By James Lawrence¹, Mills Oakley Partner and Paul Mahony², Blackwattle IP Partner

(March 2022) 127 Intellectual Property Forum 30

Introduction

Few areas of patent law have received as much recent judicial attention in Australia as the statutory test for patentable subject matter. The decision of the Full Court of the Federal Court of Australia in Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (“Aristocrat”)³ has established a new test for determining whether a computer-implemented invention involves a manner of manufacture within the meaning of section 18(1)(a) of the Patents Act 1990 (Cth) (the “Act”). This article explores that decision, and what might lie ahead in the context of Aristocrat’s application for special leave to appeal the decision to the High Court of Australia.

Authorities pre-Aristocrat

The present debate commences with the seemingly innocuous section 18(1)(a) of the Act which says that for an invention to be patentable it must “be a manner of manufacture within the meaning of section 6 of the Statute of Monopolies”.

Section 6 of the Statute of Monopolies 1624 (“Statute of Monopolies”) sets out the exceptions to the general rule against monopolies. It says that the previous provisions (i.e. those directed to the prohibition of monopolies):

shall not extend to any letters patents (b) and grants of privilege for the term of fourteen years or under, hereafter to be made, of the sole working or making of any manner of new manufactures within this realm (c) to the true and first inventor (d) and inventors of such manufactures, which others at the time of making such letters patents and grants shall not use (e), so as also they be not contrary to the law nor mischievous to the state by raising prices of commodities at home, or hurt of trade, or generally inconvenient (f ): the same fourteen years to be accounted from the date of the first letters patents or grant of such privilege hereafter to be made, but that the same shall be of such force as they should be if this act had never been made, and of none other (g) …[Emphasis added].

It is well-accepted that modern jurisprudence concerned with manner of manufacture is underpinned by the High Court’s seminal decision in National Research Development Corporation v Commissioner of Patents⁴ (“NRDC”). There the Court held that for a claimed invention to be manner of manufacture under the Act,⁵ it needs to generally produce an “artificially created state of affairs”⁶ in a field of economic endeavour.⁷

The thrust of the two-limb test in NRDC was to provide greater flexibility to an assessment of whether a claimed invention involved a manner of manufacture; that is, a rigid application of the language of section 6 of the Statute of Monopolies was no longer appropriate. Subsequent application of the NRDC principles provided little difficulty for a considerable period of time, including after the mainstream emergence of computer technology.

The Patents Act 1952 (Cth) was replaced by the Act in 1990. Relevantly, the Explanatory Memorandum to the Act, in the context of section 18(1)(a), states:

The requirement in paragraph 18(a) that an invention, in order to be patentable, must be a “manner of manufacture” invokes a long line of UK and Australian court decisions. It means little more than that an invention must belong to the useful arts rather than the fine arts^.8 [Emphasis added]

The term “patentable invention” is defined in the Dictionary in Schedule 1 of the Act as “an invention of the kind mentioned in section 18”. The term “invention” is defined as “any manner of new manufacture the subject of letters patent and grant of privilege within section 6 of the Statute of Monopolies, and includes an alleged invention”. The High Court in D’Arcy v Myriad Genetics Inc⁹ (“Myriad”) at [12] indicated that it is not clear how the expression “manner of manufacture” differs from “manner of new manufacture” and noted that it was not explored in that appeal.

It must be that the term “manner of new manufacture”, as that term appears in section 6 of the Statute of Monopolies, encompasses all patentability requirements that must be satisfied by an invention in order to obtain a patent right under the Act. In contrast, the Act codifies the distinct requirements for patentable inventions, such that the “newness” requirement is captured by the distinct novelty and inventive step considerations under s.18(1)(b) of the Act, rendering the “manner of manufacture” requirement of s.(18)(1)(a) – note the absence of the word “new” – a threshold test for subject matter eligibility. This is consistent with the Full Court’s approach in CCOM Pty Ltd v Jiejing Pty Ltd (“CCOM”):

This distinction is now made clear by the use of the expression “manner of manufacture” in s. 18 of the 1990 Act. The structure of sub-s. 18(1) emphasises that the grounds of novelty, inventive step, utility and secret use are each excised from any general body of case law which previously developed the phrase from 1623 “manner of new manufactures”. The point is made particularly clear by the reference in para (a) of the subsection to “manner of manufacture” rather than to “manner of new manufactures”.¹⁰

Further, the Act defines a prior art base in respect of each of the grounds of novelty and inventive step and explicitly states that those grounds are assessed “when compared with the prior art base as it existed before the priority date”¹¹ of the claim in question. Relevantly, there is no reference to any comparison to a prior art base or reference to priority date in relation to the ground of manner of manufacture. As illustrated by the Full Court in CCOM, a claim for a ball point pen now would fail for anticipation and obviousness, but it would still be a claim for a manner of manufacture, as there is no temporal component associated with the manner of manufacture requirement.¹² There is a distinction between whether an invention is patentable by meeting each of the separate requirements of section 18 and whether an invention is for patentable subject matter, which is a subset of the patentability requirement.

In the many years following the advent of computers, numerous decisions of the Federal Court of Australia confirmed what most regarded to be an unsurprising proposition; namely, that inventions (including claimed methods) implemented on a computer constituted patentable subject matter. During that period, by way of critical examples, the Federal Court found the following claims to constitute a manner of manufacture:

(a) a method for displaying a curve on a computer screen, in 1991;¹³

(b) a method of converting keystrokes on a keyboard into Chinese characters, in 1994;¹⁴

(c) a method of implementing a customer loyalty card using smart-card technology, in 2001.¹⁵

The 1994 decision of CCOM warrants closer consideration. The invention in CCOM was to the use of computer technology, for example word processors or other computer processing systems, to store, retrieve and display Chinese characters through the use of well-known computer hardware devices such as keyboards.

