Patentability of Business Methods and Software In Australia – Full Federal Court Decides Much Anticipated Research Affiliates Case

By Ernest Graff
November 18, 2014

The Australian Full Federal Court recently handed down its decision in Research Affiliates LLC v Commissioner of Patents [1]. The decision is an important addition to Australian case law concerning the patentability of business methods and software.

Judges Kenny, Bennett, and Nicholas ruled that the Appellant’s claimed computer implemented method for generating an index for use in securities trading was unpatentable as an abstract idea. The Court held that “[t]he claimed method in this case clearly involves what may well be an inventive idea, but it is an abstract idea. The specification makes it apparent that any inventive step arises in the creation of the index as information and as a scheme. There is no suggestion in the specification or the claims that any part of the inventive step lies in the computer implementation. Rather, it is apparent that the scheme is merely implemented in a computer and a standard computer at that. It is no part of the claimed method that there is an improvement in what might broadly be called ‘computer technology’.”[2]

In our opinion this case does not present a major change in the law in Australia regarding the patentability of business methods and software, but clarifies that mere reference to computer implementation in patent claims will not be enough to satisfy Australia’s requirements of patentable subject matter. Otherwise, the patentability of business methods and software, where a computer is “inextricably linked with the invention itself”, appear to remain patentable in Australia.[3]

In Australia, to include patentable subject matter, a claimed invention must be a “manner of manufacture” under s 18(1)(a) of the Patents Act 1990 (Cth). The primary issue of this case was “whether computer implementation of an otherwise unpatentable business scheme is sufficient to make the claimed method properly the subject of letters patent.”[4]

Research Affiliates LLC is the assignee of Australian patent application no. 2005213293 and its related child application no 2010236045 (the Divisional Application), both entitled “Valuation Indifferent Non-Capitalization Weighted Index and Portfolio”.   The case focused on the Divisional Application, where claim 1 reads as follows:

A computer-implemented method for generating an index, the method including steps of:

(a) accessing data relating to a plurality of assets;

(b) processing the data thereby to identify a selection of the assets for inclusion in the index based on an objective measure of scale other than share price, market capitalization and any combination thereof;

(c) accessing a weighting function configured to weight the selected assets;

(d) applying the weighting function, thereby to assign to each of the selected assets a respective weighting, wherein the weighting:

(i) is based on an objective measure of scale other than share price, market capitalization and any combination thereof; and

(ii) is not based on market capitalization weighting, equal weighting, share price weighting and any combination thereof;

thereby to generate the index.

The decision includes a thorough review of the law regarding patentable subject matter and software in other jurisdictions, namely Europe and the United Kingdom, and The United States, including Bilski v Kappos 130 S Ct 3218 (2010) and Alice Corporation Pty Ltd v CLS Bank International 134 S Ct 2347 (2014).

With regard to the Alice Corporation decision, the Court particularly noted that an instruction to apply an abstract idea on a generic computer was insufficient to transform an abstract idea into a patentable invention, and that the claims in question did not purport to include the functioning of the computer or contain any express language to define the computer’s participation.

Following the review of these decisions, the Court stated: “While decisions in other jurisdictions are not binding, it is noteworthy that the Australian approach to patentability in respect of inventions such as those considered here, is consistent with that taken in the United States and the UK to the extent discussed above.”[5] This comment on the harmonization of patent law is particularly noteworthy given the Full Federal Court’s recent decision in D’Arcy v Myriad Genetics Inc.[6], which was sharply at odds with the reasoning of the US Supreme Court concerning the patentability of human genomic DNA in the related US case Association for Molecular Pathology v. Myriad Genetics. [7]The Court then summarised the invention in the present case as follows: “The summary of the invention, as set out in the specification as a first aspect of invention, is that it provides a method of constructing data indicative of a non-capitalisation weighted portfolio of assets, the method being implemented in a computer system and comprising a series of steps commencing with the receipt in the computer system of data gathered in regard to a plurality of assets. Other aspects of the invention provide a system for constructing a non-capitalisation weighted portfolio of assets and a computer-implemented non-capitalisation weighted portfolio of assets construction system. In each case, a computer is used to receive the data and to provide ‘weighting means’ for weighting each of the plurality of assets.”[8]

