Monday, 5th December, 2011

Patentability of computer-implemented inventions in Australia

IP Australia has granted patents for computer-implemented inventions for two decades.

However, in the last 18 months we have seen IP Australia introduce some uncertainty as to the extent to which computer implementation results in patentable subject matter.

Statutory definition

The Australian Patents Act 1990 is silent on the patentability of computer-implemented inventions.  Section 18(1) states that one of the requirements an invention must satisfy to be a patentable invention is that it must be a "manner of manufacture within the meaning of section 6 of the Statute of Monopolies".

Judicial interpretation

An Australian Court in International Business Machines Corporation v Commissioner of Patents[1]  held that a computer program was a new application of selected mathematical methods to computers.  The techniques presented curve images in computer graphics displays.  The Court held that there was nothing new about the mathematics of the invention.  What was new was the application of the selected mathematical methods to computers and in particular to the production of the desired curve by the computer.  The technique was said to involve steps that are foreign to the normal use of computers.  The production of an improved curve image was held to be a commercially useful effect in computer graphics.

The Federal Court of Australia held that a smartcard-based trader loyalty program was patentable in Welcome Real-Time S A vs Catuity Inc [2].  The Federal Court judge said:

What is disclosed by the patent is not a business method… for example a manufacturer appointing wholesalers to deal with particular categories of retailers rather than all retailers in particular geographical areas…Rather, the patent is for a method and a device, involving components such as smartcards and POS terminals in a business…

Heery J in this case distinguished between an abstract idea (such as a method of calculation or a method or scheme for carrying on business which is not patentable) and a practical operation of an abstract idea (such as a method and device for use in business which is patentable.  His Honour drew a distinction between a technological innovation and a business innovation.  A physically observable effect was not necessary but was present in this case.

In Grant vs Commissioner of Patents[3] the Federal Court of Australia considered the patentability of a method to protect assets from unsecured judgment creditors.  The claimed method involved establishing a trust, giving money to that trust, borrowing from the trust and the trustee securing the loan by taking a charge for the money over the asset.  The Court found the claims not patentable. 

The Court made it clear that it was not refusing the claims because they related to a business method.  Patentability of claims needed to be considered by applying the principles that have been developed for determining whether a method is a manner of manufacture, irrespective of the area of activity in which the method is to be applied.

The Court observed that the patent:

does not produce any artificial state of affairs, in the sense of a concrete, tangible, physical, or observable effect ... In Catuity and CCOM as in State Street and AT&T, 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. By contrast, the alleged invention is a mere scheme, an abstract idea, mere intellectual information, which has never been held to be patentable, despite the existence of such schemes over many years of the development of the principles that apply to manner of manufacture. There is no physical consequence at all.

Patent office practice

The claims most commonly allowed in Australia include:

  • method claims
  • apparatus claims
  • computer-readable medium software claims (Beauregard claims)
  • data structure claims (Lowry claims).

In a post-Bilski era, there is some uncertainty involving method claims and the extent to which mere computer implementation results in patentable subject matter.  There is a procedure in Australia in which a Delegate of the Commissioner of Patents reviews ex parte appeals from the adverse decisions of examiners and resolves inter partes oppositions.  This procedure has seen some use over the last 18 months.

In Invention Pathways Pty Ltd[4]  a method for commercialising inventions was refused despite the claims including a data file maintained in data storage means.  The Delegate held that a patentable physical effect must be central to the purpose or operation of the claimed process or otherwise arise from the combination of steps of the method in a substantial way.  The physical effect has to be more than peripheral and subordinate to the substance of the claimed invention.

Patent applications have since been refused in Iowa Lottery[5], Research Affiliates, LLC[6], Myall Australia Pty Ltd v RPL Central Pty Ltd[7], Discovery Holdings Limited[8], Network Solutions, LLC[9], and Jumbo Interactive Ltd & New South Wales Lotteries Corp v Elot, Inc[10].

On the other hand, in Visa Inc v CardinalCommerce Corporation[11], a patent application relating to a universal merchant platform for payment authentication was found to involve patent-eligible subject matter.  The Delegate held that the method claims clearly relate to supporting authentication processing of on-line commercial transactions involving physical steps in a networked environment.  The claims were held not to be directed merely to a scheme and did in fact relate to a manner of manufacture.

[1] [1991] FCA 625; (1992) 22 IPR 417

[2] [2001] FCA 445; (2001) 113 FCR 110

[3] [2006] FCAFC 120 (18 July 2006)

[4] [2010] APO 10 (21 July 2010)

[5] [2010] APO 25 (21 October 2010)

[6] [2010] APO 31 (17 December 2010)

[7] [2011] APO 48 (12 July 2011)

[8] [2011] APO 56 (9 August 2011)

[9] [2011] APO 65 (19 August 2011)

[10] [2011] APO 82 (28 October 2011)

[11] [2011] APO 34 (25 May 2011)