Twenty years on

Last week I passed a significant milestone. I've now been an intellectual property advisor for twenty years. I think that entitles me to dwell a bit on how things used to be and how they are now.

Technology

One of the biggest changes over the last twenty years has got to be our use of technology.

Back in 1994 I had a single cathode ray tube (CRT) screen connected to a mainframe in a server room. The 'computer' was used only for accessing the firm's electronic docketing and record system. It had been written in-house and was pretty state of the art back then.

On my first day the server was down. As I was being shown around I remember seeing the computer guy in the server room. Shirt sleeves rolled up. Red faced. Looking stressed. I thought back to my recent career choice to create stuff rather than fix stuff. If ever there was a defining moment that I had made the right choice then this was it.

There were no cellphones, no smart phones, no tablets. There was internet access from a single stand-alone PC running Mosaic. We had a telex machine. We eventually encouraged clients who still sent us telexes to send urgent instructions by fax instead.

Today our firm has a Bring Your Own Device (BYOD) policy. A bewildering selection of powerful mobile devices combined with secure, web-based technology means that our attorneys are able to work from virtually anywhere.

Patentable subject matter

We have seen a gradual widening of eligible subject matter, particularly in my field. The Hughes decision in 1995 is acknowledged as a landmark case in the treatment of computer-related inventions. We were able to point to an earlier Australian decision which the new Zealand Hearing Officer adopted the test for eligible subject matter as:

'Does the invention claimed involve the production of some commercially useful effect?'.

The Haddad decision in 2000 reminded us that the term 'manner of manufacture' still implies a situation which involves some sort of interaction with a real entity, or which achieves a tangible product or result.

Surge Miyawaki in 2005 involved a method of issuing an ear tag to identify an animal in a group of animals. The applicant averted a challenge by amending the claims to include a computer database. 

The Hearing Officer in two separate applications Coppereye and Maximum Availability in 2006 concluded that a database per se can be considered as analogous to a table or spreadsheet in which data is arranged in a manner which facilitates searching and information retrieval. Claims to the database were refused.

These two decisions are at odds with the later Microsoft decision in 2007 in which a patentable data structure arranged and presented data in such a way that it worked in cooperation with a computer program to produce an improved and commercially useful result.

In 2007 the first New Zealand Court decision on the patentability of business methods, Cool 123, noted that a business method could be the subject of a patent application. However, where the case for obviousness seems overwhelming it is difficult to find eligible subject matter.

In 2013 IPONZ allowed a patent on a technique for providing data insurance in Hodgkiss v Monument Insurance. The Hearing Officer commented that the invention was more than a mere computerization of a known process, which suggests that the actual contribution lay in more than just a computer program.

IPONZ

Long before its relaunch as the Intellectual Property Office of New Zealand (IPONZ), the New Zealand Patent Office operated out of a six story building 15 minutes drive out of the Wellington CBD. It shared a car park with a funeral parlor and was a mere stone's throw from both a liquor store and a fast food franchise.

Patent Office staff prepared abstracts of all allowed patents and printed them on cards the size of envelopes. There were stored in IPC order. Searching consisted of identifying a set of catch words describing an invention from a hard cover book, looking up the relevant IPC classes, and flicking through the cards in the relevant classes. I remember a sign displayed prominently above the cards warning us that a misplaced card could cost a million dollars.

My firm had 5 full time staff working out of space provided by the New Zealand Patent Office in its library. We would send search instructions out to our staff by morning courier. They would send us back search results that afternoon. I was there when we installed a fax machine at the Patent Office for our searchers to use.

Exam reports were largely handwritten, at least for trade mark cases. The Patent Office had a kind of form listing every possible rejection an examiner could raise against a case. Examiners simply worked their way down the form and checked most of the boxes.

There was a late filing box. It was a kind of slot through which you could post paper documents. Every morning Patent Office staff scooped up everything posted in the slot the day before and stamped it with yesterday's filing date. There was supposed to be an automatic gate on the slot that closed the slot at midnight. Nobody wanted to test whether or not the gate technology worked. And so began the tradition of late night dashes to the late filing box.

Legislative changes

Right now we are waiting for the New Zealand Patents Act 2013 to come into force in September. Prior to that there were only relatively minor tweaks made to the New Zealand Patents Act 1953.

The Patents Amendment Act 1992 had recently enabled New Zealand to join the PCT system. The Patents Amendment Act 1994 increased patent term from 16 years to 20 years. It also removed an obscure ground of rejection for perpetual motion machines. The Patents Amendment Act 1999 broadened the definition of 'convention country'. And then there was the Patents Amendment Act 2002, which allowed 'springboarding' for the benefit of generic pharmaceuticals manufacturers.

In the late 90s the Trans-Tasman Mutual Recognition Act 1997 and the equivalent legislation in Australia recognized the role of patent attorney in each country as equivalent occupations. Registered patent attorneys in New Zealand could now apply for registration in Australia and vice versa.

