Tuesday, November 29, 2011

Commercialising Innovation to Save the World

 It’s well known that when something sounds too good to be true, it usually is.  Well, not always.

The International Licensing Executives Society is holding its annual conference in Auckland, New Zealand.  It runs from Friday 30 March to Wednesday 4 April 2012.

It is always a good time to visit New Zealand.  It is particularly nice at that time of the year.  There is often a late summer gradually giving way to a mild autumn.

The theme for this year is on how innovation might be commercialised to “save the world” from threats such as disease, poverty, food shortages, over-population and environmental destruction.

Should be a good conference.

Monday, November 28, 2011

KOHA: All's well that ends well

The gift of rust
Last week we saw a breathless press release announcing that a "small New Zealand library is fighting to keep its trademark [sic] free software from the clutches of a United States corporation".  Joann Ransom of the Horowhenua Library Trust is "astounded an international company could trademark [sic] a Maori word".

Dannevirke librarian Michael Parry goes further, stating that the company "have also sort sought [sic] to claim ownership of the name Koha ... we have the ridiculous situation that they will deny the very people who originally developed Koha the right to use that name. What is even more stupid is that the Maori Advisory Board to the Trademarks [sic] people has approved this. Yep, they are happy to give a Te Reo term to a US company as a trademark [sic]".

The Horowhenua Library Trust

The Trust claims to be incorporated under the Charitable Trusts Act 1957, although there is no record of the Trust on the Charities Register maintained by the Charities Commission*.  It has a close relationship with the Horowhenua District Council.  According to the Trust's frequently asked questions, the Council funds 85% of the Trust's operation and appoints the Trustees.

On 17 April 2010 the Trust applied for New Zealand trade mark application 822685 KOHA for computer software.  Its attempt to secure trade mark protection was unsuccessful.  The application lapsed on 12 October 2011.

The Trust, and by extension the Council, is associated with a loosely defined group known as the "Koha community".  The Committee rules define Koha Community, Koha Software and Koha Project.  You can find out more on the site http://koha-community.org/.


According to its company profile, LibLime was founded in 2005.  In 2007 it acquired the KOHA division of Katipo Communications Limited.  Katipo, according to LibLime, originally created Koha for the Horowhenua Library Trust in New Zealand.  In 2008 LibLime closed its New Zealand office, providing support for its customers in that region through its US operations.  In March 2010 it was acquired by Progressive Technology Federal Systems (PTFS).  Check out http://www.koha.org/ for more details of LibLime.
On 15 February 2010 PTFS/LibLime filed New Zealand trade mark application 819644 KOHA for computer software.  The Intellectual Property Office of New Zealand (IPONZ) approved the trade mark for registration on 8 November 2011.  There is now a three month opposition period that started on 25 November 2011 during which interested parties can challenge registration.
On 23 November 2011 PTFS/LibLime issued a press release stating that:
"Another one of the assets acquired in the purchase of LibLime was an application for the trademark of the term Koha as it applies to ILS software in New Zealand. That application has now been accepted. PTFS/LibLime will hold that trademark in trust as well, and will not enforce it in order to insure that no individual, organization, or company will be prohibited from promoting their services around Koha in New Zealand.
PTFS/LibLime is prepared to transfer the trademark to a non-profit Koha Foundation with the provision that the Foundation hold the trademark in trust and not enforce it against any individual, organization, or company who chooses to promote services around Koha in New Zealand. PTFS/LibLime encourages a direct dialog with Koha stakeholders to determine an equitable solution for the disposition of the trademark that serves the best interests of the libraries who use Koha."
The next day a staff member from PTFS/LibLime confirmed that the company will "hand the NZ trademark off to a non-profit (including HLT) who agrees to continue our practice of protecting non-exclusive use of the name".

