Asset protection method patent rejected by Australian court
By David Webber | Wednesday, August 3, 2005
The Australian Federal Court has revoked a patent for an asset protection method1 on the basis that the method was not patentable subject matter according to principles that have developed under Australian patent law.
The patent claimed:
“An asset protection method for protecting
an asset owned by an owner, the method
comprising the steps of:
(a)
establishing a trust having a trustee,
(b)
the owner making a gift of a sum of
money to the trust,
the trustee making a loan of said sum
(c)
of money from the trust to the owner,
and
the trustee securing the loan by taking
(d)
a charge for said sum of money over
the asset.”
To determine whether the method constituted patentable subject matter, Branson J considered the principles which had developed and been discussed by the High Court in NRDC2 and recently referred to by the Patent Office in Szabo3.
Branson J felt a principle may have developed that patent protection is only available in respect for inventions which reflect scientific or technological developments. She also believed there may be a narrow principle that patent protection is not available for any invention that consists of a method of applying the law, such as for the claimed asset protection method.
Branson J, however, declined to reach a concluded view on either of these principles and decided the matter on a different ground, being the principle that “an invention should only enjoy the protection of a patent if the social cost of the resulting restrictions upon the use of invention is counterbalanced by resulting social benefits”. She considered that the performance of the invention would not add to the economic welfare of Australia or otherwise benefit Australian society as a whole, and therefore had no value to the country in the field of economic endeavour, as referred to in NRDC.
An additional reason for the principle not being met was also considered the fact the claimed method was one where the owner may be insulated from the operation of bankruptcy laws, which are intended to serve the public interest. Performance of the invention was only considered to advance private interests with no benefit to the public.
The decision seems to require a court of law, and presumably also the Patent Office, to be convinced that granting of a patent for any invention requires consideration of the resulting social or economic benefits to Australia. It is unclear whether the court intended to now extend this test to all subject matter for which a patent is sought.
A sensible interpretation would be to say that the decision requires a court, or the Patent Office, to be convinced of social and economic benefits only in situations where it is being asked to extend patent protection to subject matter where there is no precedent or prior authority for protecting such subject matter.
Endnotes
- Grant v Commissioner of Patents [2005] FCA 1100, 12 August 2005.
- National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252.
- Re Innovation Patent No. 2004100848 in the name of Peter Szabo and Associates Pty Ltd [2005] APO 24.
This legal briefing was written in 2005 and may not reflect the latest legal developments. We encourage you to contact us for up-to-date advice for your particular circumstances.
