Research Affiliates LLC v Commissioner of Patents

In a recent case, Research Affiliates LLC v Commissioner of Patents1, the Full Court of the Federal Court of Australia (Full Court) considered whether a computer implementation of an otherwise unpatentable business scheme was sufficient to render that method patentable. In determining this issue, the Full Court clarified the applicable test for assessing the patentability of computer-implemented schemes. Ultimately, the Full Court held that the particular computer-implemented method which was the subject of the proceedings, was not patentable.

The Full Court's decision was specific to the particular facts, and we consider that there remains a possibility that other computer-implemented business methods are eligible for patent protection. This decision is particularly relevant for those wishing to file patent applications relating to a computer-implemented business method or financial product, including banks, financial services, businesses, fund managers, data businesses and software companies.

Background

Research Affiliates LLC (Research Affiliates) was the assignee of two patent applications which claimed a method of indexing securities through the use of a computer. The claimed invention provided a method of constructing an index by using a computer to receive data relating to a number of assets and providing a weighting function to weight the selected assets based on some objective measure (other than share price or market capitalisation weighting). The Commissioner of Patents refused Research Affiliates' application and subsequently, Research Affiliates commenced proceedings in the Federal Court.

The main issue was whether the claimed invention was a manner of manufacture under section 18(1)(a) of the Patent Act 1990 (Cth) (the Act). Section 18(1)(a) of the Act provides that an invention is a patentable invention insofar as it is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies. A claimed invention is a manner of manufacture provided that it involves an artificially created state of affairs in a field of economic or commercial endeavour, and it produces some physical effect.

At first instance, Justice Emmett held that the claimed invention was not patentable because the substance produced by the method was merely an index, which was a collection of data or information incapable of being the subject of patent protection in Australia. On appeal, the case was heard by the Full Court.

Decision of the Full Court

The Full Court dismissed the appeal on the basis that:

  1. The case law established that a claimed invention is not a manner of manufacture if it is a mere scheme, an abstract idea or mere intellectual formation, with no relevant physical effect whatsoever;
  2. The significance in the claimed method of invention was in the content of the data, rather than any specific effect generated by the computer;
  3. It was apparent from the description in the specification that the computer was simply the means whereby the analyst accessed data to generate an index. The work in generating the index weighting was carried out by the analyst rather than some technical generation by the computer. There was nothing in the evidence which indicated that the claimed method and the use of the algorithms involved steps which were foreign to the normal use of computers; and
  4. The claimed method was not one that had any artificial or patentable effect, other than the implementation of a scheme, which happened to use a computer to effect that implementation. There was no technical contribution and no suggestion that the computer implementation was an inventive step. Rather, it was apparent that the scheme was merely implemented in a standard computer and that there was no improvement in computer technology.

As a result of the above reasoning, the Full Court held that the claimed invention was not patentable under section 18(1)(a) of the Act. In reaching its decision, the Full Court set out the following principles for determining the patentability of computer-implemented schemes:

  1. There is a distinction between mere implementation of an abstract idea in a computer and implementation of an abstract idea in a computer that created an improvement in the computer
  2. Simply implementing an abstract idea through the use of a computer, without more, is insufficient to render the patent eligible. To salvage an otherwise unpatentable process, a computer must be integral to the claimed invention and facilitate the process in a way that manual calculation by a person could not;
  3. The invention is to be understood "as a matter of substance and not merely as a matter of form". The substance is what is required to be examined when determining whether a claimed invention constitutes a manner of manufacture under the Act.

The Full Court also referred to relevant case law in Europe, the United Kingdom, and the United States, and considered whether computer-implemented inventions in those jurisdictions are patentable. The Full Court acknowledged that while decisions in other jurisdictions are not binding, the claimed method would not have been found patentable in the United Kingdom or the United States either. It was important to look at decisions in overseas jurisdictions, because the theory and purpose of patent legislation everywhere has much in common.  Further, the Act includes provisions designed to harmonise Australian patent law with the laws of Australia’s major trading partners.

Conclusion

It is likely that IP Australia will rely on this decision and object to future patent applications for non-patentable abstract ideas or business schemes implemented on a conventional computer. However, computer-implemented inventions can still be eligible for patent protection, provided that the computer is integral to the invention. Applicants seeking patent protection for computer- implemented inventions should ensure that in respect of their patent applications:

  1. References are made to the computer-implementation and that the specifications extensively include computer and hardware elements in the claims;
  2. The descriptions and drawings included in the patent application highlight the integral role of computers and hardware/software elements in the performance of the invention;
  3. Emphasis is made to the advantages arising from implementing the invention on a computer and any technical steps performed by a computer; and

If possible, incorporate a new use of a computer or programmed apparatus as opposed to implementation by a standard computer.

Even if patent protection is not available to certain business methods or schemes, an inventor may be able to seek protection under copyright law or be entitled to rights relating to trade secrets and/or know-how associated with the technology. Please contact Karen Hayne of Addisons' Intellectual Property Team for further information on any intellectual property issues.