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






Thursday, December 17, 2015

Full Court comes down hard on business method patent, but software remains patentable

by Chris Bird and Anthony Selleck

The Full Court of the Federal Court of Australia yesterday published its reasons in the eagerly-awaited appeal decision of RPL Central v The Commissioner of Patents. The Court reversed the first instance decision, deciding that the evidence-gathering method the subject of RPL Central's innovation patent was a 'mere scheme', abstract idea or business method that did not constitute patentable subject matter.

The Court's reasoning provides welcome clarification regarding the patentability of software-related inventions. Importantly, we do not see the decision as in any way preventing the patenting of inventions in these fields of technology. Indeed, the Court was at pains to point out that computer-implemented business methods are indeed patentable, provided there is technological innovation in the way in which the method is carried out by a computer or computer system. More broadly, the decision confirms that many areas of software innovation constitute proper subject matter and are thus potentially protectable by patents.

Conversely, the decision casts doubt on the validity of some granted Australian patents with broad claims directed to business methods implemented using well-known computer and Internet functionality. Such patents were relatively readily granted, particularly during the dot-com boom of the early 2000s, when the Australian Patent Office was operating under less restrictive patentable subject matter guidelines.

It is open to the patentee to apply for special leave to appeal the Full Court's decision to the High Court of Australia.

RPL's evidence-gathering method

As we described in our Scintilla post reporting the first instance decision, the invention at issue in RPL Central was an Internet-based system to assist individuals to achieve formal recognition of their existing competencies. The patent specification explained that individuals can request an educational institution (such as a technical college or TAFE organisation) to accredit the individual's existing competencies and award a qualification equivalent to actually undertaking a training course (or part of a course) at the institution. The accreditation assessment is conducted by reference to certain units of competency registered with a government agency and available for download from the agency's web site. Individuals are required to gather evidence of their relevant work and educational histories, to be presented to the accrediting institution and compared against the standards specified in the units of competency.

According to the specification, a problem with the existing system was that the manner of accessing and identifying information relevant to the units of competency was not particularly user-friendly, and there was no single point of access. This made it difficult for individuals to gather the right sort of evidence to demonstrate compliance with the specified standards. The solution proposed in the application and defined in the claims involved the conversion of the elements of competency into a set of questions to be presented to the individual by way of a form on a website. The individual would then enter answers to the questions into the form, and (if required) upload one or more relevant supporting documents. These answers and documents together constitute the evidence of competency compliance for submission to the institution for assessment. The claimed invention thus allows an individual to be led through the accreditation and evidence-gathering process in a relatively user-friendly manner.

Put simply, the patent claims are directed to the following method (and a system for carrying out that method):

  • retrieving assessable criteria via the Internet (using a standard web browser)
  • processing the assessable criteria to generate questions relating to the individual's competency to satisfy
  • requirements associated with the recognised qualification standard
  • presenting those questions
  • receiving responses including, as required, selected files

First instance decision


At first instance the court accepted RPL's submission that each step of the method involved a physical effect, due to the fact that the method operated over interconnected computers exchanging information with each other. This transfer of information resulted in a physical manipulation of the data stored on the computers, and as such resulted in a physical effect. In addition the primary judge found that the automatic generation of questions, and the presentation of those questions to the user, created an artificial state of affairs in the user's computer that was itself a physical phenomenon in which the effect of the invention could be observed.

The Full Court

The Full Court took a different view of the method of the invention. Noting the established law that business methods and 'mere schemes' are not patentable per se, the Court focussed on the fact that the method did not actually involve any computer processing steps. Instead, the computer merely presented questions to the user through a website and received the answers. Being devoid of technical computer processing, the method constituted a non-patentable business innovation. However, in reaching this conclusion, the Court suggested that potentially patentable inventions might have arisen if the claims specified that the computer was programmed to function as an advisor or artificial intelligence entity actually engaged in the evaluation of the user's input.

At its heart, the RPL invention involved the conversion of personalised information to questions and requests for documentation. The Commissioner of Patents successfully argued that this is simply a trivial programmed conversion of information into question format by prepending relevant words. The Court concluded that the computer was in effect operating simply as an intermediary, and was not required to evaluate the user's input to provide an answer. Although the reframing of criteria into questions may indeed be beyond the generic use of a computer, it was considered that the methodology was no more than an idea, and merely implementing the idea could not give rise to an invention. Indeed, the decision pointed to the fact that no programming instructions were provided in the specification.

The Full Court also made reference to the High Court's recent decision in D'Arcy v Myriad Genetics Inc. and it seems likely that the bench may have been waiting for this decision to issue before issuing its own judgement. The Full Court noted that the present case was decided by applying the established principles as they relate to computer-implemented business methods. Unlike the genetic sequence data at issue in Myriad, the present case did not involve a new class of claim involving a significant extension of the concept of manner of manufacture. It was therefore unnecessary to examine the wide-ranging social and policy considerations that were aired in Myriad.

The RPL decision is fully consistent with last year's Australian Full Federal Court decision in Research Affiliates LLC v Commissioner of Patents. Further, readers will hear an echo of the 2014 US Alice decision (Alice Corporation Pty Ltd v CLS Bank International), and indeed the court made reference to both judgements in its reasoning.

What this means to users of the patent system

The decision has made clear that if an invention lies solely in a novel way of doing business, however clever it might be, that is not sufficient to render it proper subject matter for a patent.

In coming to this conclusion, the Court confirmed that computer-implemented business methods are patentable if the invention lies in the way in which the method is carried out in the computer. Accordingly, innovators working in the fields of software and computer-implemented inventions should continue to file patent applications to protect their new ideas. However, in preparing patent specifications to inventions involving business methods, it is critical to direct the claims to the technical computer processing steps performed to implement the business method. Further, when business method and software inventions are involved, it is important to include as much technical information in the patent specification about precisely how the process or system may be implemented. Including such detail and describing a variety of possible alternatives to each feature and step described can help patent applications get over the line.

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