Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCA 29

On the appeal from the decision of the Full Federal Court that Aristocrat’s claim to an electronic gaming machine was not a manner of manufacture as required by s 18 of the Patents Act, the six Justices of the High Court who sat were evenly divided. The result is that the appeal was dismissed, but there is no binding precedent.

Background facts

Aristocrat owns four innovation patents for “A system and method for providing a feature game”, which relate to a gaming system and a method of gaming. The specification described the claimed invention as a computerised electronic gaming machine, or EGM.

Claim 1 of one of the patents, which was accepted as an exemplar, was to a gaming machine comprising various physical features common to EGMs including a game controller which allowed the triggering of free games during the course of the base game, with any credits won during the course of the free games adding to the player’s total in the base game.

The Commissioner, having been asked to examine the patents, revoked each on the basis that the claims were not to a manner of manufacture as required by s 18 of the Patents Act 1990 (Cth). Justice Burley allowed Aristocrat’s appeal from the Commissioner’s decision, on the basis that the claim to an EGM which included a combination of physical parts and computer software was not a mere scheme or plan.

The Full Court of the Federal Court overturned Justice Burley’s decision in Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) 286 FCR 572 (Aristocrat FCAFC). Justices Middleton and Perram did so on the basis that the invention claimed a computer-implemented invention which could not be described as an advance in computer technology, and Nicholas J did so because he did not consider that the claimed invention created an artificially created state of affairs.

In Aristocrat Technologies Pty Ltd v Commissioner of Patents [2022] HCA 29 (Aristocrat HCA), six members of the High Court delivered two judgments. Kiefel CJ, Gageler and Keane JJ concluded that the claims were not to a manner of manufacture. Gordon, Edelman and Steward JJ concluded that the claims were to a manner of manufacture.

What is the effect of Aristocrat HCA?

Section 23(2)(a) of the Judiciary Act 1903 (Cth) provides that, when the Justices sitting as a Full Court of the High Court are equally divided, the decision appealed from shall be affirmed. Accordingly, Aristocrat’s appeal was dismissed. However, that says nothing about the precedent to be followed.

In Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd [1981] HCA 4; (1981)

the High Court clarified that it must consider the question again de novo if it came up. Justice French (as he then was) in Long v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCA 1422 at [35]-[40] held that where there is no “clear common ratio” of a majority of the Justices of the High Court on a question, there is no binding principle on that question. Consistently with this, Lee, Anastassiou and Stewart JJ observed in Harvard Nominees Pty Ltd v Tiller [2020] FCAFC 229 at [55] that seriously considered dicta of three members of a six-judge bench need not be followed, because it is not the majority of the High Court.

So what was the reasoning in each judgment and what can practitioners take away from the decision?

The reasoning of Kiefel CJ, Gageler and Keane JJ (the first joint judgment)

The first joint judgment referred with approval to the principles that a claimed invention will be a proper subject of letters of patent if it has some “concrete, tangible, physical or observable effect” as distinct from “an abstract, intangible situation”, or “a mere scheme in which the invention is an abstract idea or mere intellectual information”, and stated that an artificial state of affairs may be created where the invention can broadly be described as an improvement in computer technology, where the computer is integral to the invention.

Their Honours went on to affirm the correctness of CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 (except insofar as it dealt with the correctness of the Full Court’s decision in N V Philips v Mirabella); Research Affiliates LLC v Commissioner of Patents (2014) 227 FCR 378; Encompass Corporation Pty Ltd v InfoTrack Pty Ltd (2019) 372 ALR 646; Commissioner of Patents v Rokt Pte Ltd (2020) 277 FCR 767, and referred with apparent approval to Commissioner of Patents v RPL Central Pty Ltd (2015) 238 FCR 27.

The first joint judgment relied heavily on the statement by Brennan, Deane and Toohey JJ in N V Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1995) 183 CLR 655 that s 18(1)(a) of the Patents Act contains a threshold requirement to the effect that if it were apparent on the face of the specification that a subject process was nothing more than a new use of an old product, the specification would itself disclose the absence of an alleged invention, and Brennan, Deane and Toohey JJ’s rejection of the contention that the s 18(1)(b) requirements of novelty and inventive step are exclusive and exhaustive.

It is unclear from the first joint judgment precisely how to determine whether the threshold requirement of whether there is an invention is met. It appears that the judgment goes further than N V Philips in suggesting there can be reference, perhaps extensive reference, to the common general knowledge beyond what is described in the specification.