The response from the Koha Community

A posted comment from a "Dave" proudly announces he has been in contact with PTFS/LibLime.  He didn't like the reply he received so he sent another.  He encourages other members of the Koha Community to do the same. His reply:

On the News tonight in NZ.
You’re company really knows how to shaft the originator of the project.
You guys ever thought of becoming political lobbyist? from my knowledge of the American Lobbyiest community you’d fit in well, build a support base around an issue then claim it as you’re sole property.
great going.
Hope the NZ Govt gets hell over this (we’re leading up to an election in this coming Saturday Te he).
you’re application should never have been allowed. Do you even know what Koha means in Maori?
you’ll have all the Maori up in arms with the trademarking of a word that simply means in english “free” or “of no charge”.
No wonder America is so villified in parts of the world, you’re society has an arogance that defies belief and yet I aknowledge that as a society is very giving (YES I LIVE IN CHCH NZ) gone through all the earthquakes from Sept last year etc and appreciate the support of the Urban rescue group that came out here to help.
I hope that you’re company rethinks things and withdraws the trademarking of the word (unless you gift the trademarking in what ever markets you have obtained them to the originating Library which would give you kudos in the OSS arena and would avoid further bad press).
I can see this going on youtube and through the larger OSS community as well.
Another member of the Koha Community identies himself as "Rangi".  He says "what needs to be done is some research on Liblime’s client base, find out who the clients are and send them letters outlining what they have been up to. Target the big clients and work down. This would be cheaper than any legal action".

Are the responses from Dave and Rangi examples of behaviour we would expect to see endorsed by a "small New Zealand library" and its associated Howowhenua District Council?  Of course not.  It's not about them at all.  But it gives some good insights into the mentality of the Koha Community.

So what's all the fuss about?

As I mentioned above, Michael Parry claims that PTFS/LibLime "will deny the very people who originally developed Koha the right to use that name". This statement is hard to reconcile with PTFS/LibLime's pledge not to enforce the trade mark, and to transfer it to an appropriate entity.

The Horowhenua Library Trust is hardly in a position to object to commercial use of Maori words. It incorporates at least one such word in its name and branding. Furthermore, the Trust filed its own trade mark application for KOHA, so can't complain when others "trademark a Maori word".

The real dispute here is over who should own the KOHA trade mark in New Zealand. The participants are two competing factions within the open source community that have fallen out with each other.  So now it's simply a matter of sorting out who will own the mark and under what conditions.  All's well that ends well.

The image of the little Kiwi library fighting the big US corporate makes a better story but doesn't fit the facts.

* Update 29/11/11 - Thanks to Joann Ransom for pointing out that the Horowhenua Library Trust is the trading name of Te Horowhenua Trust.  The Charities Commission entry for Te Horowhenua Trust can be viewed here.  The Registration number is CC20328.

Photo courtesy of author Tom Beard under Creative Commons licence.

Wednesday, November 23, 2011

Guest post: How the KOHA trade mark dispute could've been avoided

The gift of rust
Thanks to Lynell Tuffery Huria for this article.

Twelve years ago, a Horowhenua library developed its own cataloguing software, brand name KOHA, and released it as open source software, available for others to use and develop around the world.  The Horowhenua library did not protect the brand name KOHA as a trade mark.  A US company has now applied to register the word KOHA for computer software.  Now the library faces a battle to oppose this application.

Can the Horowhenua library stop the US company from registering the trade mark KOHA?  The short answer is yes.  The Horowhenua library has prior use of the trade mark KOHA in New Zealand, and there is a good chance the library could successfully oppose the application.  But this process is costly.  And now the library is raising funds to oppose the application.

How can a US company obtain a trade mark for a Māori word in New Zealand?  Our trade marks legislation does not have a blanket provision that prevents the registration of Māori words in New Zealand.  Instead, a trade mark that features Māori words can only be refused if the use of the trade mark is offensive.  The Māori trade marks advisory committee is responsible for deciding whether a trade mark is offensive or not.  In this case, the trade mark KOHA was obviously not considered offensive.

What could the library have done to avoid this situation?  The library could have registered its trade mark when the product was first released.  For a fee of $100 plus GST, this trade mark application would have stopped the US company’s application and avoided this situation altogether.

What can others learn from this issue?  Before you use a trade mark, make sure you can and do obtain registered trade mark protection.  This will place you in a strong position to stop others from adopting your trade mark.

