## Facts

- Signature Financial Group owned U.S. Patent No. 5,193,056, covering a computer-based “Hub and Spoke” system used to administer certain mutual-fund investment structures.
- The system pooled assets of multiple mutual funds (“Spokes”) into a partnership investment portfolio (“Hub”) and performed accounting needed to maintain the portfolio and comply with tax-related requirements.
- The claimed system used computer-implemented calculations and recordkeeping to transform financial input data into outputs including a daily share price.
- State Street Bank and Signature both provided custodial and accounting services for multi-tiered partnership funds.
- After failed license negotiations, State Street sought a declaratory judgment that the patent was invalid, unenforceable, and not infringed.
- The district court granted partial summary judgment holding the patent invalid for nonstatutory subject matter under 35 U.S.C. § 101, and Signature appealed.

## Issues

1. Whether claims to a computer-implemented data processing system for administering a “Hub and Spoke” mutual-fund configuration constitute patent-eligible subject matter under 35 U.S.C. § 101.
2. Whether the claims are excluded from § 101 as a “mathematical algorithm,” “abstract idea,” or “business method.”
3. What role, if any, a data-transformation output (such as a computed share price) plays in determining whether an algorithm-based claim is a patent-eligible application rather than an ineligible abstraction.

## Decision

- The Federal Circuit reversed the district court’s § 101 invalidity ruling and remanded for further proceedings.
- The court held the asserted claims were directed to statutory subject matter under § 101.
- The court concluded that the claimed machine-implemented transformation of financial data into a final share price was a practical application producing a “useful, concrete and tangible result.”
- The court rejected any categorical “business method” exception to patentability.
- The court criticized the Freeman-Walter-Abele approach as largely inapplicable after Supreme Court precedent and treated the claims as a whole in assessing eligibility.

## Legal Principles

- Section 101 is broadly construed; judicial exclusions are limited to laws of nature, natural phenomena, and abstract ideas.
- A computer-implemented claim applying mathematical calculations is not excluded merely because it involves an algorithm; the key question is whether it is claimed as a practical application rather than a disembodied abstraction.
- A machine-implemented transformation of data representing discrete dollar amounts into a final share price can qualify as patent-eligible subject matter when it yields a “useful, concrete and tangible result.”
- Business-related methods are not per se unpatentable; they are evaluated under the same statutory requirements as other processes and systems.

## Conclusion

The Federal Circuit held that Signature’s computer-based “Hub and Spoke” accounting system fell within § 101 because it applied calculations through a data-processing system to produce a definite real-world output (a share price), and it rejected a categorical exclusion for business methods, reversing the district court’s invalidity judgment and remanding.


State St. Bank & Tr. Co. v. Signature Fin. Grp., Inc., 149 F.3d 1368 (Fed. Cir. 1998), cert. denied, 525 U.S. 1093 (1999)