In that case, the Full Court warned against conflating the discrete patentability requirements in section 18 of the Act at [112]:

The immediate significance of this is that in the 1990 Act, manner of manufacture, novelty, inventiveness and utility are stated as distinct requirements of a patentable invention. Thus, whilst a claim for the ball point pen now would fail for anticipation and obviousness, it would still be a claim for a manner of manufacture. Yet in the present case there are passages in the reasons of the primary Judge (e.g. 27 IPR at 593) which suggest he was influenced in the determination of the issue as to “manner of manufacture” by asking whether what was claimed involved anything new and unconventional in computer use. [Emphasis added]

CCOM involved known computer hardware, programmed using known software techniques, to produce a computer system that allowed users to type Chinese characters; that is, a new use. Gummow, Spender and Heerey JJ, all judges of deep experience in the field of patents, contemplated certain subject matter considered never to have been patentable (including “business, commercial and financial schemes”)¹⁶ and the distinction between a discovery of laws or principles of nature and their application to produce a practical and useful result. Their conclusion¹⁷ depended upon whether the result of the method satisfied NRDC at 275–7.

What we might describe as conceptual difficulties emerged from the moment of Research Affiliates LLC v Commissioner of Patents¹⁸ (“Research Affiliates”). From the outset it is plain that Research Affiliates involved claims that were on any view directed in substance to an unpatentable mere scheme; a poor vehicle indeed for shaping the future of the Full Court’s views on such matters. Directed at a method of constructing a weighted index and portfolio of securities (that is, a clever way to choose which stocks to buy), the claims in issue in Research Affiliates were always, in substance, an unpatentable mere scheme.

Relevantly, the Full Court, comprised of Kenny, Bennett and Nicholas JJ, said at [104]:

Modern computer technology offers immense capabilities and a broad range of utilities, much of which embodies significant advances that reside firmly in the category of patent-eligible subject matter. At its most basic, however, a ‘computer’ is ‘an automatic electronic device for performing mathematical or logical operations’. As the Supreme Court has explained, ‘[a] digital computer … operates on data expressed in digits, solving a problem by doing arithmetic as a person would do it by head and hand’. Indeed, prior to the information age, a ‘computer’ was not a machine at all; rather, it was a job title: ‘a person employed to make calculations’. Those meanings conveniently illustrate the interchangeability of certain mental processes and basic digital computation, and help explain why the use of a computer in an otherwise patent-ineligible process for no more than its most basic function – making calculations or computations – fails to circumvent the prohibition against patenting abstract ideas and mental processes. As we have explained, ‘[s]imply adding a ‘computer aided’ limitation to a claim covering an abstract concept, without more, is insufficient to render the claim patent eligible’.

To salvage an otherwise patent-ineligible process, a computer must be integral process, a computer must be integral to the claimed invention, facilitating the process in a way that a person making calculations or computations could not. [Emphasis added].

Then at [114]:

The invention set out in the specification is directed to the index itself. The method of the invention is not one that has any artificial or patentable effect other than the implementation of a scheme, which happens to use a computer to effect that implementation. There is no technical contribution to the invention or artificial effect of the invention by reason of the intervention of the inventors. To take the words of NRDC at 268, the process does not produce “either immediately or ultimately, a useful physical result in relation to a material or tangible entity.” The claimed method, the result of the ingenuity of the inventors, does not produce such a result; the ingenuity is in the scheme. Again, drawing from NRDC at 270, there is a useful result of the claimed process but there is no physical thing “brought into existence or so affected as the better to serve man’s purposes”. There is no “physical phenomenon in which the effect, be it creation or merely alteration, may be observed (NRDC at 276). [Emphasis added at underlined text]

As suggested above, much of the present difficulty has its genesis in Research Affiliates. Whether that is because subsequent Full Courts have read too much into the language used by the Research Affiliate Full Court decision rather than focusing on the claims in issue in that case is unclear. At [103], the Full Court paraphrased a distinction drawn by Thomas J of the United States Supreme Court in Alice Corporation Pty Ltd v CLS Bank International¹⁹ (“Alice”) “between mere implementation of an abstract idea in a computer and implementation of an abstract idea in a computer that creates an improvement in the computer.” [Emphasis added] It also identified a second distinction between, “on the one hand, a method involving components of a computer or machine and an application of an inventive method where part of the invention is the application and operation of the method in a physical device and, on the other, an abstract, intangible situation which is a mere scheme, an abstract idea and mere intellectual information.”²⁰

Notably, it did not conclude that these distinctions defined the universe of patentable subject matter; but it was clear that the first distinction was not the only one to be considered. At [58], the Full Court in Research Affiliates referred to Alice, noting that the US Supreme Court concluded that the method claims before it “merely required generic computer implementation and were insufficient to “transform” the abstract idea into a patentable application.” It did not define what it understood to be meant by a “generic computer”.

Shortly after Research Affiliates, the High Court in Myriad gave careful consideration to the correct approach for assessing the “manner of manufacture” requirement for patentable inventions when assessing claims directed to isolated nucleotide sequences. In doing so, the High Court referenced its earlier decision in NRDC in stating:

The right question is: ‘Is this a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies?’.²¹

At [6], the High Court noted:

an invention is something which involves “making”. It must reside in something. It may be a product. It may be a process. It may be an outcome which can be characterised, in the language of NRDC, as an “artificially created state of affairs”. Whatever it is, it must be something brought about by human action.