After reviewing details of the specification, the court then stated that “[a]lthough the summary of the invention and the exemplary embodiments do make reference to computers, it is to be noted that what is missing from the title of the invention, the described field of the invention and the detailed description of the invention is any reference to a computer, even though the claims limit the method of the invention to one that is computer-implemented.”[9]

Next, the Court reviewed the decision of the primary judge and Australian authority on claims to computer-implemented methods. An important aspect of the decision here concerns the Court’s reference to the recent Federal Court decision RPL Central Pty Ltd v Commissioner of Patents.[10] The innovation patent application involved in the RPL Central case is titled “Method and System for Automated Collection of Evidence of Skills and Knowledge”, and its Claim 1 concerns a method of gathering evidence for the purpose of assessing an individual’s competency relative to a recognised qualification standard, which includes the following steps:

(a)    a computer retrieving via the internet from a remotely-located server a plurality of assessable criteria associated with the recognised qualification standard, said criteria including one or more elements of competency, each of which is associated with one or more performance criteria;

(b)    the computer processing the plurality of assessable criteria to generate automatically a corresponding plurality of questions relating to the competency of an individual to satisfy each of the elements of competency and performance criteria associated with the recognised qualification standard;

(c)    an assessment server presenting the automatically-generated questions via the internet to a computer of an individual requiring assessment; and

(d)    receiving from the individual via their computer a series of responses to the automatically-generated questions, the responses including evidence of the individual’s skills, knowledge and experience in relation to each of the elements of competency and performance criteria, wherein at least one said response includes the individual specifying one or more files on their computer which are transferred to the assessment server.

In RPL Central Judge Middleton held that the above claim did include patentable subject matter, and in the present decision the Court seemed to strongly support Judge Middleton’s reasoning, stating: “Justice Middleton summarised the invention in RPL Central at [139] as one that enabled the retrieval of relevant data from a remotely located server via the internet and the generation of questions for, and presentation of questions to, the user based on this data. The effect of the process was experienced by the individual user on a computer. The user’s responses were transferred to the assessment server. Importantly, ‘the involvement of the computer in the invention is described in these claims in such a manner that it is inextricably linked with the invention itself’. In [172], his Honour said that the specification and the claims provided significant information about the invention which was to be implemented by means of the computer and that the computer was ‘integral’ to the invention there claimed. His Honour distinguished it from the primary judgment in the present case on that basis.”[11]

In the consideration, the Court noted with approval the comments of Thomas J in Alice Corporation, stating that “there is a distinction, 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. There is also a 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.”[12]

Finally, in applying the law to the claims of the Research Affiliates’ patent application, the Court emphasised the incidental nature of the computer concerning the invention of Research Affiliates: “It is apparent from the description in the specification that the computer is simply the means whereby the analyst accesses data to generate an index. The work in generating the index and weighting is described in terms of the work of the analyst rather than as some technical generation by the computer. Indeed, while the specification states that the invention may be used for investment management or investment portfolio benchmarking, the exemplary embodiment makes it clear that it may be, but is not necessarily, implemented on a computer.”[13]

The Court then concluded that “In the context of the claim, the significance lies in the content of the data rather than any specific effect generated by the computer. The computer-implementation is an essential integer of the claimed process. That is, of course, important. It is of particular importance in the assessment of, for example, novelty and infringement. However, in examining whether a claimed invention is properly the subject of letters patent, it is necessary to look not only at the integers of that claimed invention but also at the substance of that invention.”[14]

In summary, although the Court found that the present claims lacked patentable subject matter, even though they recited the use of a computer, the Court otherwise provided strong support to the patentability of computer implemented inventions. By giving clear recognition and support to the decision of Judge Middleton in RPL Central, the Court maintained the law that where a computer is “inextricably linked with the invention itself”, then claims to business methods and software are and remain patentable in Australia.

 

[1] Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 (10 November 2014)

[2] Id at para. 118.

