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MUTUAL FUND SYSTEM U.S. Patent No. 5,193,056 Issued:March 1993 to R. Todd Boes Assigned tSignature Financial Group Inc. Prosecuted by:Pennie & Edmonds Litigated by:Philadelphia’s Dilworth, Paxson, Kalish & Kauffman (now Dilworth Paxson); Steven Friedman, lead partner Pity poor Signature Financial Group. First its patent is challenged. Then it is invalidated. Then, even after that ruling is overturned, the patent is forever known as the State Street Bank patent — named, ironically, after the folks who brought the challenge. Perhaps this is appropriate, for it is not the patent itself that is important, but the case it spawned — State Street Bank & Trust Co. v. Signature Financial Group Inc.(1998). Signature’s patent covers a way to organize mutual funds using computer software. The district court determined that the invention couldn’t be patented as it fell under the so-called “business method” exception to patentable subject matter. On appeal, the U.S. Court of Appeals for the Federal Circuit ruled that the business-method exception was a bad idea that it was getting rid of. That saved Signature’s patent, but also sparked a flurry of controversy and confusion. Shortly after the Federal Circuit’s ruling in the State Streetcase, Amazon.com sued barnesandnoble.com over its one-click patent, the �ber-business method patent. (That case has settled.) The true importance of State Streetis the message — and incentive — it provides inventors whose work falls outside the traditional subject matter of patents. Securities trading, insurance underwriting, or perhaps even the practice of law were all fair game. “It means that whatever the next new area is where people say, ‘Can you patent this?’ State Street Banksays you probably can,” says Donald Steinberg, a partner specializing in intellectual property at Hale and Dorr. Alan Cohen is a free-lance writer based in New York City. His e-mail is [email protected].

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