Encompass Corporation Pty Ltd v InfoTrack Pty Ltd  FCAFC 161 (13 September 2019)
In a unanimous decision, an extended bench of the Full Federal Court dismissed an appeal in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd 1 which concerned patentable subject matter requirements for computer implemented inventions. In doing so, the Full Court has provided guidance in relation to drafting specifications for such inventions. In addition, this decision highlights the advantageous nature of the innovation patent system to patentees.
Encompass Corporation Pty Ltd and SAI Global Property Division Pty Ltd (the appellants) were respectively the patentee and exclusive licensee of Australian Innovation Patent 2014101164 (the 164 Patent) and Australian Innovation Patent 2014101413 (the 413 Patent).
The appellants sued the respondent, InfoTrack Pty Ltd, for infringement of claims 1, 2 and 3 of the 164 Patent and claims 1, 2, 3 and 4 of the 413 Patent. The respondent admitted that its conduct infringed the claims but cross-claimed that the 164 Patent and the 413 Patent were invalid on various statutory grounds.
The primary judge found in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd 2 that the patents were not directed toward patentable subject matter. In response to an allegation that the claims of the 164 Patent and the 413 Patent lacked innovative step, the primary judge found that claim 2 of the 164 Patent and claim 1 of the 413 Patent provided an innovative step.
The invention related to a method and apparatus for performing a federated search over multiple repositories and displaying information so as to provide business intelligence. The information related to “entities” such as individuals, corporations, businesses, trusts, or any other party involved in a business or other commercial environment.
The background of the 164 Patent noted that as this information is provided across multiple different repositories, identifying and accessing relevant information is difficult and may be overlooked when performing searches. Whilst the background noted that there were a number of federated search systems, these were not user-friendly.
Independent claim 1 of the 164 Patent was summarised by the Court to specify:
- generating a network representation by querying remote data sources;
- causing the network representation to be displayed to a user;
- in response to user input commands, determining at least one user-selected node corresponding to a user-selected entity;
- determining at least one search to be performed in respect of the corresponding entity associated with the (at least one) selected node;
- performing at least one search to determine additional information regarding the entity from at least one of a number of remote data sources by generating a search query; and
- causing any additional information to be presented to the user.
Dependent claim 2 of the 164 Patent specified that the method includes purchasing a report from a remote data source. The independent claims of the 413 Patent also included the additional step of purchasing a report from a remote data source.
Patentable Subject Matter
The Full Court dismissed grounds of the appeal related to patentable subject matter, concluding that, “the claims in suit are, in truth, no more than an instruction to apply an abstract idea (the steps of the method) using generic computer technology.” 3
In response to submissions by the appellants that the claimed method cannot be implemented using “generic software”, the Full Court noted that “the claims in suit do not secure, as an essential feature of the invention, any particular software or programming that would carry out the method. It is left entirely to those wishing to use the method to devise, and then to implement, a suitable computer program for that purpose.” 4 This conclusion was most apparent when the Full Court referred to the detailed description of the specification as being “largely agnostic as to how the method should be implemented.” 5
The Full Court did not accept the submissions by the appellants that the claimed method is, itself, a high-level description of a computer program, stating that “If approached from this point of view, the method is really an idea for a computer program“. The Full Court went on by stating “the method, as claimed, is no different in principle to the methods claimed in Research Affiliates and RPL Central. Patentable subject matter is not provided simply because the method is a “method … in an electronic processing device”, which itself is not characterised. To find otherwise would be to elevate form over substance.” 6
In response to the appellant’s criticism of the primary judge for inquiring whether the claimed method results in “an improvement in the computer”, the Full Court clarified that this statement should “be understood as an inquiry into and search for possibly patentable subject matter by reference to a touchstone of such subject matter.” 7 The Full Court further went on to clarify, “we do not understand his Honour to have been positing a hardware-specific test, as the appellants suggested in oral submissions. The primary judge was simply directing his mind to whether the claimed invention was something more than mere “generic computer implementation” of an otherwise abstract idea.” 8
The appellants also submitted that by describing the claimed invention as a concatenation of three other known methods, the primary judge failed to consider the working interrelationship of the claimed combination. The Full Court again clarified that the primary judge’s comments should be “understood as inquiring into and searching for possible patentable subject matter, such that the claimed method was something more than ‘generic computer implementation’ of an abstract idea.” 9
The respondent filed a notice of contention which contended that the primary judge should have found that the invention as claimed in each and every claim of the 164 Patent and the 413 Patent was liable to be revoked for lack of an innovative step.
