As we reported in our bulletin last Friday, 13 September 2019, an enlarged Full Bench (five judges) of the Federal Court of Australia handed down its much-anticipated judgement in the appeal case Encompass Corporation Pty Ltd v. InfoTrack Pty Ltd [2019] FCAFC 161, in which it upheld the finding of the primary judge that the patents in suit do not relate to patent-eligible subject matter (i.e. not a “manner of manufacture”) under Australian law.

This judgement had been highly anticipated because many had hoped the enlarged Full Bench of the Federal Court would take the opportunity to clarify the issue of patent-eligibility of computer-implemented inventions (CIIs), especially in view of the practice of IP Australia in this area in recent years. Specifically, IP Australia (i.e. the Patent Office) has commenced a practice of assessing patent-eligible subject matter in the area of CIIs with reference to the prior art, contrary to the jurisprudence and contrary to the established approach generally. Indeed, this approach by IP Australia has given rise to numerous appeals from decisions of the Commissioner of Patents, which are heard by the Federal Court. Accordingly, when the Commissioner applied for, and was granted, leave to intervene in this appeal to present the position of IP Australia on the question of patent-eligible subject matter for CIIs, the Institute of Patent & Trade Mark Attorneys of Australia (IPTA) also applied for leave to intervene in the appeal proceedings to present an alternative position. In this regard, the Federal Court notes at paragraphs [72] and [73] of its decision:

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; and it suggests that a method characterised as a business method or a scheme is unpatentable, whereas it is only methods or schemes that are no more than a method of doing business or an abstract idea (with no practical application or effect) that are not patentable.

IPTA submitted that the Commissioner’s “misconceptions” had become established practice when examining patent applications. IPTA said that this was of “central concern to IPTA and its members’ clients seeking patent protection for their inventions”. IPTA said, further, that these “misconceptions” are reflected in the Australian Patent Office Manual of Practice and Procedure (the Manual) on which the Commissioner’s delegates rely for authoritative guidance in the examination of patent applications. IPTA argued that this has “led … to a confused state of affairs in the examination of computer-implemented inventions, and will cause examination of many such applications to miscarry”.

Regrettably, however, the Federal Court has decided this appeal without directly addressing or resolving this controversy, stating at paragraph [76]:

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. Similarly, we do not propose to embark on a consideration of what could be described as IPTA’s editorial comments on the drafting of the Manual.

As we reported, the patents concerned a method of comparing data relating to specific entities (such as individuals or companies) stored in different databases and assessing whether the records of the different databases in fact related to the same entities, e.g. despite discrepancies in the data stored in the databases. The patents in suit claimed the invention in the rather abstract context of a “method of displaying information relating to one or more entities” and recited steps performed in an electronic processing device. The patents in suit also claimed an “apparatus for displaying information relating to one or more entities”, with the apparatus defined as including an electronic processing device that performs the various steps of the method. Interestingly, the Federal Court noted in its decision at paragraph [77]

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 … 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.

Pleasingly, at least, the Court again explicitly acknowledges in this statement that computer-implemented inventions may constitute patentable subject matter.

The Court noted that the appellants endeavoured to explain why the claimed method falls within the notion of an “artificially created state of affairs” by attributing computer functionality to the method: i.e. the computer (or, in the language of the claims, the electronic processing device) searches remote data sources; generates a network representation; and responds to a user’s selection to conduct a further search. The Court also observed that the appellants attributed computer functionality to the method by virtue of the computer also determining additional information relating to the same entity, though there was contention over whether this “entity matching” was even a step in the method claimed. In the result, however, at paragraph [99] the Court held:

Turning to the present case, we accept the respondent’s submission that the method claims in suit are, in truth, no more than an instruction to apply an abstract idea (the steps of the method) using generic computer technology. … But even if for present purposes “entity matching” is taken to be a step in the claimed method, neither it nor the other steps, individually or collectively, amount to anything more than a method in which an uncharacterised electronic processing device (for example, a computer) is employed as an intermediary to carry out the method steps — where the method itself is claimed in terms which amount to no more than an abstract idea or scheme”.

During the hearing, the appellant had argued that the claimed method falls within the scope of patent-eligible subject matter by virtue of the computer functionality implemented by the method. That is, the appellant argued that computers are essentially generic processing machines that can be employed in any number of computing or processing operations and that, in the present case, the invention resides in the functionality that the method attributes to the computer. In other words, the appellant argued that the invention resides in a functional architecture characterised by the operational steps carried out by the computer, with the claimed method essentially defining a program architecture. It was acknowledged that software code must be written to carry out the method (i.e. it could not be carried out by some generic “off-the-shelf” code) but it was argued that, once the steps or functions to be performed are defined, the code for performing those steps or functions of the method could be written as a matter of routine in a range of different programming languages and in a range of different ways, such that the code itself was not the invention, but rather the functional architecture (i.e. the claimed method) implemented by the code. It was apparent during the appeal hearing that the Full Bench of non-technically trained judges struggled to grasp and understand this notion, as paragraphs [100] and [101] of the decision appear to confirm:

In oral submissions, the appellants sought to make much of the fact (if it be a fact) that the claimed method cannot be implemented using “generic software”. The difficulty with this submission is that the claims in suit do not secure, as an essential feature of the invention, any particular software or programming that would carry out the method. It is left entirely to those wishing to use the method to devise, and then to implement, a suitable computer program for that purpose. As we have said, all that the specification teaches is that the processing system be “suitably programmed”.

As the oral argument developed during the appeal, the appellants submitted that the claimed method is, itself, a high-level description of a computer program. We do not accept this characterisation. If approached from this point of view, the method is really an idea for a computer program, it being left (as we have said) to the user to carry out that idea in an electronic processing device. …. Patentable subject matter is not provided simply because the method is a “method … in an electronic processing device”, which itself is not characterised. To find otherwise would be to elevate form over substance.

In assessing the analysis and findings of the primary judge in this appeal, the Full Court did acknowledge that some statements made by the primary judge may have used language suggesting that other conceptually distinct elements of patentability might have intruded into his Honour’s consideration. However, the Court saw no error in the ultimate conclusion of the primary judge, noting in paragraph [110]:

The primary judge was simply directing his mind to whether the claimed invention was something more than mere “generic computer implementation” of an otherwise abstract idea.

To summarise, the Court essentially held that the invention claimed concerned no more than mere computer automation of a method that was itself not patent-eligible. As a result of the Court’s approach to this case, the broader issue of patentability for CIIs or software-type inventions generally in Australia has not received the clarity hoped for from this decision, and the Federal Court has also not yet addressed the problems created by the current practice of IP Australia in this area. We remain hopeful, however, that there will be greater clarity in this important area of innovation in the not-too-distant future. Firstly, there may still be an appeal to the High Court of Australia in this case which could yet address these matters. Secondly, the next appeal to the Full Court of the Federal Court on the issue of patentability of a CII in Australia is already pending. In that case, the primary judge upheld the patent largely based on expert evidence (not usually contested on appeal) and the position of the Commissioner of Patents was soundly rejected. So, this area of patent law remains in a state of flux in Australia and we shall report on developments as they occur.

For astute and experienced practitioners, this decision of the Federal Court provides some interesting hints for drafting and prosecution strategies to enhance the prospects of patent grant for CIIs. The Engineering and ICT team at Wrays advises market-leaders on the protection of their innovations in this area.