The High Court indicated that the language of NRDC was not intended to be a “formula exhaustive of the concept of manner of manufacture”,²² and in doing so referenced the language of the High Court’s then very recent judgments in Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd²³ (“Apotex”), where Hayne J said:

Nothing said in the Court’s reasons for decision in that case can be taken as an exact verbal formula which alone captures the breadth of the ideas to which effect must be given.²⁴

and Crennan and Kiefel JJ, with whom Gageler J agreed, said:

… any attempt to define the word ‘manufacture’ or the expression ‘manner of manufacture’, as they occur in s 6 of the Statute of Monopolies, is bound to fail.²⁵

Crennan and Kiefel JJ in Apotex endorsed a passage from Anaesthetic Supplies Pty Ltd v Rescare Ltd²⁶ (“Rescare”) in which Lockhart J in the Full Court said:

If a process which does not produce a new substance but nevertheless results in ‘a new and useful effect’ so that the new result is ‘an artificially created state of affairs’ providing economic utility, it may be considered a ‘manner of new manufacture’ within s 6 of the Statute of Monopolies.²⁷

This is the scenario often presented by new uses of known substances and, indeed, arguably applies to computer-implemented methods in which there is no new ‘substance’ produced in the form of new computer hardware, yet newly programmed software results in a suitably programmed computer resulting in a “new and useful effect” such that the new result provides economic utility. In this sense, there is a strong parallel to the use of a known medical substance administered in a known manner to bring about a newly discovered therapeutic treatment. The High Court in Myriad, in considering the above from Rescare, indicated that satisfying the formula derived from NRDC of an artificially created state of affairs providing economic utility would not mandate a finding of inherent patentability, but that such an approach may suffice for a large class of cases in which there are no countervailing considerations.²⁸

The High Court in Myriad went on to say:

This Court in NRDC did not prescribe a well-defined pathway for the development of the concept of “manner of manufacture” in its application to unimagined technologies with unimagined characteristics and implications. Rather, it authorised a case-by-case methodology.²⁹

Further, in considering whether there is any longer a threshold requirement of inventiveness other than the distinct requirements of novelty and inventive step provided under s.18(1)(b) of the Act, the High Court in Myriad³⁰ referenced its earlier decision in N V Philips Gloeilampenfabrieken v Mirabella International Pty Ltd,³¹ which found that a quality of inventiveness must appear on the face of the specification.³²  In Advanced Building Systems Pty Ltd v Ramset Fasteners (Aust) Pty Ltd³³ (“Ramset”) (subsequently approved in Myriad),³⁴ the High Court found that the Full Court had “erred in considering “inventive merit” in light of prior art” for the purposes of assessing manner of manufacture. The High Court in Myriad concluded that the subject matter of a claim must “have about it a quality of inventiveness which distinguishes it from a mere discovery or observation of a law of nature”.³⁵

Myriad determined that NRDC did not provide a prescriptive formula for assessing manner of manufacture and that in assessing manner of manufacture, the claim was to be considered as a matter of substance over form. The manner of manufacture requirement is a threshold test for patent eligible subject matter and there must be a quality of inventiveness on the face of the specification, wherein the quality of inventiveness distinguishes the subject matter of a claim from a mere discovery or observation of a law of nature. We say nothing as to the ultimate outcome in Myriad, however one thing is plain: Myriad made clear that manner of manufacture is not an assessment of the quality of any inventive step that the claimed invention makes relative to an otherwise unidentified prior art base and it is wrong to assess the inventive merit in light of the prior art for the purpose of assessing manner of manufacture.

In the year following Research Affiliates and immediately after the High Court’s decision in Myriad earlier in 2015, the Full Court (again comprised of Kenny, Bennett and Middleton JJ) handed down its decision in Commissioner of Patents v RPL Central Pty Ltd³⁶ (“RPL”).

What was apparent on the face of the specification in Research Affiliates was again evident in RPL; the claimed invention was a poor vehicle for the consideration of such an important issue. In RPL, the claims were directed at a computer-implemented method for assessing the competency or qualifications of individuals with respect to recognised teaching standards in the teaching/vocational sector. In short, the claimed invention made life easier for a potential course applicant by presenting questions regarding potential qualification in the form of a “wizard” interface.

The difficulty in finding that the claimed invention was a manner of manufacture was that the role of the “computer” within the claim was unspecified and its use, as claimed, did not involve any apparent ingenuity:

A claimed invention must be examined to ascertain whether it is in substance a scheme or plan or whether it can broadly be described as an improvement in computer technology. The basis for the analysis starts with the fact that a business method, or mere scheme, is not, per se, patentable. The fact that it is a scheme or business method does not exclude it from properly being the subject of letters patent, but it must be more than that. There must be more than an abstract idea; it must involve the creation of an artificial state of affairs where the computer is integral to the invention, rather than a mere tool in which the invention is performed. Where the claimed invention is to a computerised business method, the invention must lie in that computerisation. It is not a patentable invention simply to “put” a business method “into” a computer to implement the business method using the computer for its well- known and understood functions.³⁷

Critically, however, the Full Court made these observations:

Care must be taken to consider the circumstances of the claimed invention, beyond the form of words used. In both IBM 2 and CCOM, the invention as claimed was patentable. However, the method in IBM 2 could have been characterised simply to involve “drawing a curve on a computer’; in CCOM, the claimed invention could have been characterised as “to convert a word into Chinese characters”.³⁸

After a short hiatus, the next instalment arrived in the form of Encompass Corporation Pty Ltd v Infotrack Pty Ltd³⁹ (“Encompass”). Encompass’ patents claimed the generation of representations of networks of relationships between entities (such as people or organisations) where a user could select searches across different databases to be performed in respect of a given entity. For example, this would allow a user to see a visualisation of the relationships between different companies, and select different searches (for example, a title search) to add extra detail regarding a given company’s holdings or directors.