Photo courtesy of author Tom Beard under Creative Commons licence.

Tuesday, November 22, 2011

Taking out the trash

“See, I told you he had a real gun”, the older of our boys said to his younger brother.  The three of us were huddled around the kitchen table.  Looking with not a small amount of awe at my Escort Magnum semi-automatic shotgun laid out before us.

In my last post on this topic I said we had decided to load the dice and get rid of Horace the rooster’s tormentors.  The boys were comfortable with the concept of getting rid of “naughty” animals.  Our daughter wasn’t so impressed.  But this wasn’t a time for compassion.  If we didn’t shoot Horace’s sons then they would kill him.  Simple as that.  We had made our choice.

My wife and I stepped out into the driving rain, shoulder to shoulder, feeling very much like the marshall and his deputy.  Ready to face whatever those chickens had for us.  It was one of those unreal situations.  Our daughter upset in her room.  The two boys watching wide eyed from inside the house.  Their faces pressed against the window pane.

It didn’t take very long at all.  We chased the flock around like a couple of geriatric sheep dogs.  Separated them enough so I could draw a bead on a rooster.  Then kabam!

The usual procedure if you are a rooster and you are hit at close range with #3 steel shot is to leap a metre in the air and land in a feathery heap.  Which is exactly what they did.  After seeing their alpha males destroyed in front of the their eyes, some of the hens crawled as far as they could into the buxus hedging.  Just like Horace did a while back.  I wonder why?

It took the flock a while to recover after that.  The hens were a bit slow laying for a week or so.  And Horace was still pretty quiet.  Maybe he didn’t want to crow too loudly in case the other roosters heard him.  We knew he had nothing to worry about.  Sure enough, after a week or two he was back in the saddle.  Strutting around proudly.

Everything back to normal at last.

Wednesday, November 16, 2011

Protecting kids the world over - with patents

internetSafety ghostIn Protecting Kids the World Over (PKTWO) Ltd [2011] EWHC 2720 (Pat) (26 October 2011) we see a successful appeal by an applicant for a patent application relating to the patentability of computer programs as such.

The patent application

UK Patent Application GB 0723964.3 was filed by Protecting Kids The World Over (PKTWO) Limited.  The application relates to a system for monitoring the content of electronic communications to ensure that children are not exposed to inappropriate content or language.

Claim 33, dependent on claim 20, was directed to a data communications analysis engine.  The engine "packet sniffs" data packets from a communications channel for further analysis of their content. The data packets are then monitored using a sequence of "hash tables" which assign a score to the data packet depending on the expressions found in the data packets. An aggregate alert level is assigned to the packet. The aggregate alert level is passed to a security warning algorithm which generates an alert notification to users. There is then a "request and response engine" for sending a notification to an administrator/user such as a parent and for receiving a response from the administrator/user comprising one of several actions to be taken by the computer.

The actions to be taken by the computer include one of (a) alerting a user, (b) terminating the electronic communication on the channel or (c) shutting down the equipment. What is envisaged is that the computer will send the alert notification, in effect an alarm, to a parent by email or SMS message. The parent will be able to send a remote response command of one of the specified types and the computer will respond accordingly.

Relevant technical effect

The Hon Mr Justice Floyd referred to the relevant legislation, section 1(2) of the Patents Act 1977 and Article 52 of the European Patent Convention on which it is based.

He set out the four step approach from Aerotel v Telco/Macrossan's Patent Application [2007] RPC 7, where the exclusions from patentability were engaged:
  1. properly construe the claim
  2. identify the actual contribution;
  3. ask whether it falls solely within the excluded subject matter;
  4. check whether the actual or alleged contribution is actually technical in nature
Identifying the actual or alleged contribution for the purposes of steps 2, 3 and 4:
"…is an exercise in judgment probably involving the problem said to be solved, how the invention works, what its advantages are. What has the inventor really added to human knowledge perhaps best sums up the exercise. The formulation involves looking at substance not form – which is surely what the legislator intended."
In Symbian v Comptroller-General [2009] RPC 1[2008] EWCA Civ 1066 the Court of Appeal declined to formulate any "bright line" test for what did and for what did not amount to a technical contribution in this field. Each case had to be decided by reference to its own particular facts and features, bearing in mind the guidance given in the decisions mentioned.

