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

Tuesday, November 11, 2014

Financial scheme again held not to be patentable subject matter

By Anthony Selleck, Senior Associate

We have been closely following developments in Australia and elsewhere concerning the important question of whether, and the extent to which, computer-implemented inventions can be protected by patents. The latest chapter is yesterday's decision of the Full Court of the Federal Court of Australia, to unanimously dismiss Research Affiliate's appeal against an unfavourable first-instance decision. We reported the first-instance decision of the Federal Court in an earlier post.

In a nutshell, the Full Court decided that while the claimed method of creating an index of securities could well have been an inventive idea, it was nevertheless an un-patentable 'abstract idea' or 'mere intellectual information'. The use of the term 'abstract idea' strongly echoes the recent decision of the United States Supreme Court in Alice Corporation v CLS Bank that was also concerned (see our earlier posts about the Alice Corporation decision here and here) with the patentability of a financial scheme.
Following the Full Court's decision, the Australian position on the patentability of software appears to be that an otherwise un-patentable abstract idea or business scheme does not become so merely by implementing the idea using standard computer technology. Although computer implementation necessarily involves the creation of an artificial physical effect inside the computer, such effect alone is not sufficient to transform the idea into a patentable invention.

Although the Full Court decisively found Research Affiliates' techniques for business analysis and securities selection were not the sort of thing for which patents are granted (even if implemented in software), the court stressed that many advances in computer technology, including developments in software, do indeed constitute patentable subject matter. 

For example, the court noted that patent protection is available for the category of innovations that are 'inventive uses of a computer that utilise previously unknown abilities of software and hardware'. Also of relevance is the Full Court's approval of a statement from the United States Court of Appeals for the Federal Circuit, that many of the capabilities of modern computer technology embody 'significant advances that reside firmly in the category of patent-eligible subject matter'.

The Full Court also noted that the question of whether a patent application is directed to patentable subject matter can only be answered by gaining an understanding of what the invention actually is as a matter of substance, and not merely as a matter of form. To gain this understanding, it appears to be permissible to look beyond the claims to the entire patent specification. Knowing that the entire patent specification will be scrutinised when examined for subject matter eligibility provides another reason for including extensive technical disclosure in patent specifications for software inventions.

Our next post on this topic is likely to follow when the Full Court hands down its decision in RPL Central, another appeal from the Federal Court on a computer related-invention.

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