Subject matter hopes dashed


In the recent Federal Court decision Research Affiliates LLC v Commissioner of Patents, Justice Emmett upheld the Patent Office’s decision to reject two patent applications in the name of Research Affiliates, LLC. These two applications related to the construction and use of passive portfolios and indexes for securities trading.

In the decision, Emmett J found that:

“The method of the claimed invention does not involve a specific effect being generated by the computer. The mere use of a computer necessarily carried with it the writing of information into the computer’s memory…There is no practical application in the method of the claimed invention for the improved use of computers…

The case propounded by Research Affiliates depends upon the proposition that information of economic significance, once entered into or produced by means of a computer, becomes an economically valuable artificially created state of affairs, and thus patentable. That proposition must be rejected.”

In the final paragraph of the decision, Emmett J stated:

“The enquiry into what constitutes a patentable invention is still evolving.  It is not to be tied to particular notions of what was understood to be a manufacture at any particular point in time.  However, while new developments in technology might be seen to widen the notion of what is patentable, the modern availability of computers as a standard means of implementing arithmetic or computational processes, which could have been implemented manually in the past, does not carry with it any broadening of the concept of a patentable invention.”

Unfortunately, it seems that Emmett J fell into the same trap that the Australian Patent Office fell into some time ago, that is, confusing the test for whether an invention is obvious and whether the subject matter of the invention is proper subject matter for protection by a patent.  An arithmetic or computational process that could be implemented manually and is claimed in an application as simply being performed by a computer would likely be obvious, but because it is performed using a computer and results in thecreation of new, useful information, it should constitute patentable subject matter.

The decision is bad news for currently pending applications directed to any computer implemented methods. Unfortunately, the Patent Office is now likely to use this decision to reject any computer implemented method involving the processing and generation of information without causing any “physical” effect or a “change in state in a part of a machine” (such as the representation of a curve in the IBM decision, the representation of Chinese language characters in the Ccom decision, and the writing of information to a smart card in the Real-Time decision.

A further decision RPL Central Pty v Myall Australia in relation a method and system for a Recognition of Prior Learning (RPL) programme is yet to be issued. We hope that the issuance of this decision provides some more much needed guidance on what is patentable in a computer implemented business method.

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