What now?

It's hard to predict what the profession will look like in another 20 years. A lot will depend on the types of inventions our clients come up with, the legislative framework we operate under, and the technology we use to help us advise our clients. None of which is likely to even remotely resemble what we have today.

Insurance method patent okay says IPONZ

In a decision published recently, the Intellectual Property Office of New Zealand (IPONZ) allowed a patent on a technique for providing data insurance.

It has been standard practice for some time to make periodic backup copies of stored data to mitigate financial and similar harm caused by data loss. However, there are some problems with existing techniques.

New Zealand patent 563320 recognises that costs are incurred in retrieving data from a remote location's backup copy and transferring it back to the original site. A further problem is where the backup copy may not be current, may have been damaged or corrupted, or may never have been created properly in the first place.

In Hodgkiss et al v Monument Insurance (NZ) Limited [2013] NZIPOPAT 8 (8 April 2013), the opponent Monument Insurance failed to persuade the Hearing Officer that the patent claims did not relate to an invention.

The patent claims

Claim 1 of the patent application reads as follows:

1. A computer-implemented method for providing data insurance, comprising: 

storing by a first processing device, data of a third entity on a storage medium of the third entity; 

creating an agreement between a first entity and a second entity to provide data protection service to a third entity, wherein the first entity arranges for a data protection service to be provided by the second entity for the third entity’s data stored on a storage medium of the third entity; 

creating an insurance agreement between the first entity and the third entity, because the data of the third entity was stored on the storage medium of the third entity, that authorizes the third entity to use the data protection service provided by the second entity for the third entity’s data stored on the storage medium of the third entity without charging the third entity for use of the data protection service provided by the second entity; 

storing, by a second processing device, an electronic backup copy of the third entity’s data, as required by the data protection service agreement, on a storage medium of the second entity such that the electronic backup copy of the third entity’s data stored on the storage medium of the second entity is insured against loss according to the insurance agreements; and 

upon loss of the data stored on the storage medium of the third entity, providing the backup copy of data from the second entity to the third entity in an attempt to restore the third entity’s data; and 

providing compensation from the first entity to the second entity for the data protection services.

Independent claims 12 and 22 are of a similar breadth, directed to a data loss mitigation tool and an insurance system respectively.

Is it an invention?

The Hearing Officer considered whether the invention claimed is a manner of manufacture within the definition of 'invention' in section 2 of the New Zealand Patents Act 1953.

The High Court of Australia in National Research Development Corporation v Commissioner of Patents ("NRDC") [1959] HCA 67; (1959) 102 CLR 252 (16 December 1959) established a patentability requirement of ‘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’.

The Hearing Officer noted at [35] that Patent Office decisions in New Zealand have followed NRDC to:

allow many different claims to inventions which do not fall easily within the scope of the ordinary meaning of 'manufacture', including allowing claims to 'computer-implemented' methods in a number of applications.

The appropriate test, as set out in the Hughes Aircraft decision is:

...whether each of the claims define a method which, either directly or by clear implication, embodies a commercially useful effect.

The Hearing Officer referred to Haddad's Application which clarified that:

the term [manner of manufacture] still implies a situation which involves some sort of interaction with a real entity ... or which achieves a tangible product or result.

At [47] it was noted about the patent under consideration that:

there appears to be a resulting effect which appears to fall within guidance given by ... the Assistant Commissioner's decisions in Hughes Aircraft and Haddad.

A further point of interest was a response to one of the opponent's arguments. The opponent submitted at [43] that mere computer implementation of a contracting process cannot confer patentability, relying on the Cool 123 decision. That decision notes that:

...it seems to me that it cannot be an 'invention' or 'manner of manufacture' to replace the previously conventional means (telephone, email or post) by the known SMS technology whose known properties or characteristics make it suitable for this use.

The Hearing Officer found at [44] that he wasn't persuaded that the present invention amounts to mere computerisation of a known process.

What next?

This invention was assessed under the current patent regime. There is currently a proposal to change New Zealand patent law to introduce a European-style "as such" restriction on the patentability of computer programs.

Under clause 10A of the proposed law a claim in a patent or an application relates to a computer program as such 'if the actual contribution made by the alleged invention lies solely in it being a computer program'.

So how would this invention be treated if it had been considered under the proposed law?

The Hearing Officer's comments give an interesting clue. The statement that this invention is more than a mere computerisation of a known process suggests that the actual contribution lies in more than just a computer program. It is therefore likely that this invention, and other inventions of this nature, would be patentable under the new law as well.

Research Affiliates and the unpatentable index

In Research Affiliates LLC v Commissioner of Patents [2013] FCA 71 (13 February 2013) a judge of the Federal Court of Australia dismissed an appeal by Research Affiliates LLC against two decisions of IP Australia. I cover the two decisions here and here.