As the Court was invited to re-consider its previous decisions in Research Affiliates and RPL, a Full Court of five judges comprising Allsop CJ, Kenny, Besanko, Nicholas and Yates JJ was constituted. The Full Court did not overturn its previous decisions and found that the Encompass claims did not disclose a manner of manufacture. Drawing on statements made by the High Court in Myriad, the Encompass Full Court said this:

But perhaps more importantly for present purposes, the reasons of the plurality in Myriad make it perfectly clear that CCOM should not be taken as laying down a rule or rigid formula to be adhered to when characterising the claimed invention, although recourse to the terminology of an “artificially created state of affairs of economic significance” can be taken as a guide when analysing the true character of the invention that is claimed. Even then, it does not follow that the demonstration of a physical effect mandates patentability.⁴⁰

Encompass suggested in oral argument that because the claimed invention could not be implemented using known or generic software then that must be suggestive of a conclusion as to patentability. However, the Full Court said the following in response to this submission:

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”.⁴¹

The next stop in the journey occurred in Commissioner of Patents v Rokt Pte Ltd⁴² (“Rokt”). The claims in Rokt were directed at a computer-implemented method for improving advertising engagement through a software and hardware solution. The claims were detailed, lengthy and claimed a computer-implemented method for enhancing user engagement through a complex structure of multiple hardware and software elements interacting together to increase the potential for engaging that user via their digital device.

Ultimately, the claims in Rokt suffered the same fate as those in Research Affiliates, RPL and Encompass. The Full Court, comprised of Rares, Nicholas and Burley JJ, found that when construed properly the claims were directed at nothing more than a marketing scheme which, absent any suggestion that the specific way in which the scheme was implemented on the various computers was beyond the “normal” use of computers, was an unpatentable scheme.

Relevantly, the Full Court said at [114]–[115]:

In Encompass the Full Court found that where 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 and the method is entirely left to those wishing to use the method to devise and implement a suitable program for that purpose and all the specification teaches is that the processing system may be “suitably programmed” then the method is really an idea for a computer program, it being left to the user to carry out the idea in a computer system … In the present case, the claim amounts to an instruction to carry out the marketing scheme. The level of abstraction at which it is expressed demonstrates that it does no more than provide a list of steps to be implemented using computer technology for its well-known and understood functions. Nothing in the specification suggests otherwise.

Two difficulties emerge at this juncture: first, identification of the “substance” of the invention (being an exercise in construction) excises claimed integers and, secondly, the excision imports notions of common general knowledge and prior art base in order to define the “substance” of the invention. We explore these difficulties, which are reinforced in the Full Court’s decision in Aristocrat, in more detail below. Rokt further argued that it was impractical to suggest that in order for a claim which included software implementation (being the only possible way to disclose a manner of manufacture in circumstances where “generic computers” were used to implement the invention) the claim must spell out the code or pseudo-code required to program the processors.

In response to this submission, the Full Court said:

In Encompass the Full Court found that where 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 and the method is entirely left to those wishing to use the method to devise and implement a suitable program for that purpose and all the specification teaches is that the processing system may be “suitably programmed” then the method is really an idea for a computer program, it being left to the user to carry out the idea in a computer system (Encompass at [100], [101]). In making these observations, the Full Court did not purport to preclude a scheme implemented using computer software from patentability. It manifestly did not lay down principles of general application (at [77]). It was considering whether invention lay in the implementation of computer technology based on the disclosure of the specification. By the claim and the specification leaving entirely to those wishing to use the method to devise and implement a suitable computer program for purpose, it was apparent that the invention did not rise above the level of being an instruction to use computer technology for its well-known and understood functions to implement the scheme.⁴³

Aristocrat – trial

Like Rokt before it, Aristocrat had success at trial. Indeed, one should not be particularly surprised having regard to the history of accepted patents for electronic gaming machines in Australia and abroad. Aristocrat itself has been awarded in excess of 600 granted Australian patents for or in connection with electronic gaming machines.

In Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents,⁴⁴ Burley J overturned a decision of the Australian Patent Office to revoke a family of innovation patents directed to electronic gaming machines on the ground that the claimed subject matter was not directed to patentable subject matter.

The representative claim from Aristocrat’s patent⁴⁵ was a product claim, specifically, an electronic gaming machine with certain hardware and software features including, relevantly, a “feature game”; the feature game being a special secondary game which was triggered following the occurrence of certain events. While the effect of the feature game was not claimed, evidence adduced at trial suggested that the role of a feature game is to make playing more enjoyable thereby encouraging players to continue wagering.

The Commissioner of Patents had posited that the claims were directed to a “mere scheme” in the form of a set of game rules, or a scheme for making money.⁴⁶ Burley J ultimately rejected the Commissioner’s position and found that the claims were patent eligible subject matter.⁴⁷ In particular, the Court found that the case did not fit the paradigm of an otherwise unpatentable scheme that had been merely “put into” a computer.

In his reasoning, Burley J identified the hardware, firmware, and software components present in the claim (including a display, reels, a credit input mechanism, meters, a game play mechanism, and a game controller) and found that the claimed invention was not directed to a “mere scheme”, but rather to a mechanism or physical device of a particular construction:

… the operation of which involves a combination of physical parts and software to produce a particular outcome in the form of an EGM [electronic gaming machine] that functions in a particular way.⁴⁸

Notably, Burley J did not discount those components from his assessment of the substance of the invention, despite those components being identified as forming part of the common general knowledge as agreed by both parties. Relevantly, these components were not “unspecified generic computer” components of the type contemplated by the US Supreme Court in Alice. Rather, these components were found to have specific characteristics and, when combined, produced “a device of a specific character”.⁴⁹ Relevantly, Burley J held that the claimed invention was directed to “a mechanism of a particular construction, the operation of which involves a combination of physical parts and software to produce a particular outcome in the form of an EGM that functions in a particular way”, based on identifying that “the invention as claimed has hardware, firmware and software components that are identified”⁵⁰ and that the claimed electronic gaming machine is “a physical device”⁵¹ that includes a number of specific components, including a display able to show reels, a credit input mechanism, meters, a game play mechanism, and a game controller comprising a processor and memory.⁵²

In characterising the invention, Burley J determined that the subject of the claimed invention yielded a tangible machine, something that is not at all abstract:

The result is that to the person skilled in the art, the invention may be characterised as a machine of a particular construction which implements a gaming function. It yields a practical and useful result. Simply put, the machine that is the subject of the claims is built to allow people to play games on it. That is its only purpose. In this regard, the physical and virtual features of the display, reels, credit input mechanism, gameplay mechanism and game controller combine to produce the invention. It is a device of a specific character.⁵³