In ATT&T Knowledge Ventures [2009] [EWHC] 343 Pat, Lewison J agreed that it was impossible to define the meaning of "technical" in this context but considered that there were a number of signposts to what amounted to a relevant technical effect. These are:
  • whether the claimed technical effect has a technical effect on a process which is carried on outside the computer;
  • whether the claimed technical effect operates at the level of the architecture of the computer; that is to say whether the effect is produced irrespective of the data being processed or the applications being run;
  • whether the claimed technical effect results in the computer being made to operate in a new way;
  • whether there is an increase in the speed or reliability of the computer;
  • whether the perceived problem is overcome by the claimed invention as opposed to merely being circumvented.

In Gemstar-TV Guide International inc v Virgin Media Ltd [2010] RPC 10[2009] EWHC 3068 (Ch), Mann J considered a patent related to a means of controlling the transfer of recorded programmes to a secondary recorder such as a VCR, hard disc or like means.  It was observed that "it does actually achieve something which can be regarded as a physical effect, namely the initiation of movement of data from one disk to another (both metadata and TV programme content)."  Thus the initiation of the movement of data, even if occurring within the computer, may be a relevant effect.

Coming back to the present case, Floyd J observed that:
"the programming of a computer is a technical exercise, and the consequence of so programming it can, again in ordinary language, be regarded as achieving a technical effect. It is therefore the case that in applying the exclusion one is seeking to distinguish a relevant technical effect from one which is irrelevant. An invention which has none of the signposts referred to in Lewison J's judgment is unlikely to involve a relevant technical effect."

What does it do?

Floyd J cited with approval the reasoning of HHJ Birss QC in Halliburton Energy Services' Inc's Application [2011] EWHC 2508 (Pat) (see my blog post), that:
“[t]he question is decided by considering what task it is that the program (or the programmed computer) actually performs.  A computer programmed to perform a task which makes a contribution to the art which is technical in nature, is a patentable invention and may be claimed as such”.
He went on to observe that “I think this reflects the formulation of Jacob LJ in Aerotel at [43], as well the oft-repeated injunction to have regard to the invention “as a whole”: see Vicom T028/84, approved in Symbian at [37].”

Solving a technical problem

The contribution made by claim 33 was held to include the generation of a more rapid and reliable alarm notification.  The particular alarm notification as described and claimed in claim 33 was not known and formed part of the contribution to human knowledge made by the application.

An alarm alerting the user, at a remote terminal such as a mobile device, to the fact that inappropriate content is being processed within the computer was found to be a technical process.  The concept was a physical one rather than an abstract one, akin to Gemstar described above.  The effect, viewed as a whole, is an improved monitoring of the content of electronic communications.  The monitoring was technically superior to that produced by the prior art.  There was present the necessary characteristics of a technical contribution outside the computer itself.

The contribution of the claim was found not to reside wholly within the "computer program as such" exclusion.  This fitted with the AT&T signposts.  The invention was observed to solve a technical problem lying outside the computer, namely how to improve on the inappropriate communication alarm generation provided by the prior art.

Further steps

The appeal was allowed.  The case was remitted back to the UK Intellectual Property Office to deal with other outstanding objections.

Photo courtesy of author Paul Klintworth under Creative Commons licence.

Friday, November 11, 2011

Research Affiliates and the passive investing patent

Is time running out?In Research Affiliates, LLC. [2010] APO 31 (17 December 2010) we saw yet another Australian patent application kicked out for lack of patentable subject matter.

The patent application

The invention involved a method, system and computer program product for passive investing that was based on indexes which are built with metrics other than market capitalization weighting, share price weighting or equal weighting.

Australian patent application 2005213293 was originally filed on 27 January 2005 and later assigned to Research Affiliates (the applicant).  There were 5 examination reports issued before the matter was set down for a hearing on 29 October 2010.