Subject matter eligibility in Australia is based on whether or not an invention is a "manner of manufacture".

The judgment sets out some new approaches to assessing subject matter eligibility for business method claims. These approaches are based on the product of the claimed method, the description of that method in the body of the specification, and the extent of computer implementation.

The patent application

The invention involved securities investing, particularly the construction and use of passive portfolios and indexes. Under passive management or indexing, the securities in a portfolio are weighted by relevant market capitalisation weighting or equal weighting. The securities purchased for inclusion in the portfolio reflect the securites that are represented in a particular index.

The amount of each security that is purchased for inclusion in the portfolio affects the weighting of that security in the index. If the weighting given to a particular security in the index changes, a corresponding amount of the security is bought or sold to adjust the amount of that security held in the portfolio.

A stated disadvantage of market capitalization weighted passive management is that undervalued securities will be underweighted in the index and in the portfolio based on the index. At the same time, any overvalued securities will also be overweighted. A further disadvantage is that a portfolio based on market capitalization weighting follows every market, or market segment, variation.

Claim 1 of the application under consideration read as follows:

1. 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 product of a method

The Court observed at [14] that a manner of manufacture must be construed as including:

• the practice of making;
• the process of making;
• the means of making; and
• the product of making.

The product of a process simply means something in which the new and useful effect may be observed. The something need not be a thing, in the sense of an article or object. It may be any physical phenomenon in which the effect, be it creation or merely alteration, may be observed.

It's important not to take a narrow view of what constitutes the product of a method, according to the Court at [15]. If a method is purely an idea, that method's product may be mere information, such that the method itself is then not patentable and is not a manner of manufacture. However, if the method or idea results in a new machine or process, or an old machine giving a new and improved result, that new process or result should be regarded as the product of the method and the method is patentable.

Furthermore, a new use of an algorithm may be a patentable invention. Even if there is nothing new about the mathematics of a claimed invention, if its application results in a commercially useful effect there may be a patentable invention.

A mathematical formula as such is not patentable. However if the claim is not for a mathematical formula in the abstract, but a way of using the mathematical formula in a process for producing particular effects, there may be a patentable invention.

Nothing more than data

The Court observed at [65] that a mere scheme, abstract idea or mere information is not patentable. Some physical effect is required. In some cases there will be a component physically affected or a change in state in a part of a machine. take for example:

• the representation of a curve
• the representation of Chinese language characters
• the writing of information to a smart card

In this case the only physical result generated by the method of the invention was a computer file containing an index. The Court observed at [67] that an index is nothing more than a set of data. It is simply information. A set of numbers. No more a manner of manufacture than a bank balance represented as data in a bank's computer, written on a piece of paper, or kept in a person's memory.

When we are talking about a computer implementation, everything is just numbers. I guess what the Court is saying here is that the numbers don't mean anything. They have no relationship with real world tangible objects.

Personally I don't see the 'stark contrast' at [70] between writing particular information on a smart card on the one hand and writing an index to a computer file on the other. Maybe I'm missing something.

Tell us more

I suspect this judgment will be remembered most for the comments on what the description should say.

The Court observed at [68] that:

'While the Specification appears to be intended to create the impression of detailed computer implementation, the Specification says almost nothing about how that is to be done ... The discussion in the Specification provides no substantive detail regarding the implementation of the claimed method. The upshot of the discussion is merely that the method is implemented by a computer, but there is no disclosure of how that is to be done.'

It looks like the Court would have liked to see at [70]:

• how data is accessed in step (a);
• the nature of the processing undertaken in step (b) to identify the selection of assets;
• how the weighting function is accessed in step (c);
• how the relevant measure of scale is chosen in step (d)(i); or
• how the weighting function is applied in step (d) to assign a weighting to each asset.

I thought the sufficiency of the description was a matter for, well, sufficiency of the description. Basing subject matter eligibility on the description rather than the claims seems to be a new approach in Australia.

Mere use of a computer

The Court seems to criticise at [67] the proposition that any computer-implemented scheme would be patentable, merely by reason of the fact that is happens to be implemented by a computer.

The implementation of this method by means of a computer was observed at [72] to be no more than the modern equivalent of writing down the index on pieces of paper. The mere use of a computer necessarily carries with it the writing of information into the computer's memory. This aspect of computer implementation, said the Court, is nothing more than the use of a computer for a purpose for which it is suitable.

The Court concluded at [73] that:

'while new developments in technology might be seen to widen the notion of what is patentable, the modern availability of computers as a standard means of implementing arithmetic or computational processes, which could have been implemented manually in the past, does not carry with it any broadening of the concept of a patentable invention.'

Further steps

Research Affiliates has 21 days to appeal this decision to the Full Federal Court of Australia. If this decision survives an appeal it will be interesting to see how it is interpreted by IP Australia.

[UPDATE: Research Affiliates applied for leave to appeal on 27 February 2013.]


