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

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"