The respondent submitted that the purchasing step, as claimed, made no contribution to the working of the invention. Expert evidence by the respondent suggested that “it would not alter the functionality or working of the tool or improve its effectiveness as a method of displaying information.” 10 Additional expert evidence suggested that “it would have been a straightforward matter to undertake the coding that would provide for payment information to be submitted in the course of submitting a search query” 11 and that the purchasing step was “simply a consequence of the choice to include commercial data sources in a system.” 12
However, the Full Court concluded that such expert evidence missed the point noting that “[i]f the method does not accommodate the ability to search and retrieve information which needs to be purchased from a remote data source before it can be searched and/or retrieved, and thereafter used in displaying information, then its utility as a method is correspondingly limited to one that can operate only by reference to free access information. The fact that the method can accommodate this ability suggests that this variation over the prior art does indeed make a contribution to the working of the method that is real or of substance. As we have said, the fact that the step might be relatively simple to carry out does not deny the fact of its contribution.” 13
In relation to the Full Court’s conclusions in relation to the assessment of innovative step, many may be aware, that the IP Amendment (Productivity Commission Response Part 2 and Other Measures) Bill 2019 was introduced into Parliament on 25 July 2019. If the Bill is passed, there will be a phasing out of the innovation patent system. Applicants should closely monitor developments in this space particularly in light of the approach by the Full Federal Court where, despite the simplicity of the claimed distinction over the prior art, the claim may still be found to involve an innovative step.
Consideration – patentable subject matter
The Full Court’s reasoning in relation to patentable subject matter appears to largely turn on the opinion that the specification failed to specifically outline how the invention could be implemented, highlighting the intertwined nature of support and patentable subject matter. The Full Court’s reasoning on patentable subject matter also appears to largely turn on whether the claimed invention is mere generic computer implementation. The characteristics leading to such a conclusion are unclear. However, the Full Federal Court noted that part of the inquiry includes considering whether there has been some “improvement in the computer”. Based on the Court’s comments, it appears that specifications drafted to include a detailed implementation as well as outlining any technical problems overcome may be useful to counter findings for lack of patentable subject matter.
The Institute of Patent and Trade Mark Attorney (IPTA) sought leave to intervene in this appeal, providing submissions in relation to recent Australian Patent Office decisions regarding patentable subject matter. However, the Full Court noted that the burden of the decision related to whether the primary judge had made an error in law. 14 We therefore expect the Australian Patent Office to continue their current practice when considering whether the claims are patentable subject matter.
The Full Court relied favourably on CCOM 15 which included a patentable claim toward a standard computer processing apparatus for assembling text in Chinese language characters using a non-Chinese keyboard. However, it will be necessary for applicants who wish to seek protection for software implemented on a standard computer to address potential objections and assertions in relation to whether the invention is a mere generic computer implementation.
The Full Court commented that they “do not see this appeal as raising any significant question of principle”, 16 which may limit likelihood of an appeal. However, we note that the Commissioner of Patents appealed the Federal Court’s decision in Rokt Pte Ltd v Commissioner of Patents 17 earlier this year which found that a computer implemented business method was patent eligible subject matter. Therefore, if the appeal is pursued, there may be further guidance from the Full Federal Court in relation to patentable subject matter.
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 ibid   CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260