Last week we reported that a decision had issued from the Appeal court in ENCOMPASS CORPORATION PTY LTD v INFOTRACK PTY LTD. This decision had been eagerly anticipated for some time on the expectation that it would address the issue of manner of manufacture, or subject matter patentability in Australia. There were a number of factors suggesting that it could become a leading case, particularly for those in software related fields.

The matter originally arose as a patent infringement between the two parties, and involved technology comparing data on an entity obtained from a number of disparate sources and data visualisation. The actual technology involved was not important. However whether it was for a manner of manufacture and hence patentable subject matter was the key aspect of the Appeal and the basis for the heightened interest.

In a surprising move, the Court appointed an expanded panel of five judges, including Chief Justice Allsop, to hear the Appeal. The appointment of five judges rather than the customary three was seen as the Court possibly addressing the issue of manner of manufacture in a comprehensive way.

For some time now there have been differences of opinion between the Australian Patent Office (IP Australia) and patent attorneys on how patentability of software related inventions should be assessed. Two earlier Appeal decisions in Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 and Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177 had not resolved these differences.

In addition the importance of the case was evident with both the Patent Office and The Institute of Patent and Trade Mark Attorneys of Australia (IPTA) seeking leave to intervene. IPTA was particularly interested in the way in which manner of manufacture is assessed. Patent attorneys see the Australian Patent office as conflating issues of novelty and inventive step with manner of manufacture, whereas the Patent Office disagrees.

The court noted this when it said:

IPTA’s submissions took issue with the Commissioner’s statement that, in considering the patentability of computer-implemented methods, a key consideration is determining where the alleged ingenuity lies. IPTA submitted that this statement is “misconceived” because it intrudes questions of novelty and inventive step into the question whether the invention is a manner of manufacture; it suggests that the way in which the method is implemented in the computer is decisive and directs attention away from the method as claimed. [at 72]

Unfortunately for patent applicants the court held:

We do not propose to opine on the correctness of the Commissioner’s decisions to which IPTA referred. Those decisions are not before us in this appeal. [at 76]

And furthermore:

We do not see this appeal as raising any significant question of principle, despite the fact that the appellants and IPTA have made oblique attacks on the correctness of Research Affiliates and RPL Central by resort to possible interpretations which, ultimately, they dismiss as misinterpretations. Having regard to the particular submissions made by the parties and the interveners on this question, we do not think that the correctness of those decisions is seriously in doubt. In truth, the burden of this appeal lies in whether the primary judge correctly applied them to the case at hand. This appeal does not provide the occasion for this Court to set out the metes and bounds of patentable computer-implemented inventions, assuming that be an appropriate task. [at 77]

In doing so the court has forgone a great opportunity to clearly and conclusively set out how manner of manufacture should be assessed. This portends that many currently registered patents could be at risk if challenged, and patent attorneys may not be able to conclusively provide potential applicants with certainty even if they have what, on face value, is a unique and ground-breaking invention.

While the decision has not been the panacea hoped for, there are some aspects that give hope to Applicants. Notably for instance the Court did not say that software implemented inventions are not patentable. The Court was clear that it was not opining in general terms but rather on the facts of this case. In this regard the Court found that the method was no more than an abstract idea or scheme, and noted that:

A claimed method that is unpatentable does not change its legal character merely because the method is implemented by the instrumentality of a computer [at 91]

In other words it could be said that the invention being software related was irrelevant. The method itself was a business scheme which was fatal. And while the Appellants argued that more than generic software was required to implement the invention, the Court found that the claims did not define any particular software. Rather an uncharacterised processing device was needed to carry out the steps of the abstract method. In hindsight, perhaps if the processing device had been better characterised a different result may have been arrived at, although on the facts presented in the decision this is unlikely.

We do not expect that this decision will alter, in any substantive way, how the Australian Patent Office considers the patentability of inventions. Rather the difference of opinion between the Patent Office and patent attorneys will continue until the process is considered judicially. Until this time Australia will continue to fall further out of step with other countries including the US and Europe, and the difficulties faced by innovative companies to effectively protect their R&D efforts in Australia could lead to even lower investment and the country falling further behind other OECD countries.

Hopefully a future decision from the courts will resolve the matter.