State Street Bank & Trust Co. v. Signature Financial Group, Inc.
149 F.3d 1368 (Fed. Cir. 1998)
Congress passed a law saying
that you would get a tax break if you set up a stock fund in a certain
way. Signature developed a process
and a computer program to help manage a portfolio in order to best take
advantage of the tax break. They applied for a patent on their method.
It was really just a method
for how to trade stock. But the patent application was written in such a
way to make it sound like a 'system' so it would meet the requirements of
Diamond v. Diehr (450 U.S. 175
The Trial Court found
Signature's patent invalid. Signature appealed.
The Trial Court found that
the method was nothing more than a math equation, and math equations are
not patentable subject matter.
See Gottschalk v. Benson (409 U.S. 63 (1972)).
The Appellate Court reversed
and allowed the patent.
The Appellate Court found
that the patent was valid under the useful results test.
The useful results test holds 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
Basically, the useful
results test collapses the concept of
patentable subject matter
into the utility
This case was overturned by In
Re Bilski (545 F.3d 943 (2008)),
which dumped the useful results test, in favor of the machine
or apparatus test which holds that in
order to be patentable subject matter a patent for a method
Be tied to a particular
machine or apparatus, or
Transform a particular
article into a different state or thing.