Advanced Software Design v. Federal Reserve Bank of St. Louis (Fed. Cir. 2009)
Advanced Software’s patents relate to software methods of detecting fraudulent bank checks. The patentee sued three Federal Reserve Banks and Fiserv for patent infringement in Federal Court in the Eastern District of Missouri. On a preliminary motion, the district court dismissed the infringement claims – finding that the claims must be litigated in the Court of Federal Claims because the alleged acts of infringement were “for the United States.” 28 U.S.C. 1498(a). Section 1498(a) provides that the the Court of Federal Claims is the forum to redress unauthorized use of a patent “by or for the United States.” Under Sectio 1498(a), work is considered “for the United States” if it is (1) conducted for the US and (2) with “authorization or consent” of the US.
Advanced Software argues that the Federal Reserve banks are private entities and that the US government expressly avoided becoming a party to any contract relating to the technology at issue. As such, the Federal Reserve’s alleged infringing activities should not be considered activities done “for” the US.
On appeal, the Federal Circuit affirmed the dismissal – finding that the proper forum is the Court of Federal Claims. In particular, the court noted that no particular or explicit authorization or consent is required.
The most interesting aspect of the decision is that the Federal Circuit appears to have allowed the US government to take-on liability post-hoc. In the appeal, the US government filed an amicus brief and was offered time to argue. During that argument, the government gave its authorization and accepted potential liability under Section 1498.