Claim 1 read as follows:

1. A method of constructing data indicative of a non-capitalization weighted portfolio of assets, the method being implemented in a computer system having at least one computer processor, the method comprising:

(a) receiving in the computer system data gathered in regard to a plurality of assets;

(b) receiving data indicative of a selection of the plurality of assets to create data indicative of an index of assets, wherein said selection is selected based on an objective measure of scale other than market capitalization and share price; and

(c) operating the processor thereby to weight each of said plurality of assets selected in the index based on an objective measure of scale of said each of said plurality of assets,

wherein said weighting comprises:

(i) weighting at least one of said plurality of assets; and

(ii) weighting other than weighting based on at least one of market capitalization, equal weighting, or share price weighting.
Applicable law

The Delegate ran through the usual cases dealing with patentable subject matter.  These included National Research Development Corp (NRDC) v Commissioner of Patents [1959] HCA 67; [1959] 102 CLR 252, referred to in CCOM Pty Ltd v Jiejing Pty Ltd [1994] FCA 1168, as requiring “a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the field of economic endeavour”.

He referred to International Business Machines Corporation v Commissioner of Patents [1991] FCA 625, Welcome Real-Time SA v Catuity Inc [2001] FCA 445, and of course Grant v Commissioner of Patents [2006] FCAFC 120.

The inventive concept

The Delegate acknowledged the statement in Grant that "the fact that a method may be called a business method does not prevent it being properly the subject of letters patent".  He then appeared to decide that the invention was an investment scheme and reject it on that basis.  It doesn't seem to matter much what the applicant actually claims.  It is what the specification as a whole describes.  Apparently.

Citing a case from the 1950's, Re Virginia-Carolina Chemical Corporation’s Application (1958) RPC 35, he concluded that "the application disclosure should be considered as a whole and care should be taken not to allow the form of words used in a claim to cloud the real issue of manner of manufacture."

A physical effect

The applicant argued, citing Grant, that the current test for patentable subject matter is that there must be some “useful product”, some physical phenomenon or effect resulting from the working of a method.  A change in state or information in a part of a machine can be regarded as a physical effect.

The application met the requirements, said the applicant, because the creation of data indicative of an index of assets provided the change in information in a part of a machine.

One of the most extraordinary statements in this decision is where the Delegate says that the Grant decision “needs to be read in context”.  In my view, various Delegates of IP Australia could be accused of developing their own unique context within which to read Grant.  He goes on to say:
“That passage cited a number of examples from decided cases that could be regarded as physical effects in contrast to a specific example, the Grant application, where there clearly was no physical effect. At that passage, it was also stated the alleged invention in that case is a mere scheme, an abstract idea, mere intellectual information, which has never been held to be patentable … [T]he Court appeared to be critical of the absence of any physical consequence at all … [I]t has long been accepted that intellectual information, a mathematical algorithm, mere working directions and a scheme without effect are not patentable (my emphasis).”
The Delegate goes on to state, according to Grant, that there must be some physical phenomenon or effect resulting from the working of a method.  He refers to that old staple of Australian patent law,  Invention Pathways Pty Ltd [2010] APO 10 (see my blog post).  He says that Invention Pathways suggests "a physical effect that is peripheral and subordinate to the substance of the claimed invention is not enough".

He concludes his formulation of his test by saying:
"I think all of the above indicates that a change in state or information in a part of a machine, on its own, is not enough. There may well be a physical effect. Mere working directions would in the main also seem to have a physical effect. See for example Rolls-Royce Ltd’s Application (1963) 80 RPC 251. On the other hand, the Grant (supra) decision states that mere working directions are not patentable. Similarly a prize pool and method of paying prizes, also seemingly having physical effects on the face of it, were also found to be not patentable. See Iowa Lottery [2010] APO 25 [see my blog post]. 
Clearly something more substantial is required than just any physical effect." 
Lack of physical effect

The Delegate acknowledged that the claims encompassed a physical effect, referring to the "derivation or manipulation of data ...  There is processing that occurs, or construction of data as is claimed".

