Computer implemented method patents alive and kicking – at least for now…


In a reversal of recent trends at the Australian Federal Court, in the case of RPL Central Pty Ltd v Commissioner of Patents [2013] FCA 871 (RPL), the invention as claimed in a “software” (or “business method”) patent application was held by Justice Middleton to be a manner of manufacture and thus to include patentable subject matter.

The present case is an appeal from a decision by the Commissioner of Patents issued in opposition proceedings brought by a third party which attempted to prevent the grant of an accepted patent application. The third party chose not to be involved in the present proceedings.

Compared with jurisdictions such as Europe and China, Australia has not ruled out patentable “software based” inventions in statute. Rather, such inventions in Australia must satisfy some judicially defined rules, for example from the cases of NRDC[1], CCOM[2], IBM[3] and Grant[4]. In Europe, by way of contrast, Article 52(2)(c) EPC states that “programs for computers .. shall not be regarded as inventions”. However if the software results in a new and non-obvious “technical” solution to a technical problem, this may be patentable. An example of this may be software in an engine management unit of a car which results in improved fuel economy.

In the present case, his Honour spent some time analysing the specification of the RPL application, which relates to the assessment of the competency or qualifications of individuals, with respect to recognised standards, by presenting a series of questions to which answers are given. In particular, the Judge was keen to delve into the system that performed the method, i.e. the computer system, and the amount of detail provided in the specification for each of the method’s steps.

Manner of Manufacture

Firstly, his Honour studied the relevant legal principles. As set out in Section 18(1A)(a) of the Patents Act (1990) (the “Act”) for innovation patents, and Section 18(1)(a) for standard patents, patentable inventions must be “a manner of manufacture”. In particular, these sections state that a patentable invention as defined by the claims must be “a manner of manufacture within the meaning of section 6 of the Statute of Monopolies”.

The Statute of Monopolies was enacted in England in 1623, and while generally condemning monopolies, provided the true and first inventor of a given item up to fourteen years of exclusive rights to the “working or making of any manner of new manufacture” [emphasis added]. This has been interpreted over time to define a distinct test for patentability based on what is and what is not patentable subject matter.

This issue was explored by The High Court in NRDC. NRDC involved a method of eradicating weeds using a known herbicide (which had not previously been known to be effective in the treatment of a particular type of weed), and is the cornerstone of modern manner of manufacture decisions in Australia. Initially the Commissioner rejected the claims for not defining a manner of manufacture as they did not result in a “vendible product”. The High Court noted that the word “manufacture” should not be a ”question of verbal interpretation”, and that the “purpose of s6, it must be remembered, was to allow the use of prerogative to encourage national development in a field which already, in 1623, was seen to be excitingly unpredictable”. Thus NRDC suggested that the test for whether or not a patent claim defined a ‘method of manufacture’ should be able to evolve as new technologies are introduced, and raised the possibility of patentable software based business methods.

A “vendible product”?

In applying these precedents and definitions, Justice Middleton in the RPL case found that the claimed method belongs to the “useful arts”, as it produces a “useful result” and “overcomes difficulties in seeking out relevant education providers”. In finding whether the invention is “vendible”, his Honour found that the invention has “utility in practical affairs … and that given its application to the education sector of the economy, can be said to be of an industrial commercial or trading character”. As such, his Honour defined the claimed method as useful enough to be sellable.

When deciding whether the invention is a “product” as defined by NRDC, his Honour found that the invention as claimed “gives rise to an artificial state of affairs … a physical phenomenon in which the new and useful effect may be observed, in the sense of a concrete effect or phenomenon or manifestation or transformation”. In particular, his Honour found that a physical effect is created by the writing of data in a computer, and that each of the steps defined in claim 1 of the application requires “computer-generated processing”. In addition “the generation of questions for and presentation of questions to the user creates an artificial state of affairs in their computer (in that there is a retrieval and transformation of data into questions, and a corresponding change in state of information [in] a part of a machine”. Thus the present application was found to be a manner of manufacture.

Is the computer integral to the claim?

A common theme in recent manner of manufacture objections raised by Australian Patent Examiners has been that the computer is not “central to the operation or purpose of the claimed process”. However, In dismissing this issue as submitted by the Commissioner in this case, his Honour stated in RPL at [146] that “I do not accept that the Australian decisions that are binding upon me … – NRDC, CCOM and Grant – expressly import any such requirement of substantiality or centrality of physical effect”. His Honour concluded that the claims made in the specification for the method expressly incorporate a computer method and system into the claims. Thus the computer was a substantial, central and integral part of each claim, and that it was not permissible to strip out the computer aspects of the claim and analyse what is left.

His Honour also differentiated the present decision from that of Research Affiliates, which similarly featured a computer implemented method, but included less detail on how its execution by a computer would work. [5] His Honour found that “the specification and claims in issue in this case provide significant information about how the invention is to be implemented by a computer”, whereas in Research Affiliates “the specifications contained virtually no substantive detail about how the claimed method was to be implemented by a computer”. We note, however, that this issue raised by his Honour concerns whether enough information was included in the patent application, rather than the fundamental definition of a method of manufacture. As such it probably should not impact whether a claimed invention defines patentable subject matter.

This decision provides real encouragement that “business method” inventions involving methods implemented by a computer will remain patentable subject matter in Australia. It is worth noting that his Honour is one of the presiding Judges in the currently pending Appeal of the Research Affiliates decision to the Full Federal Court.  In the coming months this appeal may result in a decision that will provide more clear and lasting direction in this very unsettled area of Australian patent law.

[1] Grant v Commissioner of Patents (2006) 154 FCR 62

[2] CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260

[3] International Business Machines Corporation v Commissioner of Patents [1991] FCA 625

[4] Grant v Commissioner of Patents (2006) 154 FCR 62

[5] Research Affiliates LLC v Commissioner of Patents [2013] FCA 71

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