Burley J also noted that the Commissioner accepted that had the claimed electronic gaming machine been implemented mechanically, rather than using software, there is no doubt that it would be a manner of manufacture. In doing so, his Honour noted that:

It is difficult to see why the development of an implementation of an EGM that utilises the efficiencies of electronics technology would be disqualified from patent eligibility, when the old-fashioned mechanical technology was not. Such an approach would be antithetical to the encouragement of invention and innovation.⁵⁴

The Court also accepted Aristocrat’s submissions that identified the danger of “denuding an invention of patentability by prematurely discounting elements of the claim”,⁵⁵ noting that “[a]ny claim can be stripped back to remove all specific limitations, so that at its core an abstract idea emerges”.⁵⁶ This is consistent with the Full Court’s caution in RPL at [105] when characterising the substance of the claimed invention.

Burley J referred to recent decisions relating to computer-implemented inventions and found that those decisions involve a two-step approach, with a first question being “whether the claimed invention is for a mere scheme or business method of the type that is not the proper subject matter of a grant of letters patent” and a second enquiry, if the first question is answered in the affirmative, of “whether the computer-implemented method is one where invention lay in the computerisation of the method”:

The anterior question is whether the claim is for a mere scheme at all. Only if it is found to be so does the analysis proceed to determine whether the scheme has been “put into a computer”.⁵⁷

If that anterior enquiry is decided in the negative, then the claimed invention is directed to patent eligible subject matter and no further enquiry is necessary. In the alternative, if the claimed invention is deemed to be directed to a scheme or plan, Burley J found that RPL Central requires the secondary enquiry to be made as to whether the claimed invention might be directed to patent eligible subject matter if the invention lies in that computerisation.⁵⁸

Importantly, the legislated requirement for “manner of manufacture” does not have a temporal component and patent eligible subject matter does not change over time. There is no prior art base defined in the Act in relation to manner of manufacture, so in this context the priority date of a claim is only relevant for establishing the common general knowledge at the relevant time in order to assist the court in construing the claims. This must be so. Otherwise, adopting the alternative position favoured by the Commissioner, a chair would not be patentable subject matter, nor would the ball point pen referenced in CCOM.

Aristocrat – appeal

The Full Court allowed an appeal from Burley J’s decision, albeit not via a joint judgment as had occurred on all previous occasions in Research Affiliates, RPL, Encompass and Rokt. Middleton and Perram JJ (the “majority”) rejected Burley J’s two-step approach, asserting that this approach “encounters problems where the claim includes a physical object which contains or may itself be a computer and where there is a question as to whether what is claimed is in substance a computer-implemented invention or something else”.⁵⁹

In this context, the majority cited RPL, where the Full Court there had held that “[w]here the claimed invention is to a computerised business method, the invention must lie in that computerisation”.⁶⁰ Accordingly, the majority found that the Court’s analysis proceeded from the fact that the scheme or method was implemented in a computer.⁶¹ In this regard, their Honours were of the opinion that Burley J’s approach was problematic, as it confined the overarching inquiry of “is the invention patentable subject matter” into a single question, being “is the invention not a scheme?”⁶²

Their Honours opined that this may “reduce the richness of analysis called for”.⁶³ Accordingly, their Honours propounded a “proposed alternative approach” by stipulating a new two-step test in relation to computer-implemented methods, being:

(1) Is the invention claimed a computer-implemented invention?

(2) If so, can the invention claimed broadly be described as an advance in computer technology? ⁶⁴

In applying the above two steps, the majority firstly found that the hardware, comprising of the EGM, was a computer, and the feature game was implemented into the EGM. Accordingly, the claimed invention was a computer-implemented method.⁶⁵ This finding is, of itself, problematic. Claim 1 of Aristocrat’s patent is directed to a gaming machine, not to a computer-implemented method of gaming. Further, the gaming machine is defined as comprising a display, a credit input mechanism, meters configured for monitoring credits, a random number generator, a game play mechanism including a plurality of buttons, and a gamer controller. Such a claim is clearly directed to a physical apparatus and the scope of monopoly is clearly defined by such an apparatus, not a computer-implemented method of gaming. Such an apparatus has only come to be through human ingenuity and knowledge, relates to a field of economic endeavour, and is an artificially created device. The majority acknowledged that “a mechanical poker machine which allows such a game to be played upon it is a patentable invention”,⁶⁶ but by stripping the claim of its physical integers reduced the claim to an abstraction of the type cautioned against by the Full Court in RPL.

A claim to a gaming machine, having the noted physical integers and their working inter-relationships, is not a “disguised” process claim of the type contemplated in Myriad⁶⁷ and is not an attempt by the patentee to establish a monopoly for the manufacture of a substance for a purpose for which a monopoly cannot be claimed. Such might be the case for a claim that is truly directed to a method of gaming to be implemented using generic, unspecified, computer implementation (such as through the use in bare claim language of “computer means”). However, Aristocrat is plainly claiming a new gaming machine that operates in a particular way and only a gaming machine so configured and programmed would infringe such a claim.

Following, the Court found that while the invention operated in a particular probabilistic fashion, this was not enough to render it an advance in computer technology.⁶⁸

At [16] the majority held:

The prohibition on patents being granted in respect of abstract ideas of this kind does not extend to inventions which physically embody an abstract idea by giving it some practical application. Although the rules of a game consisting of spinning reels in which prizes are awarded depending on the symbols which appear in the win line constitute no doubt an abstract idea which is not a patentable invention, it is clear nevertheless that a mechanical poker machine which allows such a game to be played upon it is a patentable invention. But the patent protects the invention which is the poker machine and not the abstract idea consisting of the game which it plays. This is consistent with decisions on board or card games to the effect that the game itself, no matter its ingenuity, does not comprise patentable subject matter but the physical apparatus used for playing the game (such as cards or the board) may do so.

