State Street Bank & Trust Co. v. Signature Financial Group
Facts:
Signature Financial Group obtained a patent entitled “Data Processing System for Hub and Spoke Financial Services Configuration”. The invention involved a computer program in connection with a system in which mutual funds (“spokes”) pooled their assets in an investment portfolio (“hub”) that was organized as a partnership. The system managed the daily allocation of assets for mutual funds with investments in the same portfolio and made daily determinations of the true assets held by each fund. State Street made an unsuccessful attempt to obtain a license and subsequently brought a declaratory judgment action asserting that the patent was invalid because it was not patentable subject matter under 35 USC 101. The district court found that the patent was invalid and granted summary judgment in favor of State Street.
Issue: Is a machine or program that stores and calculates numbers in a useful manner eligible for a patent?
Holding:
Yes. A machine or program that stores and calculates numbers in a useful manner is patentable subject matter. The patent claim at issue was directed to a data processing system and recited each element as a means plus function. The court, citing In re Allapat, held that “”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 court held that the claim was not invalid for lack of patentable subject matter because machines are patentable under 35 USC 101. The court also noted that the question of whether the claim was directed to a machine or a process was irrelevant because both are patentable subject matter.
The district court had also found the claim invalid because it fell within two judicially created exceptions to statutory subject matter. The district court held that the claimed subject matter fell within the “mathematical algorithm” exception and the “business method” exception. The Federal Circuit rejected these arguments. Citing Diamond v. Chakrabarty and Diamond v. Diehr, the court stated that Congress intended 35 USC 101 to extend to “anything under the sun that is made by man.”
“Today, we hold that the transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical algorithm, formula, or calculation, because it produces “a useful, concrete and tangible result”–a final share price momentarily fixed for recording and reporting purposes and even accepted and relied upon by regulatory authorities and in subsequent trades.”
Disposition: Reversed and remanded.
State St. Bank & Trust Co. v. Signature Fin. Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998).
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