Federal Reserve Banks file for declaratory judgment in patent case

Federal Reserve Bank of Atlanta, 1000 Peachtree St NE, Atlanta, GA.

Federal Reserve Bank of Atlanta, 1000 Peachtree St NE, Atlanta, GA.

On Wednesday, February 1st, a patent infringement suit was filed in the U.S. District Court for the Northern District of Georgia (N.D. Ga.) naming all 12 banks of the Federal Reserve System (the “Federal Reserve Banks”) as plaintiffs seeking declaratory judgment of non-infringement of two patents owned by Florida-based Bozeman Financial, Inc. The patents are U.S. Patent No. 6,754,640 and U.S. Patent No. 8,768,840. They are both part of the same family of patent applications and list Bozeman Financial’s principal, William Bozeman, as the sole inventor.

According to the complaint, William Bozeman personally telephoned the Federal Reserve Bank of Atlanta to inform them that he believed several financial institutions were infringing on both of his company’s patents as well as patents owned by the Federal Reserve Banks. The complaint states that Bozeman offered to approach those financial institutions on behalf of himself and the Federal Reserve Banks to license those patents to the financial institutions. The complaint states that once the Federal Reserve Bank of Atlanta declined this offer, Bozeman informed them that he believed they were infringing on his two patents.

More specifically, Bozeman alleged that his patents pertained to “universal positive pay” and that the Federal Reserve Banks were essentially engaging in positive pay. For the uninitiated, “positive pay” is a process to identify fraudulent checks in which the check issuer periodically provides a list of checks it has issued to its bank along with amounts of those checks so that, once a check is presented to the bank for payment, it is compared against the list to identify any potential mismatches.

That complaint states that in response to Bozeman’s allegations, the Federal Reserve Bank of Atlanta informed Bozeman that although it had not looked into his company’s patents, the Federal Reserve Bank of Atlanta did not provide any positive pay services and hence was not infringing.

The complaint then alleges that about a month later, Bozeman and counsel for his company telephoned the Federal Reserve Bank of Atlanta again to reiterate Bozeman’s belief that the Federal Reserve Banks were infringing on Bozeman Financial’s patents involving positive pay and that Bozeman Financial was entitled to licensing fees. The Federal Reserve Bank of Atlanta again denied infringement and asked for a written explanation of the bases for the alleged infringement.

Then, according to the complaint, Bozeman Financial emailed the Federal Reserve Bank of Atlanta a few months later through counsel to request “commercially reasonable treatment”, and attached a claim chart to the email that compared the claims of the Bozeman patents to the Federal Reserve Banks’ FedACH, Fedwire, and FedLine services. The complaint goes on to allege that the parties subsequently communicated numerous times orally and in writing concerning the dispute, but the Federal Reserve Banks still denied infringement and maintained that a license to use Bozeman Financial’s patents was not necessary or warranted.

The complaint sets forth two claims for relief: one for declaratory judgment of non-infringement of the 6,754,640 patent, and the other for declaratory judgment of non-infringement of the 8,768,840. The complaint alleges that the Federal Reserve Banks do not infringe multiple elements of independent claims set forth in both patents and seeks a judicial declaration indicating as much, along with costs, expenses, and attorney’s fees.

An answer from Bozeman Financial is due later this month. The case number is 1:17-cv-00389-AT, for those interested in looking it up.


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One comment so far.

  • [Avatar for Invention Rights]
    Invention Rights
    February 14, 2017 12:36 pm

    Certainly some gamesmanship here from the patent owner in trying to not create enough controversy for a DJ action. On the other hand, there must be some strength to his position if the banks decided to initiate litigation.