Nicholas J, delivering a separate judgment, also found that Burley J’s two-stop approach was “erroneous”,⁶⁹ however emphasised that a computer-implemented method may be patentable even if it does not involve an innovation in computer technology. Further, his Honour provided a reminder that the Courts should not take a rigid and formulaic approach to determining whether an invention is a manner of manufacture, drawing attention to parts in Research Affiliates and RPL which acknowledged this. His Honour asserted:

The statements at [98] in RPL Central and at [117] in Research Affiliates are important because they recognise that it is not appropriate to adopt an excessively rigid or formulaic approach to the question whether a computer implemented scheme is a manner of manufacture. This is especially true in situations where there may be no clear distinction between the field to which the invention belongs, and the field of computer technology. There may well be a technological innovation in the field of technology to which the invention belongs even though it cannot be said that there has been some technological innovation in the field of computers. The field of the invention may encompass different fields of technology that have their own technical problems that lie “outside the computer”. Moreover, the solutions to these problems may necessarily rely upon generic computing technology for their implementation. That does not necessarily render such solutions unpatentable.⁷⁰

The Aristocrat Full Court could not avoid dealing with an immediately apparent inconsistency with their determination that Aristocrat’s presently claimed invention did not disclose patentable subject matter: two previous decisions of the Federal Court, namely Aristocrat Technologies Australia Pty Limited v Konami Australia Pty Limited⁷¹ (“Konami”) and Neurizon Pty Ltd v LTH Consulting and Marketing Services Pty Ltd⁷² (“Neurizon”). Both were cases involving new electronic gaming machines and both were cases in which the Court found the inventions to be directed to a manner of manufacture.

The Full Court dismissed the relevance of Neurizon on the basis that Burley J had accepted that the attack in Neurizon as to lack of manner of manufacture “was rejected on a basis that does not reflect the reasoning of more recent case law”, but such a statement does not engage with the enquiry as to whether or not the claims in Neurizon would inevitably be held invalid now, although one must now assume that to be the case. Konami elicited more fulsome comments from the Full Court, perhaps in part being a trial decision of Nicholas J, a member of each of the Research Affiliates, RPL, Encompass, Rokt and Aristocrat Full Courts. In any event, Konami was decided post-Research Affiliates and consequently the rationale behind the Full Court’s dismissal of Neurizon could not apply to Konami. Instead, after considering the claims in Konami and accepting that “there is no conceptual distinction between the invention claimed in the 967 patent [directed to an electronic gaming machine which includes a particular feature game] and the invention claimed in the 689 patent [directed to a method for awarding a jackpot on an electronic gaming machine] in Konami”, the Full Court nevertheless stated that:

[i]t may be that the trial judge in Konami worked on the assumption that because the apparatus disclosed by the patent was a new and useful gaming machine that it was not also a computer, however, this is by no means clear. In our respectful opinion, in any event, Konami is to be understood as a case in which the question of computer implementation was not addressed.

Nicholas J, the trial judge in Konami, provided additional reasoning so as to distinguish that result from the present appeal:

There were findings made in Konami that the invention solved a number of well-known problems associated with progressive jackpots … These included the problem of “swamping” … Neither the problem nor the solution was abstract, and the solution could not be properly characterised as a mere scheme or rule of a game. The invention provided a technical solution (using a random number generator) to a practical, real-world problem confronting gaming machine operators.

That is, because the claimed invention in Konami was said to solve a problem using a technical solution, then it constituted a manner of manufacture. Such a conclusion gives rise to at least the following observation: is a computer-implemented invention that otherwise does not involve an “improvement in the computer” or an “advance in computer technology” nevertheless a manner of manufacture if it solves a known problem using a technical solution?

Whatever the answer to the question above, it is abundantly clear that the claim in issue in Konami did not “secure as an essential feature” (to use the language of Encompass) the software programming required to implement the invention.

What is a “computer-implemented invention”?

One of the chief concerns with the new “test” established by the Full Court in Aristocrat is the nature of the first question. Rather than commencing with an enquiry, however that may be characterised, into whether or not the invention as claimed is in substance an abstract idea, mere scheme or business method, the Full Court proposes first to ascertain whether or not the invention is “computer-implemented”.

The immediate difficulty with this lies in the fact that the very term “computer-implemented invention” is nebulous. Application of the test to claims which are expressly drafted in those terms is more straightforward. However, the metes and bounds of what might otherwise constitute a computer-implemented invention are unclear.

The new test would on application exclude from patentability inventions that are not abstract ideas, mere schemes, or business methods, and would otherwise be patentable, merely because they are computer-implemented. Because of the number of fields of endeavour in which computers are now used, a test that excludes from patentability any invention implemented in a computer that is not an advance in computer technology represents a seismic shift in patent law. It likely renders unpatentable swathes of inventions that would previously have been patentable, and that have been found as such.

By way of example, the new test would likely exclude from patentability medical imaging and diagnostic machines, speed detection camera systems, green energy solutions, and biotechnology inventions such as COVID diagnosis, where those inventions include features (as is often the case) implemented by way of newly programmed software running on known computer processors.

Drawing in a host of inventions previously considered to be plainly patentable, the difficulties with the first limb of the new test are compounded in circumstances where application of the second limb requires one to, in effect, exclude from consideration known hardware features or otherwise known ways of using computer technology.

What is an “advance in computer technology”?

In mandating a special treatment for computer-implemented inventions, the Courts are on one view adopting a judicial approach that might be regarded as inconsistent with Australia’s international obligations. In assessing the requirements for manner of manufacture as they might apply to a new class of claim, the High Court in Myriad referenced Australia’s international legal obligations, noting that:

Article 27(1) of the Agreement on Trade-Related Aspects of Intellectual Property Rights (“the TRIPS Agreement”) requires, subject to pars (2) and (3), that patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. There is provision for “ordre public or morality” exclusions in Art 27(2) and specific exclusions are authorised in Art 27(3). They relate to methods of treatment for humans or animals, and to plants and animals other than microorganisms. ⁷³

Thus, the High Court recognises Australia’s obligation to provide patents for inventions in all fields of technology. In considering manner of manufacture, there are no legislative constraints or fetters on different fields of technology, so patents must be offered agnostically across different fields of technology, with the same threshold.