[3] Id at para. 98, citing RPL Central Pty Ltd v Commissioner of Patents [2013] FCA 871.

[4] Id at para. 1.

[5] Id at para. 59.

[6] [2014] FCAFC 115.

[7] 569 U.S. 12-398 (2013).

[8] Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 at para. 62.

[9] Id at para. 67.

[10] [2013] FCA 871

[11] Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 at para. 98.

[12] Id at para. 103.

[13] Id at para. 107.

[14] Id at para. 117.

The Author

Ernest Graff

Ernest Graff

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 6 Comments comments.

  1. wow November 18, 2014 5:21 pm

    very confusing.

  2. Mark Summerfield November 20, 2014 6:53 am

    @wow

    Yes, it is confusing. Not helped by the fact that there is a tendency in Australia (not usually to be found on this blog) to refrain from pointing out that the emperor is not wearing any clothes. This is a deeply problematic decision, and anybody who does not find it confusing has not read it closely enough!

    You could try my report, to see if you find it any more helpful: http://blog.patentology.com.au/2014/11/australias-alice-appeals-court-denies.html. (I am not done with it yet, and have a follow-up article in mind.)

    But bear in mind, I am not impartial in all of this: I drafted the specification and claims art issue in the RPL Central case! Obviously, therefore, I am pleased about the court’s apparent support for the decision in that case, but would prefer that had happened in the context of a decision that was not quite so flawed as this one. If Research Affiliates its Australia’s Alice, then RPL Central is our Ultramercial. The decision is also on appeal – fingers crossed for a better outcome!

  3. Gene, but not Gene Q November 20, 2014 8:39 am

    here is the claim highlighted by [what computers have been doing for at least 50 years] and {language so vague and non-specific with respect to computer hardware that it doesn’t say anything meaningful and circumscribes nothing}

    [(a) accessing data] {relating to a plurality of assets;}

    [(b) processing the data] {thereby to identify a selection of the assets for inclusion in the index based on an objective measure of scale other than share price, market capitalization and any combination thereof;}

    [(c) accessing a weighting function] {configured to weight the selected assets;}

    [(d) applying the weighting function,] {thereby to assign to each of the selected assets a respective weighting, wherein the weighting:}

    {(i) is based on an objective measure of scale other than share price, market capitalization and any combination thereof; and}

    {(ii) is not based on market capitalization weighting, equal weighting, share price weighting and any combination thereof;}

    thereby [to generate] {the index.}

  4. Curious November 20, 2014 8:47 am

    language so vague and non-specific with respect to computer hardware that it doesn’t say anything meaningful and circumscribes nothing
    You’ve been reading the anti-patent website that starts with “patent” and ends with “O” too long. Have you found anything not “vague and non-specific” in your travels or is this your default conclusion for every patent claim you run across?

  5. Anon November 20, 2014 9:02 am

    Curious,

    Sadly, the byline for that site is “America’s leading patent law source.”

    If, as you posit here, the take-away has become a meaningless anti-intelligent anti-patent lack of understanding of patent law, then perhaps the source should reconsider its mission and tactics (and yes, this comment is made in light of being aware of that source’s intended effort to do just that recently, and the ongoing struggles there to present – as my namesake there indicates – dialogue as opposed to monologues).

  6. Curious November 20, 2014 10:18 am

    Sadly, the byline for that site is “America’s leading patent law source.”
    I recently (privately) suggested to DC that it be changed to “America’s leading anti-patent patent law source.” I’ve stopped posting there — anybody that allows the likes of baboon-boy to post unfettered for the last 7 years doesn’t deserve my commentary (i.e., content). Like many blogs, while the articles can be worthwhile reads, a lot of what is interesting takes place in the comment section.

    For example, DC loves to trot out his graphs and bar charts. Frequently, however, there is little analysis associated with them and it is up to the commentators to provide explanations. In short, we are doing his work for him.

    I’m all for letting that website become a home for the anti-patent crowd. Eventually, if that website becomes little more than an anti-patent echo chamber, people interested (beyond burning down the system) in discussing issues about intellectual property law will find another home to engage in meaningful discussion.