t's rare when a patent flap gets public attention these days, but Merrill Lynch Pierce Fenner & Smith appears committed to playing hardball over its claim that it has an enforceable patent for its landmark Cash Management Account.

When the nation's largest brokerage house announced its intention in September to seek licensing agreements from the other major houses offering similar accounts, few competitors took the move seriously.

One of the eight that Merrill Lynch notified at the time claims to have tossed an initial Merrill Lynch letter into the garbage. "It seemed so bizarre that nobody paid any attention to it," said one industry source.

Now, however, it is starting to appear to at least some securities industry executives that Merrill Lynch means to keep its legal bulls charging.

"We're very serious about it," said Merrill Lynch Chairman Roger E. Birk. "We developed the process and those who want to use it ought to provide compensation. We have an obligation to our stockholders to pursue it."

On the other hand, most competing executives such as Prudential Bache Securities chief George Ball, who makes light of the entire matter, notes that his firm's lawyers are reviewing the situation and says "there is no logic to patent law" if Merrill Lynch can enforce their claim.

And Paine, Webber, Jackson & Curtis Inc., which is in the process of starting its own similar Resource Management Account in Washington and six other cities, has decided to test both Merrill Lynch's commitment to it patent claim and the legality of the entire effort.

Paine Webber has filed a complaint in federal court in Delaware challenging the Merrill Lynch patent claim and charging that its competitor is misusing its patent authority in any event. The complaint asks the court to issue a judgment asserting that the claim is invalid and formally barring Merrill Lynch from doing anything to enforce it.

"An airplane is an airplane is an airplane," said Robert Benmoshe, vice president of Paine Webber and head of the Resource Management Account program. "But we have a much different engine from the one they invented. Our product is different."

But the phrase "cash management account" is regularly used by most consumers to describe any one of the handful of accounts offered by competing houses, and even a recent Wall Street Journal headline spoke of the industrywide proliferation of "cash management accounts."

In fact, however, each of the eight major accounts offered by the brokerage houses differs at least slightly from the other. But in essence, all require their customers to provide a minimum investment that is put into interest-yielding government securities or money market fund portfolios, for example.

When idle cash, such as dividend funds, reaches a particular figure, which varies depending on which firm offers the account, that money is automatically swept into investment funds. In addition, credit or debit card and check-writing privileges are also included in the account.

At Paine Webber, the decision to take a stand was made because executives there stress their view that they have something different -- as Benmoshe put it, "the next generation" of these accounts.

And actually, at least as far as specific customer features go, the resource management account does appear substantially different, although the Merrill Lynch patent appears to speak as much to the data processing aspects of the account as it does to the pieces of the effort the public actually sees.

According to Paine Webber's Benmoshe, the firm was looking for a system to handle the needs of the client, the broker and the affiliated bank. For example, their account, which requires a minimum investment of $15,000, compared with the CMA minimum of $20,000, is the only one from a major house that offers to return canceled checks to customers.

In addition, the credit card linked to the system -- in Paine Webber's case a gold MasterCard -- is optional. It is also a charge card, rather than the debit card featured by most of the other similar accounts. Debit cards automatically withdraw money from certain accounts within days, while charge cards provide monthly billing.

In terms of customer services, there is little doubt the accounts differ. Why, then, all the hullabaloo? Skeptical competitors look to the marketing value of the patent flap. "They must have said 'let's come up with a clever idea and hold everybody hostage,' " said one Wall Street marketing source. "As a publicity stunt, it has worked marvelously."

Furthermore, the stakes in the patent flap are considerable. Merrill Lynch's 850,000 CMA accounts have assets of about $50 billion. Although there are no precise figures, the remaining six similar accounts may have as many as another 350,000 customers. If Merrill Lynch's initial thinking is correct and they hope to get $10 a year per account from competitors, that could mean added revenues of $3.5 million a year in current terms.

The federal judge in Delaware may clarify the muddy situation. With so much already invested in these growing, acutely competitive accounts, the last thing the industry needs is an internal squabble.

Perhaps that fact gives new meaning to the advertising slogan: "Thank You, Paine Webber."