Much anticipated ‘Research Affiliates’ Decision Provides Further Guidance on the Patentability of Business Methods and Software In Australia

The Australian Full Federal Court today handed down its decision in Research Affiliates LLC v Commissioner of Patents[1].  The decision is an important addition to Australian case law concerning the patentability of business methods and software.

Judges Kenny, Bennett, and Nicholas ruled that the Appellant’s claimed computer implemented method for generating an index for use in securities trading was unpatentable as an abstract idea.  The Court held that “[t]he claimed method in this case clearly involves what may well be an inventive idea, but it is an abstract idea.  The specification makes it apparent that any inventive step arises in the creation of the index as information and as a scheme. There is no suggestion in the specification or the claims that any part of the inventive step lies in the computer implementation. Rather, it is apparent that the scheme is merely implemented in a computer and a standard computer at that. It is no part of the claimed method that there is an improvement in what might broadly be called ‘computer technology’.”[2]

In our opinion this case does not present a major change in the law in Australia regarding the patentability of business methods and software, but clarifies that mere reference to computer implementation in patent claims will not be enough to satisfy Australia’s requirements of patentable subject matter.  Otherwise, inventions involving business methods and software, where a computer is “inextricably linked with the invention itself”, appear to remain patentable in Australia.[3]

In Australia, to include patentable subject matter, a claimed invention must be a “manner of manufacture” under s 18(1)(a) of the Patents Act 1990 (Cth). The primary issue of this case was “whether computer implementation of an otherwise unpatentable business scheme is sufficient to make the claimed method properly the subject of letters patent.”[4]

Research Affiliates LLC is the assignee of Australian patent application no. 2005213293 and its related child application no 2010236045 (the Divisional Application), both entitled “Valuation Indifferent Non-Capitalization Weighted Index and Portfolio”.   The case focused on the Divisional Application, where claim 1 reads as follows:

A computer-implemented method for generating an index, the method including steps of:

• (a) accessing data relating to a plurality of assets;
• (b) processing the data thereby to identify a selection of the assets for inclusion in the index based on an objective measure of scale other than share price, market capitalization and any combination thereof;
• (c) accessing a weighting function configured to weight the selected assets;
• (d) applying the weighting function, thereby to assign to each of the selected assets a respective weighting, wherein the weighting:
  • (i) is based on an objective measure of scale other than share price, market capitalization and any combination thereof; and
  • (ii) is not based on market capitalization weighting, equal weighting, share price weighting and any combination thereof;
• thereby to generate the index.

The decision includes a thorough review of the law regarding patentable subject matter and software in other jurisdictions, namely Europe and the United Kingdom (UK), and The United States.  In particular, the Court reviewed the following UK decisions:

• International Business Machines Corporation’s Application [1980] FSR 564;
• Symbian Ltd v Comptroller General of Patents [2008] EWCA Civ 1066; [2009] RPC 1;
• Aerotel Ltd v Telco Holdings Ltd; Re Macrossan’s Application [2007] 1 All ER 225; and
• Symbian and HTC Europe Co Ltd v Apple Inc [2013] EWCA Civ 451; [2013] RPC 30.

The Court reviewed the following US decisions:

• Bilski v Kappos 130 S Ct 3218 (2010); and
• Alice Corporation Pty Ltd v CLS Bank International 134 S Ct 2347 (2014).

Following the review of these decisions, the Court stated:  “While decisions in other jurisdictions are not binding, it is noteworthy that the Australian approach to patentability in respect of inventions such as those considered here, is consistent with that taken in the United States and the UK to the extent discussed above.”[5]  This comment on the harmonization of patent law is particularly noteworthy given the Full Federal Court’s recent decision in D’Arcy v Myriad Genetics Inc.[6], which decision was sharply at odds with the reasoning of the US Supreme Court concerning the patentability of human genomic DNA in the related US case Association for Molecular Pathology v. Myriad Genetics. [7]

