Notes

Outline

The AT&T and State Street Decisions  What do they really say? Start first by examining 35 USC 101.    Then by reviewing exclusions from case        law.    The key is “useful, concrete and        tangible result”.

35 U.S.C. Section 101 reads: “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.” The Supreme Court has stated that Congress intended statutory subject matter to “include anything under the sun that is made by man.” See Diamond v. Chakrabarty, 447 U.S. 303,309

Exceptions    The Supreme Court has specifically identified three categories of unpatentable subject matter. They are: “laws of nature, natural phenomena, and abstract ideas.” See Diehr, 450 U.S. at 185.

Exceptions (cont.)    Of special relevance to both AT&T and State Street, the Courts have held that mathematical algorithms are not patentable subject matter to the extent that they are merely abstract ideas. See Diehr, 450 U.S. 175[209 USPQ 1], passim. In Diehr, the Court explained further that certain types of mathematical subject matter, standing alone, represent nothing more than abstract ideas until reduced to some type of practical application, i.e. “a useful, concrete and tangible result.” See In re Alappat, 33 F.3d at 1544, 31 USPQ2d at 1557.

State Street Bank & Trust Co. v. Signature Financial Group Inc. The Invention:    The patent claims recite a data processing system for implementing an investment structure. The system transforms data, representing discrete dollar amounts, into a final share price using a machine (computer) that makes a series of mathematical calculations.

State Street - The Bottom Line    The Courts held that a machine (computer) programmed to transform data which represents discrete dollar amounts into a final share price through a series of mathematical calculations does, in fact, constitute the practical application of a mathematical algorithm, formula, or calculation because it produces “a useful, concrete and tangible result” i.e. the final share price. See State Street Bank & Trust Co. v. Signature Fin. Group, Inc, 149 F.3d 1368, 1374-75, 47 USPQ 2d 1596, 1602 (Fed. Cir. 1998)

State Street - The Bottom Line (cont.)    The Courts further noted that “a process, machine, manufacture, or composition of matter employing a law of nature, natural phenomenon, or abstract idea is patentable subject matter even though a law of nature, natural phenomenon, or abstract idea would not, by itself, entitled to such protection.” Id. And………..

State Street - The Bottom Line (cont.) The CAFC took the opportunity “to lay this ill- conceived exception to rest”………… ......“this” being the business method “exception”.

AT&T Corp. v. Excel Communications Inc. The Invention:    The patent claims a process that uses Boolean algebra to derive a value that is used to generate a message record of long distance telephone calls between subscribers and their call recipients, that value being used to create a signal useful for billing purposes.

AT&T - The Bottom Line    The Courts held that the claims constituted patentable subject matter under 35 U.S.C. 101 eventhough the billing value was derived using a simple Boolean mathematical principle. The Courts noted that the patent does not claim the Boolean principle nor try to preclude its use in any other application, and that the “process applies the Boolean principle to produce a useful, concrete, tangible result without preempting other uses of mathematical principle.” See AT&T Crp. V. Excel Comm. Inc. 50 USPQ2d 1447 (Fed. Cir. 1999)

The Result…..     In 1998, the State Street decision triggered an awareness of the “business method claim” for computer related inventions. Inventors are now changing the ways they choose to describe their inventions in this art to reflect this new awareness. This decision, together with recent phenomenal growth in the Internet and information technology has brought much attention and filing activity to this patent area.