Expense management provider Expensify filed a lawsuit
against rival Abacus for patent infringement of its SmartScan technology,
founder and CEO David Barrett announced on Expensify's blog.
The two patents in question address technologies that scan
receipts and automatically pair them with credit card feeds, according to
documents filed with the U.S. District Court for the Southern District of New
York. "Abacus entered the expense report automation market late, forcing
it to copy Expensify's SmartScan technology in an effort to gain lost
time," the filing states.
Abacus' website said it was founded in 2013. Expensify was
founded in 2009 and claims more than 4.8 million users with more than 700,000
companies across 169 countries, according to the filing. Expensify filed a provisional
patent application in May 2011, followed by a utility patent application in May
2012, for which a patent was eventually issued in May 2014. Expensify filed a
second utility application in September 2014 as a continuation of its previous
application, and a second patent was issued in November 2015.
Expensify describes its SmartScan technology as a layered
system that uses optical character recognition to extract text from receipt
images and analyzes the text to define the merchant name, currency and purchase
date. SmartScan pairs the processed receipt images with transactions imported
from a credit card feed. Expensify claims that both of Abacus' offerings,
Abacus Starter and Abacus Professional, infringe on its patents and points to
Abacus' website and an Abacus YouTube video as proof.
Indeed, Abacus' website and blog detail the use of OCR,
"a type of artificial intelligence that uses machine learning to help a
computer read an image as text, the way a human eye would."
A 2016 Abacus blog post stated, "Nobody was selling OCR
out of the box. Setting it up was a project that required us to write an
algorithm, set up a network to do the processing and start training the system
ourselves."
Abacus had claimed an initial 40 percent success rate of
reading receipts, but at some point, it switched to using Amazon Web Services cloud
computing. Abacus then claimed the success rate had increased to about 70
percent in 2016. "Abacus no longer had to maintain our own machine
learning process. With one API, we got turnkey access to a powerful machine
learning system, [which] let us focus on Abacus while knowing that our OCR
technology was getting better every day," according to the blog post.
Likewise, many expense
management providers offer OCR technology. Some, like Coupa, depend on Amazon
Web Services for their system platforms. Chrome River uses it to manage data
storage. Several—including Chrome River, Concur, Certify and Coupa—also
offer automated receipt and credit card transaction pairing.
It's difficult to say whether Abacus is only the first of
many expense systems against which Expensify will seek to protect its patents. Barrett
is known for making bold statements and taking action. In November 2015,
Expensify sued Nexonia for trademark
infringement of Expensify's SmartScan trademarked name. Within 48 hours,
Nexonia stopped using the name on its website and products, and within seven
days, the name was removed from the Apple store and the parties settled out of
court. While other companies were using the same name for document-scanning
technologies, Barrett said at the time that he was unsure how aggressively
Expensify would take action against other companies' illegal use of the
trademark. Expensify has pursued no additional protective actions related to
the SmartScan name.
Still,
a name doesn't cost as much to create as innovative technology does. In the
blog post in which he announced the suit against Abacus, Barrett said, "One
fantastic aspect of technology is that it's easier than ever to copy. But
creation is still very expensive, time consuming and risky."