State Street Bank & Trust Co. v. Signature Financial Group, Inc. (901422128)

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Read for 2/11/11

Reading Notes

  • Determined by the CAFC in 1998
  • District Court granted summary judgment for State Street by finding a patent invalid under 101
    • CAFC reverses because the claims are directed to statutory subject matter
  • Signature has a patent for "Data Processing System for Hub and Spoke Financial Services Configuration"
    • Directed to data processing system for implementing an investment structure
    • Facilitates a structure whereby mutual funds pool their assets in an investment portfolio organized as a partnership
  • Negotiations for licensing fell through and State Street asked for a summary judgment
  • CAFC determined the subject matter was statutory
  • Describe the system capabilities
    • It is essential that the calculations it does and quick and accurate - computer is essentially necessary
  • Patent initially had six "machine" claims and six "method" claims
    • Examiner contemplated rejection based on 101, but the method claims were canceled
  • Claim 1 claims a machine
    • Machine is statutory inder 101
  • District court ruled that the patent fell into one of two judicially-created exceptions to statutory subject matter (mathematical algorithm and business method)
  • CAFC holds that the transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share prices, constitutes a practical application of a mathematical algorithm because it products a "useful, concrete, and tangible result" - a final share price...
    • District Court was wrong in applying F-W-A
  • DC relied on the business method exception
    • CAFC wants to lay this to rest
    • Arose from the "requirement for invention" which was eliminated by 103
    • All the cases State Street cites as previous examples of this method really used different criteria

Patentable Subject Matter

  • CAFC must make an independent determination that the standards for summary judgment have been met
  • Machine claims having means clauses may only be reasonably viewed as process claims if there is no supporting structure in the written description that corresponds to the claimed means elements
  • The word "any" in 101 shows Congress's intent not to place restrictions on statutory subject matter
    • Algorithms can be viewed as abstract ideas
  • To be statutory, an algorithm must be applied in a useful way
  • After Diehr, the F-W-A test has no applicability to determining statutory subject matter
    • The question should focus on the essential characteristics of the subject matter and its practical utility
  • Whether the claims are directed to subject matter within 101 should no turn to whether the subject matter does "business"

Class Notes