Do Not Bank on a Bank Not Being a “Person” Under the AIA

BOZEMAN FINANCIAL LLC V. FEDERAL RESERVE BANK

Before Lourie, Dyk, and Moore.  Appeal from the Patent Trial and Appeal Board.

Summary: Banks that are members of the Federal Reserve System but are operationally distinct from, and not owned by, the federal government are “persons” for purposes of the America Invents Act.

Several Federal Reserve banks (“the Banks”) petitioned for covered business method review of two of Bozeman’s patents.  The Board found all of the claims of the challenged patents invalid under 35 U.S.C. § 101.  Bozeman appealed the Board’s authority to decide the petitions by arguing the Banks are not “persons” under the AIA. 

Bozeman argued the Banks are government entities, which the Supreme Court held in Return Mail are not “persons” under the AIA.  Bozeman relied on the Banks being members of the U.S. Federal Reserve System, implementing policies of the United States, and conducting important governmental functions.  The Federal Circuit disagreed and held the Banks are “persons” because they are not government-owned and are operationally distinct from the federal government.  The Banks can also be sued for patent infringement in any court, whereas remedies against government entities are limited and must be filed in the Court of Federal Claims.  Having concluded that the Board had the authority to resolve the petitions, the court affirmed the Board’s determination that the challenged claims are invalid under 35 U.S.C. § 101.

Editor: Paul Stewart                

Written by: Ari Feinstein & Adam Powell