"If Signature's invention were patentable, any financial institution desirous of implementing a multi-tiered funding complex modelled on a Hub and Spoke configuration would be required to seek Signature's permission before embarking on such a project.  This is so because the . . . Patent is claimed sufficiently broadly to foreclose virtually any computer-implemented accounting method necessary to manage this type of financial structure."

Id.  When the true breadth of the claims is considered, isn't the claimed "invention" in State Street any general- or special-purpose digital computer system programmed to perform the stated accounting operations, regardless of how it is programmed?


5.  If the answer to that question is affirmative (if not, isn't the patent rather useless?), then the basic issue of State Street appears in stark relief.  The inventor there did not claim to have invented arithmetic, any particular accounting procedure used, any computer hardware, or any programming language.  For all that appears in the opinion, the alleged inventor simply wrote a computer program, using a programming language invented by someone else, to run on a computer invented by someone else, to perform arithmetic calculations required by rules and regulations devleoped by someone else, using arithmetic operations known for millennia.  By virtue of writing such a program, should an "inventor" deserve a patent that can control a particular type of business by monopolizing the accounting procedures necessary to engage in that form of business?  Wouldn't such a patent be a state-granted monopoly on a type of business, which has been outlawed in Anglo-American society for about four centuries, since Parliament adopted the Statute of Monopolies?

If one characterizes the effect of the patent in this manner, isn't the court's extinction of the putative "business-method exception" merely an afterthought?  Could such a patent, so construed, coexist with a rule precluding patents that provide monopolies on ways of doing business?


6.  Are there any limits to the panel's holding in State Street?  The panel repeats the phrase "a useful, concrete and tangible result" like a mantra, but what does it mean?  In accepting the printout or display of accounting numbers as such a result, isn't the court in fact accepting any system or process that produces "useful" numbers?  Aren't most computed numbers useful to somebody, in some context?  Aren't specific numbers "concrete," and isn't a paper printout of them "tangible"?  Is there any perceptible limitation here?  Also, does the court's emphasis on usefulness confuse the requirement for statutory subject matter with the separate requirement that an invention be "useful" under Section 101?


7.  More fundamentally, does the abstract/concrete distinction discussed in Diehr, Alappat, and State Street make economic sense?  The three judge-made exceptions to patentability mentioned in Diehr—"laws of nature, natural phenomena, and abstract ideas"—seem to be based on the notion that no one should monopolize the basic tools of invention and discovery, i.e., the fundamentals of math, science and engineering that every inventor needs to do his or her work.  But does the abstract/concrete distinction properly capture this policy?  Is is clear and administrable?  Isn't the question whether claimed subject matter is an invention or part of the tools for making inventions and discoveries a matter of discrerning judgment that no formula can capture?


8.   In any event, does the abstract/concrete distinction properly draw a line between specific inventions which need and can benefit from patent protection, on the one hand, and, on the other, ordinary business ventures of the type that have been subject to the general rule of free competition for about four centuries?  Shouldn't the dividing line be based on economic substance, rather than an evanescent distinction that is itself an abstraction, such as the difference between abstract and concrete results?


9.  In 1966, in articulating the economic policy basis for the "nonobviousness" criterion for patentable invention under what is now Section 103(a), the Supreme Court said, "The inherent problem was to develop some means of weeding out those inventions which would not be disclosed or devised but for the inducement of a patent."  Graham v. John Deere Co., 383 U.S. 1, 11, 86 S.Ct. 684, 15 L.Ed.2d 545, 148 U.S.P.Q. (BNA) 459 (1966).  Isn't this the proper policy basis for determining what "inventions" merit patents and what do not?  If this basic criterion were applied, would the patent in State Street stand?  Would Signature Financial Group have declined to write a computer program to manage its hub-and-spoke investment partnerships without the incentive of a patent?  Would Alappat have refused to use his cute mathematical trick to smooth curves on computer screens?  In contrast, would a pharmaceutical company embark on a project of basic reserach, followed by exhaustive and risky clinical trials (which together can cost hundreds of millions of dollars) without the incentive of patent protection to prevent piracy of the new drug once discovered and proven to be safe and effective?