Photo courtesy of author thinkpanama under Creative Commons licence.

The IP year in review

Christmas is a big deal in New Zealand. For most of us the 25th of December marks the start of a two, three or even four week summer vacation. It is a chance to recharge our batteries, ready to return refreshed in the New Year.

I'll be taking a break for a few weeks and returning mid-January. I'll leave you all with a list of my ten most popular posts for the year.

The New Zealand Patents Bill has been a hot topic thanks to a campaign by the open source community to introduce a European-style exclusion for computer software. The patentability of software has also been the subject of a few decisions of the US Courts and the BPAI. Copyright enforcement news in both New Zealand and Australia has also been popular.

Alice and the Abstract Idea: When is a computer-implemented invention a mere "abstract idea”? Does the presence of a computer in a claim make an unpatentable "abstract idea" a patentable invention? Should it matter that a computer-implemented invention is claimed as a method, system, or storage medium? Is there any real difference between these types of claims? These are the questions that the United States Court of Appeals for the Federal Circuit is going to be considering over the next 12 months.

The show goes on: These are interesting times for copyright infringement actions. We have seen a conclusion to the long running dispute between Roadshow Films/AFACT and iiNet in Australia. We have also seen a couple of test cases emerge for New Zealand's three strikes law.

A forum on software patents: Fellow blogger Patentology comments on a recent IP Forum held by the IP Australia on the subject of 'software patents'.

KOHA - Better late than never: Another chapter closes on the KOHA trade mark saga. The New Zealand trade mark application is the subject of a kind of tug-of-war between two competing factions within the open source community that have fallen out with each other.

D. finds non-functional descriptive matter: The Board of Patent Appeals and Interferences considers a data structure for generating network data traffic utilizable in communication systems. The BPAI rejected the data structure claim as relating to non-functional descriptive material.

The embedded software conundrum: The New Zealand Patents Bill had a second reading in Parliament this year. On the table is a Supplementary Order Paper (SOP) setting out proposed amendments to the Bill. The SOP clarifies the extent to which computer programs will be patentable. It better reflects the intentions of the Parliamentary Commerce Select Committee who originally recommended changes to the Bill.

A public slap from Twitter: Laws can certainly be broken in 140 characters or less and Twitter is starting to take a more transparent approach to copyright infringement. It is a bad look for your company to be accused of copyright infringement. And even worse to be slapped so publicly.

Hu finds that storage is the key: The BPAI considered the patentability of a claim in the field of performing log-based recovery by allowing a plurality of worker processes to process in parallel a plurality of work items in a log. Each work item represented an ordered operation on a corresponding data object. The BPAI found that the term "computer-readable medium" is broad enough to cover intangible media. However, a computer-readable storage medium is confined to tangible media for storing data.

Edelson finds an abstract intangible asset: The BPAI looked at a claim for a way for creating financial instrument derivatives of rollups of recurrent yield monetary based assets. Whatever that means! The Board found that simply using some computer-implemented method in some undefined manner alone cannot confer patentability.

Patent party in the House: It's always good to try something new. I gathered some of my work colleagues together and we watched the Second Reading of the New Zealand Patents Bill on the tellie. I didn't quite know what to expect but I wasn't surprised at what I saw. It was certainly an interesting experience.

Photo courtesy of author Daniel Peckham under Creative Commons licence.

A forum on software patents

Fellow blogger Patentology comments on a recent IP Forum held by the Australian Patent Office (IP Australia) in Sydney on the subject of 'software patents'. There are independent reports of the event by ITNews.com.au (IP Australia debates software patents), ZDNet Australia (The world needs patents: Uniloc founder), and CIO.com.au (Do software patents stifle innovation?).

Facts and figures

Deputy Commissioner Phil Spann delivered some facts and figures. According to Spann, computing-related patent applications have increased moderately since 2003, in line with an increase in patent applications in general. Computing-related applications account for 6% of Australian patent applications. This compares with 4% in Germany, 6% in China and Japan, and 10% in the United States.

It perhaps would have been more useful for Deputy Commissioner Spann to talk about issued patents rather than patent applications. After all, the event was about 'software patents' not 'software patent applications'. It would have been interesting to see what percentage of issued Australian patents are computing-related.

I did some research a year or two ago on the New Zealand position. There were around 34,000 current patents in New Zealand across technology areas. Out of this number there were just over 1,000 granted patents that Deputy Commissioner Spann would consider to be computing-related. So that means that granted software patents make up just 3% of the total number of New Zealand patents.

A subjective view

Open source enthusiast Ben Sturmfels argued that the real winners in the patent debate are large corporations that have a significant portfolio of patents because those corporations can use their patents to threaten other companies for “getting on their turf".

