Federal Reserve Banks Can Petition for Inter Partes Review

Intellectual Property Law

In Bozeman Fin. LLC v. Fed. Reserve Bank of Atlanta,1 the Federal Circuit held that Federal Reserve banks are not considered government entities under the America Invents Act (AIA) and can challenge patents using the contested proceedings. The Federal Circuit recently denied en banc rehearing and confirmed this holding even though the Supreme Court in Return Mail Inc. v. U.S. Postal Service held that the U.S. Postal Service was considered a government entity that could not file such a petition.2

Bozeman Financial LLC owned U.S. Patent Nos. 6,754,640 and 8,768,840, covering methods for authorizing and clearing financial transactions to detect and prevent fraud. Twelve regional Federal Reserve banks filed a petition for covered business method (CBM) review, arguing that all claims were not patent eligible under 35 U.S.C. § 101.

The Patent Trial and Appeal Board (Board) held that all claims of U.S. Patent Nos. 6,754,640 and 8,768,840 were not patent eligible.

On appeal, Bozeman argued that the Federal Reserve banks were not “persons” under the AIA, but were government entities. The Federal Circuit disagreed and explained that the Federal Reserve banks are not part of an executive agency, and each bank has its own board of directors and can also be sued in any court for patent infringement. In addition, the court said the banks are distinct from the government because they are not structured as government agencies, they do not accept congressionally appropriated funds, and their officials are not appointed by government officials. Accordingly, the court concluded the following:

… [T]he Banks are distinct from the government for purposes of the AIA. We recognize that there may be circumstances where the structure of the Banks does not render them distinct from the government for purposes of statutes other than the AIA. For purposes of the AIA, however, we conclude the Banks are “persons” capable of petitioning for post-issuance review under the AIA. The Board therefore had authority to decide the CBM petitions at issue here.3

Consequences

This decision enables the Federal Reserve banks to challenge the validity of a patent under the AIA, whereas the Supreme Court Return Mail decision excluded federal agencies such as the U.S. Postal Service. Thus, the federal government can only challenge the validity of a patent using the ex parte reexamination procedure at the U.S. Patent Office or litigation at the U.S. Court of Claims. The exact contours of who is a person under the AIA continue to develop. It is important to remember that while the federal government is not considered a person under the AIA, the threat of AIA proceedings is not eliminated, since federal government contractors or other interested third parties may still challenge the validity of a patent asserted against the federal government under the AIA.

1 Bozeman Fin. LLC v. Fed. Reserve Bank of Atlanta, 955 F.3d 971, 2020 USPQ2d 10332, 2020 WL 1814311 (Fed. Cir. 2020).

2 Return Mail Inc. v. U.S. Postal Service, 139 S.Ct. 1853, 2019 USPQ2d 212999, 2019 WL 2412904 (2019).

3 Bozeman Fin., 955 F.3d at 976.


Irah Donner is a partner in Manatt’s intellectual property practice and is the author of Patent Prosecution: Law, Practice, and Procedure, Eleventh Edition, and Constructing and Deconstructing Patents, Second Edition, both published by Bloomberg Law.

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