Patent law inherently excludes certain things from being patented. It is possible that an invention is new and inventive, but at the same time if that invention is something that is specifically excluded from being patent eligible, then such an invention cannot be patented regardless of how novel and inventive it is.

For example, pure mathematical equations or abstractions or arithmetic processes cannot be patented in most countries including New Zealand.

Business method patents

Business method patents are a loosely defined category of patents which typically claim steps relating to finance, commerce, logistics, management, or other things that amount to conducting business. Claims to a business method often involve computer implementation, but often novelty will be present only in the steps of the business method rather than in the hardware used to implement it.

Lawmakers in some jurisdictions consider business method patents antithetical to the intentions of the patent system.

Business method claims are at risk of being considered non-technical, and some types of software inventions may be viewed as merely business methods that do not solve a technical problem. Lawmakers in some jurisdictions consider business method patents antithetical to the intentions of the patent system. Patent law can therefore contain provisions to make business methods patent ineligible, and patent offices and the courts will often look unfavourably upon applications they consider to claim business methods.

For example, article 52 of the European Patent Convention explicitly states that “schemes” and “doing business” shall not be regarded as inventions.[1] Additionally, European examination generally involves determining the “technical effect” of a claim resulting from distinguishing features, and such technical effect is needed to establish inventive steps.[2]

In one recent decision of the European Patent Office’s Technical Board of Appeal 3.5.01, T 0550/14 (Catastrophe relief/SWISS RE) of 14.9.2021, the Board upheld a decision by the Examining Division that the independent claim of an application related to a non-technical business method and was therefore unpatentable.[3] The application related to a method for managing charity funding of catastrophe relief efforts, where a computer is used to allow charities to receive funding from investors that is accessible in a catastrophe but paid back with a premium if no catastrophe occurs in a certain timeframe, similar to an insurance policy. The Board considered that this involved no technical content beyond the well-known networked computer system, the rest amounting to a business model.[4] The appellant argued that the claims defined a technical feature of a “parametric index” used to electronically trigger payout, relating to catastrophe data including type/location/size/speed. However the Board considered that the triggering criteria required no technical considerations and the skilled person (in this case a business person) would be aware this information would be available from e.g. weather data providers.[5] The appellant also asked the Board to define criteria that the examining division should use to prove that a feature was not technical.[6] The Board held that this would essentially be trying to prove a negative so it is appropriate for the division to simply make a prima facie assertion that the feature in question is non-technical, and it is then up to the applicant to provide arguments to prove the positive that there is technical effect.[7]

Business method patents in Australia and New Zealand

In Australia and New Zealand, the respective Patents Acts (with heritage from UK law) provide that patents can only be granted for a “manner of manufacture” within the meaning of the Statute of Monopolies.[8] The courts interpret this reasonably broadly, but with some restrictions that are potentially relevant to business method patents. New Zealand also has an explicit provision in the Act that a computer program “as such” is not a manner of manufacture, which is relevant to computer-implemented business methods.[9] At least in recent decisions the position in Australia is effectively similar, but the lack of explicit statutory exclusion means there is perhaps room for IP Australia and the Australian courts to be more favourable.

In New Zealand, there are limited decisions by IPONZ relating to business method applications and few patent cases make it to court. Historical UK precedent has some influence, notably Re Cooper’s Application (1901) 19 RPC 53 (EWHC) establishes that a mere scheme or plan (e.g. for the efficient conduct of business) is not eligible for a patent.[10]

George N Haddad [2000] NZIPOPAT 8 is one NZ case under the 1953 Act involving an application for a method of wagering on a sporting or racing event, with the Assistant Commissioner finding that this was not a manner of manufacture.[11] The applicant argued that the invention had a commercially useful effect which would result in improved participation and wagering at sporting/racing events. The Assistant Commissioner acknowledged some broadening in the definition of manner of manufacture, but held that the method of wagering was essentially a patent ineligible mathematical formula or algorithm and likened it to a variation in the rules of a game, which would also be patent ineligible.[12]