The issue, said the Delegate, is whether there is "sufficient physical effect ... for example, material advantage or mechanical effect in the arrangement of information."

He observed that there is "no material advantage or mechanical effect evident in any arrangement of information in the present case".  He concluded that:
"the claimed method of constructing data amounts to merely the presentation of information without anything more substantial apparently required than data selection and manipulation to operate the investment scheme."
System claims

The applicant argued that some of the claims were not defined as methods.  Therefore it was "entirely inappropriate and nonsensical to apply jurisprudence regarding the patentability of method claims to these non-method claims."

The Delegate didn't accept this, observing that:
"it seems incongruent to divorce system, device or apparatus claims wholly from method claims ... [A] claim to a computer characterised wholly by the features of a method without the requisite physical effect, or any other non-patentable method, would not be saved merely by the presence of a computer. The same would appear to hold for a storage medium characterised wholly by storing instructions to execute a non-patentable method."
Further steps

The Delegate refused all claims, including method, system and computer program product claims as not encompassing a manner of manufacture.  He gave the applicant no opportunity to present amendments.

The applicant has since filed an appeal on 7 January 2011 to the Federal Court.

[UPDATE: Read Research Affiliates and the unpatentable index for a discussion of the Federal Court decision handed down 13 February 2013.]

Photo courtesy of author thinkpanama under Creative Commons licence.

Wednesday, November 9, 2011

A failed conspiracy

Fireworks #1
Another Guy Fawkes night has been and gone.  It’s a slightly odd ceremony we have carried over in New Zealand and Australia from our history as British colonies.

The origins of Guy Fawkes are found in 1605 involving a failed conspiracy known as the “Gunpowder Plot”.  The object of the Gunpowder Plot was to blow up the English Parliament and the ruling monarch King James I.  Guy Fawkes and his conspirators were arrested before the plan could be carried out, intended to be on 5 November 1605.

So, more than four centuries later, many of us celebrate the failed plot by lighting bonfires, burning effigies of Guy Fawkes (or the villain of the day), and letting off fireworks.  Many people attend organised fireworks displays.  Others stage their own displays at home.

Every year there is the usual debate about whether fireworks should be sold to the public.  Every year there are reported injuries from burns, lacerations, bruising and foreign objects landing in eyes.  Over the years we have seen a gradual restriction in the selection and potency of fireworks on sale.  We have seen age restrictions imposed.  This year fireworks were only available for sale on the four days leading up to 5 November.

I expect there will come a time when organised public displays are all the entertainment on offer.

Many of us still enjoy getting together with friends on what is usually a mild late spring evening.  We barbeque home-raised beef and lamb and sip local wine.  We wait for nightfall and the opportunity to light our own fireworks with only slightly less anticipation than our children.  I guess we should enjoy it while we still can.

Photo courtesy of author Harold Neal under Creative Commons licence.

Monday, November 7, 2011

Jumbo Interactive – the house wins again

The LotteryIn Jumbo Interactive Ltd & New South Wales Lotteries Corp v Elot, Inc. [2011] APO 82 (28 October 2011) we see two opponents successfully oppose a patent application.  What is interesting is that they failed on every ground other than lack of patentable subject matter.

The Delegate has given Elot 60 days (to 28 December 2011) to propose suitable amendments addressing the ground that the claims do not define a manner of manufacture.

The patent application

Elot, Inc (the applicant) filed patent application 2007221934 as a divisional application on 10 October 2007.  The application was advertised accepted on 2 April 2009 and opposed in June 2009 and July 2009.  The controversial decision in Invention Pathways Pty Ltd [2010] APO 10 (21 July 2010) (see my blog post) was still a few months away.