The Court then summarised the invention in the present case as follows:  “The summary of the invention, as set out in the specification as a first aspect of invention, is that it provides a method of constructing data indicative of a non-capitalisation weighted portfolio of assets, the method being implemented in a computer system and comprising a series of steps commencing with the receipt in the computer system of data gathered in regard to a plurality of assets. Other aspects of the invention provide a system for constructing a non-capitalisation weighted portfolio of assets and a computer-implemented non-capitalisation weighted portfolio of assets construction system. In each case, a computer is used to receive the data and to provide ‘weighting means’ for weighting each of the plurality of assets.”[8]

After reviewing details of the specification, the court then stated that “although the summary of the invention and the exemplary embodiments do make reference to computers, it is to be noted that what is missing from the title of the invention, the described field of the invention and the detailed description of the invention is any reference to a computer, even though the claims limit the method of the invention to one that is computer-implemented.”[9]

Next, the Court reviewed the decision of the primary judge and Australian authority on claims to computer-implemented methods.  An important aspect of the decision here concerns the Court’s reference to the recent Federal Court decision RPL Central Pty Ltd v Commissioner of Patents.[10]  The innovation patent application involved in the RPL Central case is titled “Method and System for Automated Collection of Evidence of Skills and Knowledge”, and its Claim 1 concerns a method of gathering evidence for the purpose of assessing an individual’s competency relative to a recognised qualification standard, which includes the following steps:

• (a)    a computer retrieving via the internet from a remotely-located server a plurality of assessable criteria associated with the recognised qualification standard, said criteria including one or more elements of competency, each of which is associated with one or more performance criteria;
• (b)    the computer processing the plurality of assessable criteria to generate automatically a corresponding plurality of questions relating to the competency of an individual to satisfy each of the elements of competency and performance criteria associated with the recognised qualification standard;
• (c)    an assessment server presenting the automatically-generated questions via the internet to a computer of an individual requiring assessment; and
• (d)    receiving from the individual via their computer a series of responses to the automatically-generated questions, the responses including evidence of the individual’s skills, knowledge and experience in relation to each of the elements of competency and performance criteria, wherein at least one said response includes the individual specifying one or more files on their computer which are transferred to the assessment server.

In RPL Central Judge Middleton held that the above claim did include patentable subject matter, and in the present decision the Court seemed to strongly support Judge Middleton’s reasoning, stating:  “Justice Middleton summarised the invention in RPL Central at [139] as one that enabled the retrieval of relevant data from a remotely located server via the internet and the generation of questions for, and presentation of questions to, the user based on this data. The effect of the process was experienced by the individual user on a computer. The user’s responses were transferred to the assessment server. Importantly, ‘the involvement of the computer in the invention is described in these claims in such a manner that it is inextricably linked with the invention itself’. In [172], his Honour said that the specification and the claims provided significant information about the invention which was to be implemented by means of the computer and that the computer was ‘integral’ to the invention there claimed. His Honour distinguished it from the primary judgment in the present case on that basis.”[11]

Finally, in applying the law to the claims of the Research Affiliates’ patent application, the Court emphasised the incidental nature of the computer concerning the invention of Research Affiliates:  “It is apparent from the description in the specification that the computer is simply the means whereby the analyst accesses data to generate an index. The work in generating the index and weighting is described in terms of the work of the analyst rather than as some technical generation by the computer. Indeed, while the specification states that the invention may be used for investment management or investment portfolio benchmarking, the exemplary embodiment makes it clear that it may be, but is not necessarily, implemented on a computer.”[12]

The Court then concluded that “In the context of the claim, the significance lies in the content of the data rather than any specific effect generated by the computer. The computer-implementation is an essential integer of the claimed process. That is, of course, important. It is of particular importance in the assessment of, for example, novelty and infringement. However, in examining whether a claimed invention is properly the subject of letters patent, it is necessary to look not only at the integers of that claimed invention but also at the substance of that invention.”[13]

In summary, although the Court found that the present claims lacked patentable subject matter, even though they recited the use of a computer, the Court otherwise provided strong support to the patentability of computer implemented inventions.  By giving clear recognition and support to the decision of Judge Middleton in RPL Central, the Court maintained the law that where a computer is “inextricably linked with the invention itself”, then claims to business methods and software are and remain patentable in Australia.

The full decision is available here.