AIPPI Standing Committee Report
First published in the AIPPI report on 28 June 2016
A report by the AIPPI Standing Committee on information technology and Internet on the current situation around the world on the protection of computer implemented inventions (cii).
In Australia, an invention is considered to constitute patent eligible subject matter only if “the invention, so far as claimed in any claim, is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies”1, being the first English patent statute of 1623.
The leading authority for determining the scope of the “manner of manufacture” requirement remains the “landmark” Australian High Court ‘NRDC’ decision2. In NRDC, the High Court emphasised the importance of maintaining a flexible approach to the assessment of patent eligibility, unconstrained by requiring compliance with any “exact verbal formula”, and instead asking: “[is] this a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies?”3. In other words, it is left to our Courts to determine the boundaries of patent eligibility.
In NRDC, the High Court held that the invention before it was a patentable method, observing that it provided “a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the field of economic endeavour”, a phrase that became established as the touchstone for determining patent eligibility.
The expansive approach of NRDC was subsequently relied upon by the Federal Court in 19914 to establish that computer programs were not excluded from patent eligibility under Australian law, a decision that effectively opened the gates for software patents in Australia.
In 2006, an attempt to patent an asset protection method involving purely financial and legal steps without the use of a computer was rejected by the Australian Full Federal Court in Grant5 on the basis that the “artificially created state of affairs” of NRDC required “a physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation.” The Court contrasted the method before it with computer implemented methods, noting that the latter were patent eligible because “there was a component that was physically affected or a change in state or information in a part of a machine. These can all be regarded as physical effects.” Those comments were taken to indicate that any computer implemented method would be patent eligible.
In contrast to the broad acceptance of computer implemented inventions taken by the Courts, in recent years the Australian Patent Office has adopted a generally negative attitude to their patent eligibility, albeit mainly in the context of inventions involving finance, gaming, or computer automation of methods that (in the eyes of the Patent Office) could be performed manually.
In 2010, the Australian Patent Office handed down a decision6 rejecting claims directed to “a computer-implemented method for generating an index” by applying respective weightings to selected assets. On appeal to the Australian Federal Court7, the claimed method was held not to produce an “artificially created state of affairs” because the result of working the method was only the index itself, which “is nothing more than a set of data… If that were sufficient to satisfy the requirement of an artificially created state of affairs, any computer-implemented scheme would be patentable, merely by reason of the fact that it happens to be implemented by a computer.”
Shortly after rejecting the Research Affiliates application, the Australian Patent Office rejected the claims of another patent application, for RPL Central, entitled “Method and System for Automated Collection of Evidence of Skills and Knowledge” as being directed to a “mere business or commercial plan or scheme”.
An appeal to the Federal Court8 was successful, the Court holding that the invention was patent eligible because “the magnitude of the task performed by the invention … and the express terms of the claims themselves mean that the computer is an essential part of the invention claimed”9.
Importantly, the Court distinguished the RPL Central claims from those in Research Affiliates on the basis that Research Affiliates had accepted the Commissioner of Patents’ submissions “that the only physical result generated by the method of the claimed invention is a computer file containing the index” and that “in reaching this ultimate conclusion, his Honour was influenced by … the fact that the specifications contained virtually no substantive detail about how the claimed method was to be implemented by a computer.”
Both Federal Court decisions were appealed to the Australian Full Federal Court (FFC). The FFC Research Affiliates appeal decision10 was handed down in November 2014.
The FFC held that the claims in Research Affiliates do not constitute patentable subject matter because they are directed to an “abstract idea”. The FFC said: "the method of the invention is not one that has any artificial or patentable effect other than the implementation of a scheme, which happens to use a computer to effect that implementation."
Referring to NRDC, the FFC held: "the effect of Research Affiliates’ submissions is that the mere implementation of any abstract idea or scheme in a well-known machine is sufficient to render that unpatentable subject matter patentable because it gives rise to an “artificial effect”. That approach is inconsistent with NRDC and is one of form not substance."
The FFC said that the requirement for “an artificially created state of affairs of economic significance was part of the High Court’s reasoning [in NRDC], but did not represent a sufficient or exhaustive statement of the circumstances in which a claimed invention is patentable.”