He admitted that patents may be useful for certain industries, but harmed the fast-paced software industry, where "you get people inventing the same thing ... all at the same time. By saying someone has more right to an idea than someone else, just because they've filed a patent before anyone else has, that's just silly. People don't use the patent system in the way that it's intended. They don't read patents to stay up to date with state-of-the-art things. So they can't search for and avoid patents that already exist in the system. That's the real trouble."

An objective view

Australian inventor Ric Richardson spoke in favour of software patents. He disagreed with Sturmfels on several points.

He mentioned that he doesn't personally “see a lot of small guys getting squashed by big guys because in the end, if you have a patent that protects what you’re doing, they actually value that and it’s part of your whole acquisition strategy".

Without software patents, said Richardson, only the biggest players would benefit from original ideas, rather than the person who had conceived the idea in the first place. "What you say about [patents] stymieing innovation is wrong in my mind. You have great ideas in software development, and you should benefit from coming up with a great idea. To go and say everything should be free and it's only the guy that can [get to market first] is the one that should benefit from it is to encourage stealing."

The New Zealand view

Sturmfels reportedly failed to win over the audience of developers and lawyers at the event. Similarly, here in New Zealand I have seen little factual basis for the contention that New Zealand software patents are stifling innovation and preventing small companies from succeeding.

In fact, submissions a couple of years ago on the New Zealand Patents Bill 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". Another pointed out that New Zealand was appealing "due to the healthy and innovative software industry here".

Photo courtesy of author PanARMENIAN under Creative Commons licence.

Fang finds no surprises for identifying prizes

In Sheng-Ping Fang [2011] APO 102 (20 December 2011) we see another computer-related invention chucked out by the Australian Patent Office.  The applicant represented himself at the hearing on 6 October 2011 so it is not that suprising to see an unsuccessful result.  However, he achieved much the same result as he would have had he been represented professionally.

The patent application

The applicant, Sheng-Ping Fang, filed Australian patent application 2010230079 on 13 October 2010.  There were 5 adverse exam reports during prosecution.  From 16 June 2011 the applicant represented himself up to and including the hearing on 6 October 2011.

There was some dispute over what claim amendments would be allowable.  For the purpose of the hearing the Delegate settled on the version of claim 1 amended on 16 June 2011 as follows:

1. A system for providing an award program on one or more servers and electronic devices, said system comprising:

a) a machine readable or executable instruction for providing a plurality of qualified events, wherein said qualified events provide a plurality of unique and, or shared award symbols to be collected or accumulated for completing a selection or plurality of complete award symbols with identical and different visual or physical characteristics and,
b) a machine readable or executable instruction for providing a selection or plurality of award symbols, wherein said award symbols consist of unique and, or shared award symbols that are selected from a collection of symbol pieces and, or symbol clones associated with a selection or plurality of said complete award symbols and,
c) a machine readable or executable instruction for providing a selection or plurality of prizes that are displayed alongside their corresponding or associated complete award symbols, said prizes are awarded on full or partial completion of said complete award symbols.

Substantial effect or transformation

It will be clear to readers where this is heading.

The Delegate referred to several Australian Court decisions:

• National Research Development Corporation v Commissioner of Patents ("NRDC case") [1959] HCA 67; (1959) 102 CLR 252 (16 December 1959)
• CCOM Pty Ltd v Jiejing Pty Ltd [1994] FCA 1168; (1994) 122 ALR 417
• International Business Machines Corporation v Commissioner of Patents [1991] FCA 625
• Welcome Real-Time SA v Catuity Inc [2001] FCA 445 (17 May 2001)
• Grant v Commissioner of Patents [2006] FCAFC 120 (18 July 2006)

He referred to the United States decisions Bilski v. Kappos, 130 S. Ct. 3218 and CyberSource Corp. v. Retail Decisions, Inc. (Case No. 2009-1358) (see my blog post).  Strangely, there is no mention of the more recent case Ultramercial LLC v Hulu LLC (Case No. 2010-1544) (see my blog post).

The Delegate also referred to some (but not all) of the Australian Patent Office decisions relating to the patentability of business methods and computer-related inventions.  Strangely, there is no mention of Visa Inc v CardinalCommerce Corporation [2011] APO 34 (25 May 2011) (see my blog post).

He observes at [56] that, while he is not bound by the Australian Patent Office decisions:

'the principle that consistently emerges out of these decisions is that inventions for pure business, commercial or financial schemes will not satisfy the requirements for being a manner of manufacture merely because the scheme is implemented using a computer. What is required is some substantial effect or transformation brought about by the use of the computer or other physical device.'

Abstract idea

The Delegate oberved at [59] that abstract ideas are not patentable subject matter.  It was clear (to the Delegate):

'that the core of the invention lies in the use of the unique and shared symbols ... These symbols enable users to win different prizes at different time periods, without the prizes being grouped and awarded hierarchically according to monetary value ... Although the invention can clearly be said to be in a field of economic endeavour, namely retail trading, the use of different types of award symbols in a loyalty scheme is in my view an abstract idea, mere intellectual information involving new symbols, which had never been held to be patentable subject matter.'