IPONZ has also considered the computer program exclusion in the 2013 Act in a few recent decisions, although none of these cases are directly related to business methods. In 3M Innovative Properties Company [2022] NZIPOPAT 5, the Assistant Commissioner considered an application claiming a computerised method of identifying when information copy-pasted between medical documents is at risk of introducing errors.[13] The Assistant Commissioner found that the contribution of the alleged invention lay solely in it being a computer program and therefore the claims were not patent eligible, reasoning that the main problem the alleged invention was trying to resolve was eliminating inaccuracies in medical documents but that the method(s) claimed did not achieve this and instead only served to mark documents for further review.[14] It was also noted that the same contribution could be performed manually, and that the sole advantage of computerisation was in making this process more efficient.[15]

The Applicant argued that the invention was patent eligible because it had a physical effect outside of the computer, namely preventing a physician from ordering unnecessary medications based on inaccurate information, but the Assistant Commissioner held that because the claims did not actually recite a process for resolving any inaccuracies this outcome was only speculative.[16]

Although the above decision does not relate directly to a business method, the same issues would have to be considered for a computerised business method claim in New Zealand. Explicitly reciting steps that achieve some physical effect outside of the computer and definitively solve a relevant problem may assist in avoiding the negative outcome discussed above.

Accenture Global Solutions Limited [2022] APO 8, a recent decision by the Australian patent office, illustrates their position. In this decision, a patent application for a machine learning based incident management apparatus was refused because it was held that the claims did not define a manner of manufacture.[17] The decision notes that a business method or scheme is not, per se, patentable, rather it must be a technological innovation.[18] A computerised business method or scheme can be patentable, but only if there is ‘some ingenuity in the way in which the computer is used’ — it is not sufficient to implement a business method using a computer for its well-known and understood functions.[19]

The Commissioner considered the claims of Accenture’s application, which involve using machine learning to classify incidents within an organisation to help prioritise them in a way that maximises KPIs. It found that there was no problem or difficulty in terms of computer technology identified, no physical or material problems outside of computer technology addressed, and no improved functioning of a computer or improved computer technology in the claims.[20] Rather, the method steps provided for a logistical scheme/business innovation which is otherwise unpatentable.

Business method patents in the US

In the US, although business method patents were once easier to obtain, the Supreme Court has held claims directed to an abstract idea to be unpatentable.[21] The US Patent Office often relies on the court decisions to reject business method claims.

In ChargePoint Inc. v. SemaConnect, Inc., the US Federal Circuit found claims 1 and 2 of US patent 8,138,715 (related to EV charging) to be invalid on account of being directed to an abstract idea and therefore patent ineligible.[22] The ‘715 patent claimed numerous technical features including a control device for charge transfer, a transceiver for communicating requests for charge transfer with a remote server, and a controller for enabling charging based on communication from the server. Although not defined in the claim, the description clarifies that this is in the context of a payment scheme where users can make payments to the remote server to enable charging. The court found that the focus of claim 1 was “directed to” the abstract idea of communicating requests to a remote server and receiving communications from that server, and therefore patent ineligible. Although in this case it was not explicitly business-related steps that were fatal to the claim, this somewhat perplexing outcome is illustrative of how patent eligibility and the “abstract idea” test can be a dangerous hurdle for business method applications to overcome. It is possible that the decision was influenced by payment-related language in the description which may have characterised the invention as a business method.

Having said this, many companies seem to still be successful in obtaining patents classified as business methods in the US.[23]

Set your patent filing up for success

Avoiding adverse decisions from the patent office or the courts can be a matter of careful patent drafting. A patent specification that is carefully drafted focusing on technical aspects, outlining how a real-world problem is solved, and including sufficient description from which one can establish that a computer is not a mere tool but is rather an integral part of the claimed invention can minimise the risk of your patent application being rejected on the ground of lacking sufficient technicality.