Australia remains closed for business on computer implemented business method patents

By Jane Owen, Patrick Brown


Despite convening a special 5 judge bench for a recent appeal heard by the Full Federal Court, that Court's decision in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161 (Encompass) provides no promise for aspiring patentees of computer implemented business methods in Australia.

As a result of the consideration of the Full Court in Encompass, the situation remains that it more often than not, this type of subject matter will be rejected at the Patent Office examination level and at Court level. The test remains simple: the computer implementation of an unpatentable abstract idea will be become patentable only if the computer is integral to the process, such that the implementation by computer is inventive (and not use of routine computing tools). It also appears that express disclosure of the code required for the computer implementation is likely to assist in overcoming the patentable subject matter objection.

The very recent decision of Justice McKerracher in Repipe Pty Ltd v Commissioner of Patents [2019] FCA 1956 (Repipe) has affirmed that the hurdle to overcome to achieve patentability of computer implemented inventions is high.

In Encompass, the Court was considering two innovation patents directed to a search system for providing and visualising business intelligence information. Specifically, the patents provided a method for searching across multiple separate databases (e.g. property ownership, corporate positions and police records) and displaying the information in a graphical network representation to indicate connections between entities.

At first instance Justice Perram (Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2018] FCA 421) found that neither invention was a patentable manner of manufacture.

The Full Court declined to depart from the established approach to identifying patentable subject matter in relation to computer implemented inventions. In upholding the first instance decision, the court noted that NRDC[1], Research Affiliates[2], RPL Central[3] and Myriad[4] present a consistent picture of how the patentability of subject matter should be assessed.

This assessment does not change merely because the invention was implemented using a computer system. An invention must be considered as a matter of substance, not form, so an unpatentable abstract idea or mere scheme will not become patentable by implementation using generic computer technology
While the court accepted that the method described in the patents provided an artificially created state of affairs with economic significance through the creation of business intelligence network diagrams using data from disparate sources, it found that the invention amounted to no more than the computer implementation of an abstract idea or business method. Because the computer implementation of this method was described in purely generic terms, with no detail regarding the computer system itself, this could not elevate the invention to a patentable manner of manufacture.

In Repipe the Federal Court heard an appeal from a decision of a delegate of the Commissioner of Patents revoking two innovation patents because they did not claim a manner of manufacture. The patents related to a system for providing occupational health and safety documentation to employees in the field via a database linked to a portable computing device, such as a phone or tablet.

Justice McKerracher noted seven propositions relating to the patentability of computer-based inventions:

  1. Patentability is a question of substance, not form;

  2. This assessment is not done mechanically or with precise guidelines – it is necessary to understand where the inventiveness is claimed to lie;

  3. Technological innovations are patentable, while business innovations and mere directions to implement a method using a computer are not;

  4. Computerised business methods will only be patentable where the innovation lies in the computerisation itself;

  5. An invention must be examined to determine if it is in substance a scheme, or can broadly be described as an improvement in computer technology;

  6. That a business method or scheme cannot be implemented without using a computer does not prove patentability;

  7. It is not sufficient, in relation to computer implemented inventions, to only consider if two limbs in NRDC (artificially created state of affairs; and utility in the field of economic endeavour) are satisfied.

Consistent with the Full Court in Encompass, Justice McKerracher focussed on the question of whether the inventions relied on using generic computer technology, or if there could be said to be an innovative component to the implementation. It was accepted by both parties that the components of the computer systems used (the databases, servers, portable computing devices and wireless communication) were all well established.

The Court accepted that it was not necessary for the invention to disclose new computer hardware to be patentable, nor was it necessary that it include artificial intelligence.

Importantly the Court noted that, despite needing specialist software, any generic computer or smartphone could be used to implement the invention. No code or programming logic was either disclosed or identified in the patents and the specification noted that any software or technical means could be used to implement the invention. Repipe asserted the technical contribution of the invention was the architecture and functionality of the computer system, rather than specific code. The Court rejected this, noting that it must look to the substance of the invention, rather than relying on the assertion by Repipe that the ingenuity lay in the field of computer technology.

The Court concluded that the inventions were mere schemes or business methods which could be implemented using unidentified software produced by a user relying on his/her own skill and were not patentable subject matter.

A further appeal has remained in abeyance pending the outcome of the appeal in Encompass – the appeal in Rokt Pte Ltd v Commissioner of Patents [2018] FCA 1988 – in which the patentee was successful in its appeal and the Court found the invention patentable. The next chapter in that case will determine if that decision was anomalous and will be reversed on appeal.

[1] National Research Development Corporation v Commissioner of Patents [1959] HCA 67

[2] Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150

[3] Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 81

[4] D'Arcy v Myriad Genetics Inc [2015] HCA 35