There were 4 claims under consideration.  Independent claim 1 and three dependent claims.  Claim 1 read as follows:
1. A system for facilitating governmental lottery play over an electronic network comprising:
an agent server connected via said electronic network for receiving player and ticket information, including subscription play information, transmitted from a plurality of player terminals, for transmitting said ticket information to a governmental lottery administrator, and for receiving serial numbers issued by said governmental lottery administrator in association with each lottery ticket;
a database in said agent server for storing said player and ticket information and said serial numbers associated with each lottery ticket; and
a subscription play unit for monitoring subscription play of the same lottery numbers for a specified number of draws.
Incidental to the invention

Opponents Jumbo and NSWLC submitted that the claims were not directed to a manner of manufacture as they were directed to a non-patentable method.  They submitted that the implementation via a computer did not make it a manner of manufacture as the computer was incidental to the method.

The Delegate noted that the High Court in National Research and Development Corporation v Commissioner of Patents [1959] HCA 67; [1959] 102 CLR 252 provided a definitive statement of the law on manner of manufacture.  This has been summarised as a requirement for ‘a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the fields of economic endeavour’ (CCOM Pty Ltd v Jiejing [1994] FCA 1168).

In Grant v Commissioner of Patents [2006] FCAFC 120 the Court found that a method of protecting an asset including steps of establishing a trust, making a gift to the trust, making a loan from the trust and securing the loan was not a manner of manufacture.  The Delegate referred to the often-quoted conclusion:
‘Whether the method is properly the subject of letters patent is assessed by applying the principles that have been developed for determining whether a method is a manner of manufacture, irrespective of the area of activity in which the method is to be applied. It has long been accepted that "intellectual information", a mathematical algorithm, mere working directions and a scheme without effect are not patentable. This claim is "intellectual information", mere working directions and a scheme. It is necessary that there be some "useful product", some physical phenomenon or effect resulting from the working of a method for it to be properly the subject of letters patent. That is missing in this case.’
The Delegate acknowledged that claim 1 included an “agent server” which was said to be capable of collecting and storing particular pieces of information.  However, whatever “effect” is generated by that collection and storage, said the Delegate, it is incidental to the claimed invention.

No meaningful limit on the claim

The Delegate referred to Network Solutions, LLC [2011] APO 65 (see my blog post).  That decision referred to a recent decision in the United States in CyberSource Corporation v. Retail Decisions, Inc., No. 2009-1358 (Fed. Cir. August 16, 2011) (see my blog post).

Cybersource observed:
‘As we stated in Bilski, to impart patent-eligibility to an otherwise unpatentable process under the theory that the process is linked to a machine, the use of the machine “must impose meaningful limits on the claim’s scope.” … In other words, the machine “must play a significant part in permitting the claimed method to be performed.”’
In Network Solutions the Delegate went on to comment that:
‘The commonality in approach with the US in relation to abstract ideas has been noted by Australian Courts (eg Grant at [21]-[24]) and, to the extent that a rule of materiality may not have been explicitly expressed in Australia, I nevertheless consider it to be an inherent requirement of the law which otherwise would elevate form over substance to the point of absurdity.’
Coming back to the present case, our Delegate concluded that ‘while “physical effects” might be able to be identified in claims, the consideration must be to ask whether those effects are “material” or, to use the words in CyberSource (supra), whether the effect places a meaningful limit on the claim’s scope.’

The “agent server” of claim 1, said the Delegate, is essentially characterised by the information content of the data it stores. It provides no material advantage to the agent server and, therefore, the agent server does not place a meaningful limit on the claim.

The Delegate then referred to the “subscription play unit”, said to monitor subscription play of the same lottery numbers for a specified number of draws.  He took this as nothing more than facilitating the play.  The utility of this unit lies in the information that it monitors (i.e. the “subscription play information”). The unit in and of itself does not place a meaningful limit on the claim.

Further steps

It’s now over to the applicant to come up with “physical effects that need to be placed into the claims to ensure that they are directed to patentable subject matter”.

It seems strange to me that the Delegate here doesn’t mention Ultramercial LLC v Hulu LLC (Case No. 2010-1544) (see my blog post).  Sure it’s a US case.  But the Australian Delegate in Network Solutions was very quick to follow the United States CyberSource decision.

Perhaps the reason for the oversight is because the Court in Ultramercial observed that subject matter eligibility is merely a threshold check.  The categories of patent-eligible subject matter are no more than a “coarse eligibility filter”.  Claim patentability ultimately depends on the conditions and requirements such as novelty, non-obviousness, and adequate disclosure.