The new test proposed by the majority in Aristocrat is contrary to the established principles for assessing manner of manufacture as a patentable subject matter threshold. In particular, determining whether there is an advance in computer technology for computer-implemented invention poses a number of difficulties. The existing principles only require that there be a quality of inventiveness, in relation to the claimed invention, on the face of the specification and, as noted above with reference to Ramset and Myriad, the Court is not to consider any inventive merit in light of the prior art. It seems that determining an advance in computer technology would necessarily require reference to the prior art (the scope of which is not contemplated by the legislation) and thus be in direct conflict with the High Court’s earlier rulings on such an approach.

The proposed test would introduce a temporal component to the manner of manufacture requirement. As discussed above, the manner of manufacture requirement was intended to ensure that patents are granted to inventions in the useful arts, rather than the fine arts. Introducing a temporal component is contrary to the legislation and case law. As the Full Court plainly stated in CCOM at [291], reaffirmed by Burley J in the initial decision on the Aristocrat case, whilst a claim for a ball point pen would fail for anticipation and inventive step, it would still be a claim for a manner of manufacture.

As the Full Court in CCOM accurately observed:

[I]t was submitted that all that had been done was to select a desirable characteristic of a computer program, the ability to search, in the manner described, a data base of the type described, and “to claim all computers present and future possessing that characteristic”.

That submission should not be accepted. It may be that such a claim lacks novelty, is obvious, or lacks utility, or there is a failure to comply with one or other of the limbs of s. 40 because, for example, the invention is not fully described or the claim is not clear and succinct. But if such hurdles all are surmounted, then in our opinion in a case such as the present there does not remain an independent ground of objection as to patentability, within the sense of para 18(1) (a) of the 1990 Act.⁷⁴

The Act does not define any prior art base in relation to manner of manufacture. The priority date of a claim is used to establish the common general knowledge at the time an application disclosing the subject matter of the claim is filed, so that terms within a claim may be properly and appropriately construed. However, patent-eligible subject matter should not change over time and the consequences of adopting such an approach may carry significant consequences.

If a temporal component is introduced into an enquiry relating to manner of manufacture, then it raises a question as to the role of a separate novelty requirement. That is, once an invention has been published, then any subsequent claim directed to the same subject matter, which would otherwise be rejected for lacking in novelty, would not constitute a manner of manufacture. Such an approach would also be inconsistent with all tests for patent eligible subject matter in other jurisdictions.

Requiring an advance in computer technology would also provide a higher threshold for computer-implemented inventions than for inventions in other fields of technology. In the chemical and biotechnology fields, it is accepted that patents may be granted for new uses of known substances, despite there being no advance in the known substances. In this regard, it is to be noted that the claim in NRDC was to the use of a well-known herbicidal composition for the treatment of weeds in a field of crops. There was no advancement in the herbicidal composition and that point was, indeed, the basis of the patent examiner’s objection to grant of a patent directed to such a claim, which was ultimately overturned by the High Court. The High Court determined that the new use of the known herbicidal composition was a manner of manufacture, despite there being no advancement in the herbicidal composition itself.

In NRDC, the High Court referenced Lindley LJ’s judgment in Lane Fox v Kensington and Knightsbridge Electric Lighting Co.⁷⁵ and his consideration that:

[A] man who discovers that a known machine (his Lordship might equally have said a known substance) can produce effects which no one before him knew could be produced by it has made a discovery, but has not made a patentable invention unless he so uses his knowledge and ingenuity as to produce either a new and useful thing or result, or a new and useful method of producing an old thing or result.⁷⁶

This is particularly relevant to computer-implemented inventions, as computer hardware without programs are almost always utilise known computing components, but only come alive and provide useful output through the creation of appropriate software.

Computers are digital electronic devices that are able to process arithmetic or logical operations. Computers typically consist of hardware and software, wherein the hardware is a physical device comprising a power source, one or more microprocessors, and associated circuitry and electronic components. The microprocessors, circuitry, and components provide logic gates and pathways for processing the arithmetic and logical operations. However, the hardware cannot itself perform any operation absent appropriate programming. It is the software, constituting a set of programming instructions, that controls the flow of information through the microprocessors, circuitry, and components in order to define the operation to be performed and then perform that operation. It is the software that controls the switching of the semiconductor devices in the hardware to make the hardware able to perform any functionality.

The software itself is a set of written instructions that, by itself, cannot generate any result or product. It is only when the hardware and software combine together, with the particular set of instructions set out in the software to execute on one or more processors of the hardware, that a computer can perform any operations to generate a physical and identifiable result. That result could be a Chinese character or a radiology image, for example.

A collection of nuts, bolts, nails, and timber when considered alone are each individually known elements. However, those same nuts, bolts, nails, and timber may be combined and configured through human knowledge and ingenuity to create a new and useful thing or result, in the form of a new product or apparatus, such as a table, chair or other structure. If that new product or apparatus is useful and is a vendible product, then that apparatus is a manner of manufacture, irrespective of the component integers being known. Whether the particular product or apparatus is novel or inventive is to be assessed under those grounds.

Similarly, a computer can produce “a new and useful result”⁷⁷ through the knowledge and ingenuity of one or more persons expending time and effort to create a program to make that computer produce that new and useful thing or result. Thus, any new software written for a computer will give rise to an advance in the functionality of that computer, as the computer could not perform that functionality before the software was written, loaded, and executed on the computer. A newly programmed computer is a new and useful thing, as it is capable of performing functions that it could not previously perform. International Business Machines Corporation v Commissioner of Patents (“IBM 2”)⁷⁸ and CCOM show that computer-implemented inventions are patentable, even if the advance comes from the software. It was plainly not the case (nor can it be suggested now) that the hardware components in those cases were not known (i.e. they formed part of the common general knowledge).

