 community banks with assets less
than $10 billion. The company helps banks fill an increasing funding void
caused by the continuing erosion of local retail deposits. In 1992, 82% of a
bank's funding came from their local retail deposits -- today only 68% of
their funding comes from this same source. This funding problem is expected to
grow in the coming years as deposits from the post-World War II generation
passes to the next generation. CBFC recognizes this problem and has developed
solutions like the CMCD to assist community banks in funding needs to allow
them to compete effectively in the financial services markets. Visit CBFC at
http://www.cbankfunding.com.
SOURCE Community Bank Funding Company
Joelle Rockwood, +1-303-923-2172, for Community Bank Funding Company