Doesn't the "but for" test of Deere provide the proper balance between the general rule against monopoly and the need for patent protection where progress requires financial incentives?  Yet isn't the "but for" test itself rather vague and difficult to administer?  How could it be refined, without relying on equally slippery abstractions like the abstract/concrete distinction?  See Jay Dratler, Jr., "Does Lord Darcy Yet Live? The Case against Software and Business-Method Patents, 43 Santa Clara L. Rev. 823, 840-853 (2003).


10.  Some judges on the Federal Circuit appear to believe, as did the late Judge Rich, that enforcing the subject matter line is not important.  The separate criteria of novelty and nonobviousness will weed out "bad" patents, they seem to think, without having to draw lines between patentable and unpatentable subject matter generally.

But is this so?  The Patent and Trademark Office apparently granted the patent in State Street after a thorough examination of the alleged "invention's" novelty and nonobviousness.  While the patent might have been invalidated in litigation for failure to meet the requirements that patentable inventions be new and nonobvious, wouldn't that litigation be costly and dilatory, impairing competition by putting up a barrier to entry into the "hub and spoke" investment partnership business?


11.  To see how costly and dilatory full-blown patent litigation can be, consider the case of Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 57 U.S.P.Q.2d (BNA) 1747 (Fed. Cir. 2001).  There Amazon had gotten a patent on "one-click" shopping on the Web.  See id., 239 F.3d at 1357-1348.  The claims were quite broad, not limited to any specific programming techniques; indeed they were broad enough to encompass "single-action" shopping by means of technology other than the ubiquitous mouse.  See id. at 1348-1350 (reciting and discusing claims).  Apparently on the basis of cases such as State Street, no one had challenged the alleged "invention" as improper subject matter.  The district court refused to invalidate the patent for obviousness and granted a preliminary injunction.  See id. at 1347-1350.  About two years later, the Federal Circuit, although affirming the finding that infringement was likely if the patent were valid, see id. at 1355-1358, vacated the injunction and remanded for reconsideration of obviousness in light of new and improperly considered prior art.  See id., at 1366.

At this point, the alleged infringer, Barnes and Noble, had paid for a complete trial and an appeal to Federal Circuit, with two years having passed and no end to the litigation in sight.  Had the defendant been a small, innovative start-up company, rather than a substantial competitor like Barnes and Noble, could it have managed to challenge such a substantial barrier to entry into the "one-click" Web shopping business?


12.  Patent doctrine also suggests that preliminary litigation over subject matter is likely to be far less expensive and dilatory than full-blown patent litigation.  Full-blown patent litigation requires judicial construction of the patent claims, which may entail a special "Markman" hearing and an appeal of claim construction to the Federal Circuit.  Only after the patent claims have been construed can the district court address their validity, exhaustively comparing the claimed invention with "prior art," both that cited by the patent examiner and that introduced by the infringement defendant in litigation.  Then, if the patent is valid, the court must compare the properly construed and validated patent claims with the accused device, in detail, in order to assess infringement, perhaps with the aid of a jury.  Finally, in assessing infringement, the court may have to address the doctrines of equivalents and prosecution history estoppel, which may require an exhaustive review of statements and claim amendments made by the patentee during patent prosecution. See generally, Jay Dratler, Jr., Intellectual Property Law: Commercial, Creative, and Industrial Property § 2.05 (Law Journal Press 1991 & Supps.), available on LEXIS: Secondary Legal: View More Sources: Law Journal Press (discussing claim construction and infringement assessments).  In the end, full-blown patent ligitation may require as many as three hearings (preliminary injunction, Markman, and full trial), and three appeals to the Federal Circuit.

Should an infringement defendant who believes that an alleged "invention" is clearly not of the kind for which the Constitution and the patent statute authorize patent protection have to go through all this?  Does the daunting prospect of such prolonged and expensive litigation provide a barrier to entry into competition nearly as high as a that of a valid patent itself?  Woudn't it be far simpler and more efficient economically for the courts first to decide whether one-click shopping is a patentable technology or an ordinary business venture subject to the age-old rule of free competition in free markets?  Under these circumstances, does the Federal Circuit's refusal to draw a line on subject-mattter ground make economic sense?