Photo courtesy of author Jeremy Brooks under Creative Commons licence.

Friday, November 4, 2011

Patent law reform hits a snag

Windy road ahead
This week I came across an interesting article by Auckland University Commercial Law senior lecturer Rob Batty.

He comments on a proposal in New Zealand to exclude computer programs from patentability as a controversial change that “emerged at the eleventh hour when the [Parliamentary Commerce] Select Committee reported back on its review of the Bill.”

He notes the exclusion “appears to stem from submissions by open-source advocates who contend that software development does not involve an inventive step, but simply builds on what has gone before.”

The Patents Bill, he observes, will introduce examination for obviousness, a world-wide novelty standard, and streamlined challenge procedures.  These are all measures that will improve the quality of patents granted in New Zealand.

It is clear, in my view, that many concerns expressed by those who opposed patents for “software” can be addressed without a discriminatory exclusion.

He also makes the point that policy should be driven as much as possible by objective evidence.  He notes that the Commerce “Select Committee did not receive objective evidence of economic harm caused by allowing computer programs to be patented”.  Quite the opposite.

As I have said in an earlier article, people making submissions to the Commerce Select Committee who were opposed to “software” patents emphasised that innovation is strong, even “rampant,” with the law that’s in place. One said the software industry is “highly competitive, innovative and prosperous,” and another pointed out that New Zealand was appealing “due to the healthy and innovative software industry here.”

Statements like these suggest those who were most opposed to “software” patents had not experienced any detrimental effects from our current law in which patents have been allowed for computer-implemented inventions for nearly two decades.

Maybe we will see a few more twists in the road towards reform of New Zealand’s patent law.

Photo courtesy of author Dawn Loh under Creative Commons licence.

Wednesday, November 2, 2011

UK Intellectual Property Office adopts narrow view of mental act exclusion

In an earlier blog post I discussed Re Halliburton Energy Services Inc [2011] EWHC 2508 (Pat) (05 October 2011).  In that case the UK IPO’s wide construction of the “mental act” exclusion was highlighted as flawed.

Two interpretations

The Court observed that there are essentially two possible interpretations of the “scheme, rule or method for performing a mental act” exclusion, a wide one and a narrow one.

The wide construction is that a method is "a scheme, rule or method for performing a mental act" if it is capable of being performed mentally.  Regardless of whether, as claimed, it is in fact performed mentally. Read this way the exclusion excludes methods of the type performed mentally regardless of how they are claimed.

The narrow construction is that the exclusion only excludes acts carried out mentally. On the narrow construction a claim to a calculation carried out on a computer could never be caught by the mental act exclusion because the claim does not encompass carrying out the calculation mentally. The fact that calculations in general are the kinds of thing which are capable of being performed as mental acts is irrelevant.

The Court reviewed earlier precedents and concluded that the balance of authority in England is in favour of the narrow approach to the mental act exclusion.

It was observed that the correct scope of the mental act exclusion is a narrow one. Its purpose is to make sure that patent claims cannot be performed by purely mental means and that is all. The exclusion will not apply if there are appropriate non-mental limitations in the claim.

The Practice Note

It was observed that the approach proposed to mental acts of the current UK Practice Note issued on 8 December 2008 is wrong in law and should not be followed.  Paragraph 8 assumes a wide construction and states that “in future examiners will object to the computerisation of what would have been a pure mental act if done without the aid of a computer as both a mental act and a computer program as such”.

The UKIPO has now issued a notice on the patentability of mental acts.  The notice replaces paragraph 8 of the current practice note.  Examiners will now take a narrow view of the mental act exclusion.  In future, claims which specify that the invention is implemented using a computer will not be considered to be excluded from patentability as a mental act.

I expect that reference to a non-mental limitation in a claim such as a processor, a display, a data input component, a data network and/or a data storage component will be sufficient to avoid the mental act exclusion.

Photo courtesy of author TZA under Creative Commons licence.
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