The FFC said: “In examining whether a claimed invention is properly the subject of letters patent, it is necessary to look not only at the integers of that claimed invention but also at the substance of that invention… It is a question of understanding what has been the work of, the output of, and the result of, human ingenuity …. Here, that subject matter is truly the scheme, the idea, the index… As set out in the specification it may be, and in the claimed method it is, implemented in a computer, but the ingenuity of the inventors, the end result of which is the invention, is directed to the idea, which is not patentable… The specification makes it apparent that any inventive step arises in the creation of the index as information and as a scheme. There is no suggestion in the specification or the claims that any part of the inventive step lies in the computer implementation.” (emphasis added)
Although the Research Affiliates FFC appeal decision may pose difficulties for patenting financial or business methods, it also seems clear that an important issue in the FFC decision is that, although the claims required computer implementation, "it is apparent from the description in the specification that the computer is simply the means whereby the analyst accesses data to generate an index. The work in generating the index and weighting is described in terms of the work of the analyst rather than as some technical generation by the computer. Indeed, … the exemplary embodiment makes it clear that it may be, but is not necessarily, implemented on a computer."
Significantly, the FFC referred, apparently approvingly, to the RPL Central Federal Court appeal decision, observing that, in RPL Central, “the involvement of the computer in the invention … is inextricably linked with the invention itself”, and that: “the specification and the claims provided significant information about the invention which was to be implemented by means of the computer and that the computer was “integral” to the invention there claimed. His Honour distinguished it from the primary judgment in the present case on that basis. … As we read his Honour’s reasons, he aligned the invention with a new use of a computer…, in contrast to mere implementation of the invention by a computer.”
Notwithstanding the FFC’s apparent approval of the decision in RPL Central, the Australian Commissioner of Patents pressed on with its appeal of the RPL
Central Federal Court decision to the FFC, which handed down its decision11 in December 2015.
The FFC allowed the Appeal, rejecting the claimed invention as patent ineligible because it was nothing more than a scheme or business method that happened to be computer-implemented. The Court said12:
“A claimed invention must be examined to ascertain whether it is in substance a scheme or plan or whether it can broadly be described as an improvement in computer technology. The basis for the analysis starts with the fact that a business method, or mere scheme, is not, per se, patentable. The fact that it is a scheme or business method does not exclude it from properly being the subject of letters patent, but it must be more than that. There must be more than an abstract idea; it must involve the creation of an artificial state of affairs where the computer is integral to the invention, rather than a mere tool in which the invention is performed. Where the claimed invention is to a computerised business method, the invention must lie in that computerisation. It is not a patentable invention simply to “put” a business method “into” a computer to implement the business method using the computer for its well-known and understood functions."
“It is not a question of stating precise guidelines but of deciding, in each case, whether the claimed invention, as a matter of substance not form, is properly the subject of a patent.”13
With a nod to the UK Aerotel/Macrossan decisions, the Court stated that relevant considerations include whether the invention solves a technical problem and whether it makes a technical contribution.
In May 2016, RPL Central applied to the Australian High Court for special leave to appeal the FFC decision, but the High Court dismissed the application, stating baldly that “the Full Court was plainly correct”14.
It can be concluded that, as Australian law stands at present, mere computer implementation is insufficient to transform an otherwise unpatentable scheme or abstract idea into patentable subject matter. However, if the claims and in particular the description indicate that the involvement of a computer is inextricably linked with the invention, or the invention can be seen as providing an improvement in computer technology or a “new use of a computer”, then the claims may be considered to constitute patent eligible subject matter in Australia. However, the “invention” that is the subject of this assessment is not necessarily that claimed, but rather one that can be gleaned from the specification as being the result of the ‘ingenuity of the inventors’. The subjective nature of this assessment can create considerable uncertainty for some types of computer implemented inventions. On the other hand, inventions that are technical in nature or solve a technical problem should be considered patent eligible.
Finally, in April 2016 the Australian Productivity Commission produced a draft Report15 that it intends to make final. The draft Report includes a recommendation to exclude “business methods and software” from patent eligibility, arguing that ‘the patent protection that has been afforded to [these]… in Australia has generally been excessive, ineffective and not in the interests of the community.”
Although the Report refers to the European-style exclusion recently introduced into New Zealand law (see below), it does not propose to adopt that language into Australian law. Rather, it recommends that the Australian legislation be amended to explicitly exclude simply “business methods and software”, yet still contemplates retaining protection for what it refers to as “embedded software”16.
The public was invited to make written submissions on the draft report by 3 June 2016, and the report is expected to be finalized by August 2016 and handed to the Australian government for consideration.
Whatever the ultimate effect of the Report, it appears that Australian law continues to move closer towards the approaches adopted in the UK or Europe for assessing the patent eligibility of computer implemented inventions, which at least provide relative certainty compared to the current situation in Australia.
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