Why State Street is Out

State Street is out and is not coming back. The majority of justices believe that State Street’s test was improperly broad. See the footnote in the Court's opinion:

Even if the machine-or-transformation test may not define the scope of a patentable process, it would be a grave mistake to assume that anything with a " ‘useful, concrete and tangible result,’ " State Street Bank & Trust v. Signature Financial Group, Inc., 149 F. 3d 1368, 1373 (CA Fed. 1998), may be patented.

A four justice minority thought that all business method patents should not be considered as a patentable process. Justice Scalia joined Breyer in the summary that states:

“In sum, it is my view that, in reemphasizing that the ‘machine-or-transformation’ test is not necessarily the sole test of patentability, the Court intends neither to de-emphasize the test’s usefulness nor to suggest that many patentable processes lie beyond its reach.”

No 5 justice majority could be found to support any reading that a process claim should be patentable if it achieves a "useful, concrete and tangible result." The Supreme Court has left the door open to software claims that are not merely seeking to patent “abstract” ideas, but the Supreme Court only cites to Diehr for an example of how this can be accomplished. Diehr is the original “transformation and reduction of an article to a different state or thing” case, when “a process claim does not include particular machines.” Diehr at 184. Breyer’s concurrence, which Justice Scalia joined, criticizes the Federal Circuit’s State Street decision in no uncertain terms. This makes at least 5 of the 9 justices to be on record against the test in State Street. Some examples:

“although the machine-or-transformation test is not the only test for patentability, this by no means indicates that anything which produces a ’useful, concrete and tangible result’” … is patentable.

“[T]his Court has never made such a statement and, if taken literally, the statement would cover instances where this Court has held the contrary.” Laboratory Corp.

State Street’s decision preceded “the granting of patents that ‘ranged from the somewhat ridiculous to the truly absurd.’”

“To the extent that the Federal Circuit’s decision in this case rejected that approach, nothing in today’s decision should be taken as disapproving of that determination.”

So, it is clear that at least 5 justices concur that the decision in State Street was wrong and should not be followed, as least as far as its “useful, concrete and tangible result” test is concerned.