The first joint judgment states: “Unlike CCOM, the present cannot be said to fall within a category of case in which, as an element of the invention, ‘there [is] a component that [is] physically affected or a change in state or information in part of a machine’.” With respect, the authors find this reasoning difficult to understand. It appears that the process of playing the game would have involved a change in the state or information in the EGM, what was displayed on the machine, and its ultimate (monetary) output. The basis on which a distinction is drawn between Aristocrat’s claimed invention and the claim in CCOM (apparently because the change in state or information is not “an element of the invention”) is not clear.

The first joint judgment concluded that the claim in Aristocrat’s innovation did not disclose any technical contribution to either computer or gaming technology outside common general knowledge: at best it disclosed a new game, which is not patentable.

The first joint judgment breathes new life into the threshold test for invention in s 18 of the Patents Act by allowing an opponent or revoker to reduce a claimed invention to those integers that are not common general knowledge, and then ask whether the remainder is not patentable subject matter.

The reasoning of Gordon, Edelman and Steward JJ (the second joint judgment)

The second joint judgment noted that the Commissioner of Patents accepted that, if the relevant claim had involved a mechanical implementation, there would have been no doubt that the relevant claim was a manner of manufacture, and continued “In the 21st century, a law such as s 18(1A) of the Patents Act that is designed to encourage invention and innovation should not lead to a different conclusion where physical cogs, reels and motors are replaced by complex software and hardware that generate digital images”.

The second joint judgment rejected the Commissioner’s characterisation of the claim as a mere scheme or abstract idea, observing that such a characterisation could only be achieved by filleting from the claim essential and interdependent integers providing for the implementation of the game on the EGM. Their Honours observed that “the characterisation of the claim at the appropriate level of generality should include all of the matters that properly form part of the idea, as well as its implementation.”

The second joint judgment then observed that a manner of manufacture thus requires only the existence of some material and artificial advantage, and that any product that improves, restores or preserves a vendible product and thereby creates some new and useful effect will be a manner of manufacture.

Their Honours observed that, although a mere scheme or plan, or the rules of a game, are not patentable, such a method may become a manner of manufacture when it is practised or used in a way that is embodied in a physical form. When an idea is incorporated into a means for carrying out an idea, the idea can be taken into account when considering validity. Their Honours observed that this analysis applied where the idea consists of rules of a game, combined with materials for playing the game (such as cards which are marked differently).

The second joint judgment said that it is not enough that the scheme involves the use of a machine to manipulate abstract ideas. Where the manner of manufacture relies upon some change in state or information in a machine, that change must produce an artificial state of affairs or a useful result. Their Honours went on to cite numerous examples “where the proper characterisation of the claim is one that merely involves the use of a machine to manipulate an abstract idea rather than involving the implementation of the idea on a machine to produce an artificial state of affairs and a useful result” and observed that an “idea that uses a computer, but does not generate some artificial state of affairs, remains no more than an idea”. Among the examples cited by their Honours were Research Affiliates, RPL Central, Encompass and Rokt.

The second joint judgment then stated: “A better way of expressing the point … would be to ask whether, properly characterised, the subject matter that is alleged to be patentable is: (i) an abstract idea that is manipulated on a computer; or (ii) an abstract idea which is implemented on a computer to produce an artificial state of affairs and a useful result. The artificial state of affairs may be an improvement in computer technology, but it need not be. It is enough that the artificial state of affairs and useful result are carried out “by the way in which the method is carried out on the computer”.” Their Honours then observed that it is not of assistance to consider whether the subject matter of a claim is computer implemented. The second joint judgment concluded that the claim was to a manner of manufacture because the claimed operation of the game controller, displayed through the player interface, is an altered EGM involving an artificial state of affairs.

With respect, the authors do not find the second joint judgment’s re-characterisation of the test helpful. The basis for distinguishing between an abstract idea which is “manipulated on a computer” and an abstract idea which is “implemented on a computer to produce an artificial state of affairs and a useful result” is unclear.

Are there any clear principles arising from Aristocrat?

Three matters are clear from Aristocrat HCA (in that all justices seemed to agree on them).

First, the majority judgment of the Full Court in Aristocrat FCAFC incorrectly states the law. It is not of assistance to ask whether an invention is “computer implemented” or involves an improvement in computer technology (although the judgments differ on the enquiry which should be made).

Second, each of the earlier Full Court decisions (Research Affiliates, RPL Central, Encompass and Rokt) was correctly decided (albeit that Gordon, Edelman and Steward JJ cavil with the expression of the reasons for those decisions, and this concession is a little hard to reconcile with the second joint judgment, because it is not clear why those cases did not involve an artificial state of affairs and a useful result).

Third, the law of the United States is not relevant to the question of manner of manufacture.

This is an abridged version of an article which is published at https://www.listgbarristers.com.au/publications/intellectual-property-law-update-what-to-do-with-the-split-high-court-decision-on-manner-of-manufacture