State Street Bank and Trust Co. v. Signature Financial Group

In State Street Bank & Trust Co. v. Signature Financial Group, 149 F.3d 1368 (Fed. Cir. 1998), the Court of Appeals for the Federal Circuit rejected a categorical exclusion of business methods from patentability, and held in favor of U.S. Patent No. 5,193,056 (the '056 patent), entitled "Data Processing System for Hub and Spoke Financial Services Configuration." This patent set forth a method by a data processing system for combining mutual funds in an efficient way that takes advantage of economies of scale.

The Court held that the patent described a transformation constituting a practical application of an algorithm, formula, or calculation because it produces a useful, concrete, and tangible result. Accordingly, the Court held that the transformation passes the test for utility and thereby qualifies as patentable subject matter.

The Court noted that the so-called "business method exception" to patentability was unlawful and that business method claims (and indeed all process claims) are "subject to the same legal requirements for patentability as applied to any other process or method." 149 F.3d at 1375-76.

This was affirmed most recently by In re Bilski, 545 F.3d 943 (Fed. Cir. 2008), appeal pending with the U.S. Supreme Court as of the fall 2009.