If an “advance in computer technology”⁷⁹ (as posited by the Aristocrat Full Court) only relates to improvements in computer hardware, then many inventions will be rendered unpatentable. In no other field of technology is it necessary for the physical components of the claims to be an advance over their respective predecessors, rather the question is whether the claim, as a whole, when considered as a matter of substance is suitable subject matter for the grant of a patent. It is not necessary to define a new chemical composition, as was demonstrated in NRDC, to arrive at patent eligible subject matter.

The approach proposed by the majority in Aristocrat also requires a determination of what constitutes a “computer-implemented invention”. Computers are utilised in many products in the modern world, from personal computers to everyday appliances including washing machines, dryers, and microwaves. Digital clocks, vacuum cleaners, and cars all commonly utilise computers to control and perform various functions. Consequently, many products may be considered to be computer-implemented inventions and then, in accordance with the proposed approach, those products must broadly be described as an advance in computer technology in order to be eligible subject matter for the grant of a patent.

Considerations posed by the Full Court in Aristocrat for patentability are more resonant of an assessment of novelty and inventive step, perhaps even support and sufficiency, rather than as a threshold to subject matter eligibility.

Provided that care is taken not to denude claim language of essential features in the determination of the substance of the invention, thereby characterising the invention in the abstract, there is much to be said for the test proposed by Burley J.

Aristocrat has sought special leave to appeal the decision of the Full Court to the High Court of Australia. Given the great difficulties presented by the Full Court’s new “test” for assessing the patentability of computer-implemented inventions, it is hoped that the High Court will embrace the opportunity to provide clarity to patent applicants and practitioners in connection with ensuring that Australia’s patent system protects innovation in such an important field of technology.

James Lawrence and Paul Mahony, ‘Patentability of Computer-Implemented Inventions Post-Commissioner of Patents v Aristocrat: A Brave New World or Dystopian Future?’ (March 2022) 127 Intellectual Property Forum 30

 

1 Partner, Mills Oakley. James Lawrence acted for Rokt and presently acts for the Institute of Patent and Trade Mark Attorneys of Australia (“IPTA”) in its intervention on Aristocrat’s application for special leave to appeal to the High Court of Australia.

2 Partner, Blackwattle IP. Paul Mahony also acts for Rokt and is a member of IPTA’s working group on manner of manufacture.

3 [2021] FCAFC 202 (“Aristocrat”).

4 (1959) 102 CLR 252 (“NRDC”).

5 At the time, Patents Act 1952 (Cth) applied, however the concept

of “manner of manufacture” was retained in section 18(1)(a) of the

Patents Act 1990 (Cth).

6 NRDC, 277.

7 NRDC, 277.

8 Explanatory Memorandum, Patents Bill 1990 (Cth), 7.

9 (2015) 258 CLR 334, [130] (“Myriad”).

10 CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 (“CCOM”),

[110].

11 Patents Act 1990 (Cth) ss. 18(1)(b), 18(1A)(b).

12 CCOM, [112].

13 International Business Machines Corporation v Commissioner of Patents

(1991) 33 FCR 218.

14 CCOM.

15 Welcome Real-Time v Catuity, Inc (2001) 113 FCR 110.

16 CCOM, [292].

17 CCOM, [295].

18 [2014] FCAFC 150 (“Research Affiliates”).

19 573 US 208 (2014) (“Alice”).

20 Research Affiliates [103].

21 Research Affiliates [124].

22 Alice, [20].

23 (2013) 253 CLR 284 (“Apotex”).

24 Apotex, [83].

25 Apotex, [224].

26 (1994) 50 FCR 1,19

27 (1994) 50 FCR 1, [19].

28 Myriad, [20].

29 Myriad, [23].

30 Myriad, [130].

31 (1995) 183 CLR 655, 663-665.

32 See also Merck & Co Inc v Arrow Pharmaceuticals Limited [2006]

FCAFC 91, [22].

33 (1998) 194 CLR 171, [27]–[35] (“Ramset”).

34 Myriad, [130].

35 Myriad, [131].

36 (2015) 238 FCR 27 (“RPL”).

37 RPL, [96].

38 RPL, [105].

39 (2019) 372 ALR 646 (“Encompass”).

40 Encompass, [90].

41 Encompass, [100].

42 (2020) 277 FCR 267 (“Rokt”).

43 Rokt, [114].

44 (2020) 382 ALR 400 (“Aristocrat trial”).

45 Australian innovation patent no. 2016101967.

46 Aristocrat trial, [80].

47 Aristocrat trial, [106].

48 Aristocrat trial, [95].

49 Aristocrat trial, [98].

50 Aristocrat trial, [96].

51 Aristocrat trial, [96].

52 Aristocrat trial, [96].

53 Aristocrat trial, [98].

54 Aristocrat trial, [102].

55 Aristocrat trial, [101].

56 Aristocrat trial, [101].

57 Aristocrat trial, [100].

58 Aristocrat trial, [92].

59 Aristocrat, [25].

60 Aristocrat, [23], citing RPL, [96].

61 Aristocrat, [24].

62 Aristocrat, [25].

63 Aristocrat, [25].

64 Aristocrat, [26].

65 Aristocrat, [56].

66 Aristocrat, [16].

67 Myriad, [145].

68 Aristocrat, [86].

69 Aristocrat, [135].

70 Aristocrat, [116].

71 (2015) 114 IPR 28.

72 (2002) 58 IPR 93.

73 Myriad, [32].

74 CCOM, [125]–[126].

75 (1892) 3 Ch 424, 428, 429.

76 NRDC, 263.

77 Aristocrat, [78].

78 (1991) 33 FCR 218.

79 Aristocrat, [26].