State Street Bank v. Signature Financial Group

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State Street Bank & Trust Co. v. Signature Financial Group, Inc. , also known as State Street or State Street Bank , was a major case of American patent law . In1998, the competent federal appeals court , the United States Court of Appeals for the Federal Circuit, first established the general patentability of software and business processes . The State Street Bank v. Signature Financial Group triggered a software patent boom.

It thus expanded the scope of patent law far beyond the previously valid area of ​​applied technology. After the judgment was given, inventions only had to produce results that were useful, concrete and tangible in order to be patentable. The judgment opened the gates to patent previously unpatentable inventions such as scientific theories, business models, survey techniques and administrative techniques, but also software ( software patents ) etc. The United States Court of Appeals for the Federal Circuit largely overturned this decision in the In re Bilski judgment of October 30, 2008 and declared the “useful, tangible and concrete” test null and void. The US Supreme Court confirmed in Bilski v. Kappos took the decision on a case-by-case basis, but emphasized that only the wording of 35 USC §101 in its normal, modern, generally accepted meaning and not any derived, specific patentability test is decisive for the patentability or non-patentability of software and business methods.

background

Signature Financial Group Inc. obtained US Patent 5,193,056 on March 9, 1993 for a "data processing system for hub and spoke financial services". The end nodes (spokes) in this case were open-ended investment funds that pooled their investments in a central node . In order to avoid double tax payments on this construction, the American Internal Revenue Service (IRS) prescribes certain methods of accounting that the Signature Financial Group had implemented as software. Large parts of the patent specification literally matched the requirements of the IRS. The main difference between the patent and the legal provisions was that the patent explicitly provided for a computer for administration. Since the tax regulations stipulate, among other things, the daily calculation of the profits and losses of all partners involved and these funds normally provide for a large number of participating partners with extensive holdings, it is rather unlikely that the tax regulations could be met without a computer.

Procedure

After Signature refused to license the patent from Bank State Street, also based in Boston, State Street challenged the patent. The responsible district court ruled State Street in March 1996, following the line of case law at the time that software was fundamentally not patentable. According to the judgment, a patent on an accounting method for a business process is equivalent to a patent on the business process. Since such abstract ideas can neither be patented as a business process nor as a mathematical algorithm , Signature's patent is also void. Apart from a few exceptions, software was seen as an abstract idea that had no physical equivalent and therefore did not fall under patent law.

It was only the Federal Court of Appeal responsible for the patent office that explicitly contradicted this argument and thus considerably expanded the validity of patent law. It did not see the software as an abstract algorithm, but rather as a practical application of multiple algorithms that produced useful, concrete and tangible results. The court also wrote in its reasoning that it took the opportunity to declare the previous exception for business processes null and void, so that these were now patentable. The Supreme Court refused a Certiorari in January 1999 , making the appeal court's decision in the case final.

Effects

To what extent the ruling really contributed to the boom in software patents and patents on business processes is a matter of dispute; in any case, the number of corresponding patents rose so dramatically after State Street that the Patent and Trademark Office spoke of a "hysterical reaction" to the ruling . Overall, the number of all patents grew by over 30% between 1997 and 1998, with a large proportion of the increase being attributable to software and business process patents. The number of software patents doubled between 1997 and 1998 to 1,016, with 15,000 further applications following in 1999 alone. In the first six months after State Street alone , the number of business process logins increased by 40%.

In the years that followed, State Street established itself as a model case for the boom in patents on abstract ideas and changing case law. As early as 1999, another federal court ruled that in principle everything was patentable. In the years that followed, there was a sharp increase in patent applications from sectors such as insurance, financial services or the advertising industry, whose products were previously considered non-patentable.

Remarks

  1. ↑ 149 F.3d 1368 ( Memento of the original dated May 12, 2008 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. (Fed. Cir. 1998). @1@ 2Template: Webachiv / IABot / bulk.resource.org
  2. ↑ "Courts" 'should not read into the patent laws limitations and conditions which the legislature has not expressed,' "Diamond v. Diehr, 450 US 175, 182, and, “[u] nless otherwise defined, 'words will be interpreted as taking their ordinary, contemporary, common meaning,'” “
  3. ↑ Patent US5193056 : Applied March 11, 1991 , Inventor: Data processing system for hub and spoke financial services configuration. ‌
  4. ↑ For a tabular comparison between law and patent application see Stern, Appendix A.
  5. ^ A b Thomas, John R. 2005: On Proprietary Rights and Personal Liberties: Constitutional Responses to Post-Industrial Patenting. In: Drahos 2005 pp. 112-116
  6. ↑ Stern, p. 122
  7. ↑ "We take this opportunity to lay this ill-conceived exception [to patentability] to rest." n. star 124
  8. ↑ Lori E. Lesser: "We've Got Algorithm - Software Patents Boom"

literature

  • Richard H. Stern: Scope-of-Protection Problems With Patents and Copyrights on Methods of Doing Business in: Fordham Intelligent Property, Media & Entertainment Law Journal (Vol. 10: 105) 2006, pp. 105–158 as pdf

Web links