The Australian Patent Office in a recent decision, Network Solutions LLC [2011] APO 65, has followed the US CAFC decision in Cybersource Corporation v Retail Decisions, Inc. and rejected computer implemented method and storage medium claims on the basis that they were related to an unpatentable commercial or financial scheme.

The patent claims in question

The patent application was for a method of purchasing a domain name registration which involves certifying that a user had sufficient funds to meet an offer before the offer was sent to the registrant.

The claims under consideration were as follows:

  1. A computer-implemented method for purchasing a domain name registration, comprising:

receiving from a user data indicative of an offer message indicating a domain name and an offer amount, wherein the domain name is registered to a registrant distinct from the user;

certifying that the user has access to funds that are at least sufficient to pay the offer amount; generating certification data; and

if the certification data indicates that the offer amount has been successfully certified, then processing the data relating to the offer message thereby to send to the registrant an offer to purchase the domain name registration from the registrant.

...

16. A medium storing instructions adapted to be executed by a processor to perform a method according to any preceding claim.

The Patent Office's construction of the claims

In construing the claims, interestingly the Deputy Commissioner of Patents decided that the mere specification of a "computer implemented method" did not mean that each and every step of the method must be carried out by a computer. He felt that the steps defined in the claims were in fact capable of implementation by means other than by computer. Nevertheless, despite this construction, the Deputy Commissioner felt that this was not critical to the outcome in this case.

The Applicant argued that processing data to thereby send a message resulted in a requisite transformation or physical phenomenon or effect, as required under Australian law. Claim 16 was distinguished by the Applicant on the basis that it was directed to a physical medium and not a method.

The Deputy Commissioner found that the method claims did not involve an artificially created state of affairs in the sense of a concrete, tangible, physical or observable effect, as required by the Australian Federal Court's decision in Grant v Commissioner of Patents [2006] FCAFC 120. In his view there was no judicial authority that provided a basis for finding that what would otherwise be considered a mere scheme or abstract plan is patentable solely because it involves, or results in a manipulation or change, in a physical thing. A physical thing characterised only by "intellectual information" was said by the Deputy Commissioner to clearly remain non-patentable subject matter. He referred to a clear distinction between business, commercial and financial schemes, schemes of operation and printed sheets and the like, on the one hand and, on the other, a new and useful result achieved in the operation of a computer.

The application of Cybersource in Australia

The Deputy Commissioner drew particular support from the recent Cybersource decision in the US, which rejected claims directed to a method of validating a credit card transaction over the Internet by using a map of credit card numbers based on other transactions utilising an Internet address.

One of the rejected claims in the Cybersource decision read:

  1. A computer readable medium containing program instructions for detecting fraud in a credit card transaction between a consumer and a merchant over the Internet, wherein execution of the program instructions by one or more processors of a computer system causes the one or more processors to carry out the steps of:
  1. obtaining credit card information relating to the transactions from the consumer; and
  1. verifying the credit card information based upon values of plurality of parameters, in combination with information that identifies the consumer, and that may provide an indication whether the credit card transaction is fraudulent,

wherein each value among the plurality of parameters is weighted in the verifying step according to an importance, as determined by the merchant, of that value to the credit card transaction, so as to provide the merchant with a quantifiable indication of whether the credit card transaction is fraudulent, wherein execution of the program instructions by one or more processors of a computer system causes that one or more processors to carry out the further steps of;

  1. obtaining information about other transactions that have utilized an Internet address that is identified with the credit card transaction;
  1. constructing a map of credit card numbers based upon the other transactions; and
  1. utilizing the map of credit card numbers to determine if the credit card transaction is valid.

The US CAFC rejected the claims on the basis that they were directed to an unpatentable mental process and did not meet the machine or transformation test. This was because the claims were characterised by mere data gathering steps that could be performed without the use of a computer. In particular, with regard to claim 2 above, the US Court said that we look to the underlying invention for patent eligibility purposes and that claim 2 was not truly drawn to a specific computer readable medium, but rather to an underlying method of credit card fraud detection. It said the incidental use of a computer to perform the mental process does not impose a sufficiently meaningful limit on the claim's scope and that the computer readable medium limitation of claim 2 did not make an otherwise unpatentable method patent eligible. The Court made it clear that merely claiming a software implementation of a purely mental process that could otherwise be performed without the use of a computer does not satisfy the machine prong of the machine or transformation test.

It appeared to be critical to the Court's determination that the method could be performed without the use of the computer. The Court referred to earlier decisions in SiRF Tech v International Trade Commissioner and Research Corporation Techs v Microsoft Corporation where in the first case the methods at issue could not be performed without the use of a GPS receiver, and in the second case the method could not, as a practical matter, be performed entirely in a human's mind.

These earlier US decisions were also referred to by the Deputy Commissioner of Patents when referring to Cybersource, as well as old UK decisions before implementation of the European Patent Convention. He made it clear that what he is looking for is the identification of a real substantive effect, "the new and improved result", achieved in operation of the apparatus that distinguishes the subject matter of the application from a mere idea or intellectual information and results in a practical application of the idea in a physical form. It is the effect brought about by the operation of the computer that appears to be paramount.

Until the Australian Federal Court provides further guidance on the issue, the Australian Patent Office looks set to continue to reject claims that are too broadly drawn and characterised by only operating a business or financial scheme.