Where Does State Street Lead? A First Look at Finance Patents, 1971 to 2000


  • Josh Lerner

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    • Harvard University and National Bureau of Economic Research. Jim Hirabayashi, Adam Jaffe, Sam Kortum, and Brigid Quinn provided data or assistance in accessing data. Steve Bauer, Phelim Boyle, Richard Green, J. B. Heaton, Mark Lemley, Robert Merton, Robert Merges, Frank Morris, Sam Petuchowshi, Cecil Quillen, Jean Tirole, Peter Tufano, Rosemarie Ziedonis, an anonymous referee, and seminar participants at Harvard, MIT, and Wharton made helpful suggestions. Chris Allen, Regina Grebla, Rajiv Shukla, Matt Thompson, and especially Trang Tran provided research assistance. Harvard Business School's Division of Research provided financial support. All errors are my own.


This paper empirically examines patents for financial formulas and methods, whose patentability was recently confirmed in the litigation between State Street Bank and Trust and Signature Financial Group. The number of such filings and awards has been accelerating. Patent filings by academics have been very infrequent, which appears to be a consequence of a lack of awareness or interest on the part of faculty members, rather than any fundamental unsuitability of their research for patenting. The failure to cite academic research in this area appears to be problematic and may reflect patent examiners' limited exposure to finance research and patents.