Use of a computer

The Delegate admits at [61] that "the system has to be implemented using a computer system and in that sense a computer system is integral to the invention".  However, according to the Delegate, this is not the same thing as bringing about a physical effect.

He observes that, reading the specification as a whole:

'there is very little description or details of the computer system. While there are brief references to computer programs, machine readable/executable instructions, machine readable devices, application and database servers and programming languages there is nothing in the specification to suggest that the use of these software programs or computer devices has brought about any substantial physical effect or transformation in the implementation of the award program'. 

The use of the computer, says the Delegate at [66]:

'merely results in the display of different kinds of award symbols in an electronic form. The specification is totally silent on any method steps involved in generating or providing these electronic award symbols using the computer ... Despite the computer implementation, it is my view that the substance of what is claimed remains a mere scheme or abstract idea that does not achieve an end result that is an artificially created state of affairs in the field of economic endeavour'.

The claimed invention, said the Delegate, is therefore not a manner of manufacture.

I wonder whether the result would have been any different if the Delegate had not carefully avoided mention of Ultramercial LLC v Hulu LLC (Case No. 2010-1544) (see my blog post).  Following the reasoning in that case, an invention for which a computer system is integral would surely have qualified  as a practical application of an abstract idea.

Or perhaps the Delegate could have commented on the Australian Patent Office decision Visa Inc v CardinalCommerce Corporation [2011] APO 34 (25 May 2011) (see my blog post) in which the Delegate observed at [97] that the method claims under consideration:

'clearly relate to supporting authentication processing of on-line commercial transactions involving several physical steps in a networked environment. The claims are not directed merely to a scheme.' 

Further steps

I doubt there will be any further steps in this case. It will be interesting to see whether future Delegates will continue this selective approach to the application of United States case law and earlier decisions of  the Australian Patent Office. I think we need more guidance from the Australian Courts.

Photo courtesy of author Victoria Pickering under Creative Commons licence.

Research Affiliates knocked back again

In Research Affiliates, LLC [2011] APO 101 (5 December 2011) we see a divisional of Research Affiliates' patent application suffer the same fate as the parent.

The patent application

Australian patent application 2010236045 was filed initially by Robert D. Arnott and later assigned to Research Affiliates (the applicant).  It is a divisional application out of application 2005213293.  The parent application has already been refused in Research Affiliates, LLC. [2010] APO 31 (17 December 2010) (see my blog post).  It is under appeal to the Federal Court.

There were three examination reports issued before the matter was set down for a hearing on 5 December 2011.  I guess it's not really a hearing because the applicant had already advised that it did not wish to be heard.

Method claim 1, for example, reads as follows:

1. 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 indicate 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.


Manner of manufacture

The Delegate concluded at [13] that:

"there is nothing in the claims of the present divisional application that would suggest a different conclusion be reached than was reached for the parent application. The claims of the present application contravene subsection 18(1)(a) for the same reasons as outlined in the parent case."

In fact, the Delegate commented that the current claims are an "even greater contravention" of the manner of manufacture requirement than the parent claims.

Further steps

Presumably this patent application will join the parent application already before 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.

Research Affiliates and the passive investing patent

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.

Jumbo Interactive – the house wins again

In 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.

Iowa Lottery misses the jackpot

In Iowa Lottery [2010] APO 25 (21 October 2010) we see an unsuccessful attempt to secure patent protection in Australia for aspects of a lottery game.  We also see further use of the new “substantial effect” test for method claims that use a computer or other physical device.

The patent application

Iowa Lottery (the applicant) filed patent application 2007240153 as a divisional application on 6 December 2007.  The application related to lottery games and more particularly lotto type games.

There were three independent claims in the claim set under consideration.  These were claim 1 directed to a prize pool, claim 3 directed to a method of paying prizes and claim 12 to a method of managing a prize pool.

Putting the handbrake on NRDC

The Delegate started off sensibly enough, referring to National Research and Development Corporation v Commissioner of Patents [1959] HCA 67; [1959] 102 CLR 252.  The Court summarised the requirement for patentability as “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”, as noted in CCOM Pty Ltd v Jiejing [1994] FCA 1168 at [128].

He observed that the Court in NRDC was itself dealing with a rather narrow approach that had been applied on the basis of what had become known as Morton's rules (G.E.C.'s Application (1943) 60 RPC 1).  Applicants have forgotten this apparently.

All the Court was saying, according to the Delegate, was that the “manner of manufacture” requirement should not be constrained, for example, by existing notions of science and technology.  However, there was no justification to expand the scope of patentable subject matter to fields that have never been patentable according to long standing principles.  The exclusion of designs, schemes and plans, said the Delegate, are examples of those principles.

