CIIs – The Australian Full Court Encompass Decision

Posted in Intellectual property Technology and innovation Blog post

Overview

 The patentability of computer implemented inventions (CII) has long been a contentious topic in Australian patent law.

 A few months ago, we wrote about Justice Robertson’s decision in Rokt Pte Ltd v Commissioner of Patents, which overturned the Australian Patent Office’s rejection of a patent application for a CII relating to a digital advertising system and method.

 In the latest decision on CII, Encompass Corporation Pty Ltd v Infotrack Pty Ltd, the Full Federal Court unanimously upheld the trial judge’s finding that the invention claimed in two innovation patents was not patentable in that it was not a manner of manufacture. The Full Court’s decision in the Encompass case continues the increasing line of cases in which CIIs have been found not to be a manner of manufacture.

 We set out below a summary of the Full Court’s decision on the issue of manufacture, and then conclude by briefly discussing how this contrasts with the lesser hurdle faced by such inventions in overcoming an innovative step challenge.

 

The “manner of manufacture” decision

 The invention claimed in the two innovation patents in the Encompass case concerned a method and apparatus for displaying information relating to entities (namely, individuals, corporations, businesses, trusts or other commercial parties), so as to provide ‘business intelligence.’ The key features of the invention were its ability to (a) search multiple data sources; (b) provide users with a ‘network representation’ that displayed information relating to particular entities and the relationship between them; and (c) provide additional information regarding an entity or entities based on user selection.

At trial, Justice Perram found that the invention claimed in the patents merely involved a ‘concatenation’ of three methods, each of which were known. His Honour found that the invention did not cause the computer to do something which could not already be done and accordingly did not involve a ‘manner of manufacture.’

 On appeal, the Full Court reviewed the relevant Australian authorities relating to manner of manufacture, commencing with NRDC v Commissioner of Patents [1959] HCA 67. Their Honours emphasised that the test of manner of manufacture was not intended to be applied as a rigid or exact formula, and that references to the need for a ‘physical effect’ in previous authorities were intended to be understood in a very broad or extended sense. Turning to the recent Full Court decisions on CIIs, Research Affiliates and RPL Central, the Court noted the distinction between an unpatentable business method or scheme, in which the computer is a mere tool to perform the invention, and an artificially created state of affairs where the computer is integral to the invention.

 The Court ultimately found that the invention claimed in the patents was ‘no more than an instruction to apply an abstract idea using generic computer technology’ and accordingly upheld the trial judge’s finding that it was not a manner of manufacture. A significant factor in the Court’s reasoning was the fact that the patent claims were largely ‘agnostic’ as to how the invention should be implemented by a computer – that is, they did not specify a particular software or programming to carry out the method, but rather, left it to those wishing to use the invention to devise and implement a suitable computer program for that purpose.

In a curious side-note, the Commissioner of Patents, appearing in the appeal as of right, advanced a submission that, in the context of computer-implemented methods, a key consideration will be whether the alleged ingenuity resides in the way in which the method is implemented in the computer, or whether the ingenuity lies only in an unpatentable method or scheme. The Institute of Patent and Trade Mark Attorneys of Australia (IPTA), who sought leave to intervene in the appeal, disagreed with this proposition, submitting that it inserted questions of novelty and inventive step into the determination of whether an invention was a manner of manufacture. It further submitted that this misconception had become established practice at the patent office and was reflected in the Australian Patent Office Manual of Practice and Procedure, leading to a ‘confused state of affairs in the examination of computer-implemented inventions.’ The Court refused to get involved, declining to comment on the correctness of the Commissioner’s approach or to embark on a consideration of what it termed IPTA’s ‘editorial comments’ on the drafting of the Manual.

 

Manner of manufacture v Innovative step

 It is interesting to contrast the issues faced by CIIs in overcoming the manner of manufacture threshold with the lesser hurdle faced by such inventions in overcoming an innovative step challenge. Both of the patents in suit in Encompass were innovation patents. Notably, the Court found that one claim of the first patent, and each of the claims of the second patent involved an innovative step – notwithstanding the fact that the invention in question was essentially a collocation of known methods. This low threshold makes innovation patents very difficult to challenge on an ‘innovative step’ basis.

 Innovation patents are, however, slated to be phased out with the introduction of the Intellectual Property Laws Amendment (Productivity Commission Response Part 2 and Other Measures) Act later this year, following a finding by the Productivity Commission that they are more ‘harmful than helpful’ to the small and medium sized enterprises they were intended to assist. In the meantime, they remain a powerful enforcement tool for Australian patentees.

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