Scintilla – a flash, a spark, an iota. Shorthand for creativity and an indicator of inventiveness under Australian law.

Friday, February 15, 2013

Patents for financial methods

By Senior Associate Anthony Selleck

For the first time since 2006, the Federal Court of Australia has considered the issue of patentability of business methods.

Judgement in Research Affiliates LLC v Commissioners of Patents was delivered on 13 February 2013, with Justice Emmett dismissing Research Affiliate's appeal against the rejection of its patent application on the ground that it was not directed to patentable subject matter.

The court decided that the particular method in issue – which involved a 'valuation-indifferent' methodology for constructing an index of securities – was not patentable subject matter, because it produced nothing more than mere information (albeit information of economic significance).  However, the judge's discussion in the decision confirmed that inventions which involve algorithms, mathematical formulae and laws of nature may certainly be patentable in Australia.

To fall on the right side of the line between being patentable and not, the algorithm, formula or law of nature must be applied to produce a product in which a commercially useful effect can be observed. Applications of novel algorithms in many fields of computer science, including graphics, imaging, data compression, data analytics, telecommunications, search engines and user interfaces, will fall comfortably on the right side of the line.

An important lesson that arises from the decision is the necessity to include extensive technical disclosure in patent specifications in the software and business method arenas. In this regard, the judge noted that although the index construction methodology was professed to be a computer-implemented process, there was nothing in the patent specification detailing exactly how computers were actually used to select the securities and construct the index. These deficiencies could not be remedied by the provision of expert evidence at trial.

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