Intellectual information

The Delegate referred to the decision of the Full Federal Court in Grant v Commissioner of Patents [2006] FCAFC 120.  In Grant the Court concluded:

“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.”

He observed that the prize pool of claim 1 was merely information (ie the size of a potential future payment) generated in or reflective of the operation of the scheme defined in the claims.  Information, he said, even if represented in a physical way has never been considered sufficient for patentability save for some material advantage or mechanical effect in the arrangement of the information.

The applicant argued that claim 1 was directed to a product rather than a method.  However, the Delegate didn’t think that claiming a product produced by a scheme fundamentally alters the question of patentability of the scheme itself.

Financial transaction

The second group of claims, represented by claim 3, concerned a method of paying prizes.  The applicant argued that the requirement stated in Grant for a “concrete, tangible, physical or observable effect” was met by the payment of prizes.

On this point the Delegate observed that a financial transaction, or legal transfer of an asset, is not the sort of physical or observable effect that the Court in Grant was referring to.

Substantial effect

The last set of claims, represented by claim 12, was directed to a method of managing a prize pool.  Claim 12 included a computing device to allocate fees and prizes.  The applicant argued that the use of the computing device resulted in “a change in state or information in a part of a machine” and therefore reflected a “concrete transformation”.

The Delegate did not consider that the physical effect identified is one that is substantial or central to the operation of the claimed method.  This is a requirement of patentability because the Delegate in an earlier case said it was.

He referred to his own decision in Invention Pathways Pty Ltd [2010] APO 10.  He observed that he does not:

“believe there is any authority in Australian law for the proposition that the mere identification of a physical effect is sufficient for patentability.  It must in my view be an effect of such substance or quality that the method considered as a whole is [patentable subject matter] …  The subject matter of the present application is essentially a lottery game.  It does not in my view become patentable because it is operated in whole or part using a computer system in the normal or an unspecified way.  Rather some substantial effect or transformation must be present in the use of the computer or other physical device”.

Further steps

The Delegate rejected all claims, finding that none of them were directed to patentable subject matter.

Photo courtesy of author Lisa Brewster under Creative Commons licence.

Invention Pathways loses its way

In Invention Pathways Pty Ltd [2010] APO 10 (21 July 2010) we saw a Delegate of the Australia Patent Office refuse a patent application despite the claims including a data file maintained in data storage means.

A patentable invention requires a physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation.

The physical effect, says the Delegate, must be central to the purpose or operation of the claimed process or otherwise arise from the combination of steps of the method in a substantial way.  The physical effect has to be more than peripheral and subordinate to the substance of the claimed invention.

The patent application

Invention Pathways Pty Ltd (the applicant) filed patent application 2009201212 as a divisional application on 27 March 2009.

The patent application was directed to a method for commercialising inventions that includes the step of applying for patent protection.  The invention is intended to facilitate the uptake of commercialisation of inventions taking into account the restricted timeframe to file for intellectual property rights and the effect of automatic patent publication.  Claim 1 of the patent application read as follows:

1. An invention specific commercialization system to facilitate success of inventions, the system including the steps of:
a) applying for patent protection for the invention in a country which is party to the Paris Convention,
b) conducting a review of specific commercialization process required by the invention,
c) preparing a research and development plan, testing the business dynamics of the invention,
d) conducting prototype testing, developing a prototype cost/benefit analysis,
e) determining product positioning and packaging,
f) conducting a manufacturing checklist,
g) entry of the information collected in steps a) to f) into an electronically fillable checklist having a prescribed time limit for each step to form a commercial entry strategy (CES) with a number of sub-steps, the CES prepared on the basis that each of the sub-steps in the CES are to be completed by a corresponding deadline, all deadlines falling within 30 months from the earliest priority date of the patent application, the checklist being computer-implemented and stored in computer or human readable format in data storage means and associated with processing means to allow updating of the checklist; and
h) policing compliance with the deadlines for the completion of the sub-steps through the production of reminders based on the prescribed time limits in the checklist to ensure that all sub-steps are completed within the deadlines.

The applicant submitted that the ‘electronically fillable checklist’ was to be understood broadly and included, in addition to a specifically programmed software application, many other means by which a checklist could be created electronically.  This includes many common text editing, word processing or spreadsheet applications.

Computer related inventions patentable

The Delegate acknowledged that computer related inventions remain patentable in Australia.

The High Court in National Research Development Corporation v Commissioner of Patents ("NRDC case") [1959] HCA 67; (1959) 102 CLR 252 (16 December 1959) established a patentability requirement of ‘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’.

The NRDC decision ‘has since been applied in a number of cases that reflect the subsequent evolution of technology, particularly in the application of computers, and innovations in the service industries that have tested the distinction between the useful arts (having industrial or commercial or trading character) and the fine arts’.

