Federal Reserve Banks Challenge Patent-Infringement Claim

ATLANTA (CN) — All 12 Federal Reserve Banks, led by the Federal Reserve Bank in Atlanta, argue in court that a Florida financial firm’s claim they ripped off its patented computer banking system are bunk.

In a complaint filed in the federal court in Atlanta on February 1, the banks say allegations brought by Bozeman Financial LLC of St. Petersburg, Fla., that they infringed two of the firm’s patents on a “universal positive pay match, authentication, authorization, clearing and settlement system” are false.

In fact, the banks say, they do not even offer “positive pay” services.

According to the complaint, Bozeman Financial called the Federal Reserve Bank of Atlanta in January 2016 claiming the bank was infringing the two patents and informing the bank that Bozeman intended to extract fees it and all of its sister Federal Reserve banks.

The plaintiff banks say Bozeman Financial cited their electronic services (FedACH, Fedwire, and FedLine specifically) as examples of their supposed infringement.

The banks deny all of the allegations.

The complaint addresses Bozeman’s infringement claims piece by piece, each section with its own categorical denial of the accusations.

Bozeman claims the banks infringed one patent, called the “640 patent,” which deals mainly with a “universal positive pay match, authentication, authorization, clearing and settlement system.”

The patent describes a computer program code which allows an individual to monitor checks as they go through the check clearing process, ostensibly as a safeguard against fraud.

In their complaint, the banks say there’s a compelling reason why Bozeman’s claim should fail — they don’t use any such code.

The banks then turn to Bozeman’s claim they infringe a second of its patents, identified as the “840 patent.”

The 840 patent describes an electronic fraud-detection system that allows users to access a database and verify information related to their check during the transaction process.

Again, the Federal Reserve banks claim, there’s no basis for this charge because don’t have such a database nor do they “enable any party to the payment clearing process to verify parameters at each point along the financial transaction payment clearing process.”

Representatives of Bozeman Financial were not immediately available for comment.

The banks seek a determination that they have not infringed, and are not currently infringing, either patent.

They are represented by Natasha Moffitt of King & Spalding LLP in Atlanta.