The Delegate referred to CCOM Pty Ltd v Jiejing Pty Ltd [1994] FCA 1168; (1994) 122 ALR 417, (1994) AIPC 91-079 (1994) 51 FCR 260 (22 June 1994) in which apparatus for assembling text in Chinese language characters was held to be patentable.

In International Business Machines Corporation v Commissioner of Patents [1991] FCA 625; (1992) AIPC 90-853 (1991) 105 ALR 388, (1991) 22 IPR 417 (1991) 33 FCR 218 (13 December 1991) a method and apparatus for producing curves on a computer graphics display was found to be patentable.

In the full Federal Court decision of Grant v Commissioner of Patents [2006] FCAFC 120 (18 July 2006) the Court observed that ‘the fact that a method may be called a business method does not prevent it being properly the subject of letters patent’, referring to Welcome Real-Time SA v Catuity Inc [2001] FCA 445 (17 May 2001).

Physical effect

In Grant 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 Court observed that the method ‘does not produce any artificial state of affairs, in the sense of a concrete, tangible, physical, or observable effect’.

The Court observed that ‘a physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation is required’.  NRDC involved a physical effect as an artificial effect was physically created on the land.  Welcome Real-Time and CCOM both involved a component that was physically affected or a change in state or information in a part of a machine.  In Welcome Real-Time there was not a physically observable end result in the sense of a tangible product, however the invention involved an application of an inventive method where part of the invention was the application and operation of the method in a physical device.

Coming back to the present case, the Delegate acknowledged the observation in Welcome Real-Time that a ‘physically observable effect’ was not necessarily required.

United States situation unsettled

The Delegate acknowledged that both Welcome Real-Time and Grant referred with approval to the reasoning of the US Courts on the analogous subject matter requirements of 35 USC 101.  For example, in State Street Bank Trust Co v Signature Financial Group Inc [1998] USCAFED 107; 149 F.3d 1368; 47 U.S.P.Q.2d 1596 (23 July 1998) the Court stated that:

‘Today, we hold that the transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical algorithm, formula, or calculation, because it produces "a useful, concrete and tangible result" - a final share price momentarily fixed for recording and reporting purposes and even accepted and relied upon by regulatory authorities and in subsequent trades.’

The Delegate noted that ‘the situation in the US has however been unsettled and is the subject of the recent decision of the US Supreme Court in Bilski v Kappos 561 U. S. ___ (2010) (Case No. 08-964)’.

I am not quite sure what the Delegate means by ‘unsettled’.  If he means that US law generally lacks stability or remains unresolved then it would seem odd for the Delegate to go on to adopt the reasoning in Bilski.

On the other hand, the Delegate may mean that the law prior to Bilski was settled but has somehow been changed radically by Bilski.  In that case we need to look at the subsequent instability appearing in post-Bilski cases in the US to assess whether or not the Delegate here was right in relying on Bilski so heavily.

A substantive effect

The Delegate referred again to Grant and observed that the Court in that case was considering a claimed business method in which no physical effect could be identified.  It is in this context, said the Delegate, that the Court imposed the requirement of ‘a physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation’.

The Court, in the opinion of the Delegate, was not stating a new principle that ‘equates the requirement of an artificially created state of affairs merely with the identification of some physical effect in the application of the claimed method’.

He went on to comment that the mere operation of a method on or with physical things, or producing changes in physical things, has not been held sufficient for patentability in the past.  Something more is required.

He stated that Grant does not suggest that patentability is merely determined on the presence of a physical effect.  The physical effect, said the Delegate, must clearly be an effect of such substance or quality that the method considered as a whole is proper subject matter for a patent.

Insignificant post-solution activity

The Delegate made it clear that in his view insignificant post-solution activity is not an example of a substantive effect.

He noted that the Courts in Grant and Welcome Real-Time referenced US law.  If it was good enough for them it was good enough for him.  He referred to a passage in Bilski stating that ‘the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of the formula to a “particular technological environment” or adding “insignificant post-solution activity”.’

The inputting, storage or displaying of data, according to the Delegate, are examples of insignificant post-solution activity.

Central to the purpose

The Delegate referred again to Grant which required a physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation.  He considered that the physical effect must be significant both in that it is concrete but also that it is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way.

He considered this would apply to a business scheme implemented in some part by computer.  He did not believe that the patentability of such a method can arise solely from the fact that it is implemented in or with the assistance of a computer or utilises some part of a computer or other physical device in an incidental way.

The Delegate found in this case that the physical effect identified was peripheral and subordinate to the substance of the claimed invention which really involves a scheme for the commercialisation of inventions.  There was no substantive effect produced through the operation of the computer which holds the ‘electronically fillable checklist’.  Such an effect does not arise from a synergistic interaction in the operation of the method on the computer or other physical elements.  The collection and presentation of information appeared to have no physical consequence other than would arise in the computer with standard software in normal use.

Further steps

The Delegate held that maintaining information in an editable form and the production of reminders in a machine were merely matters of convenience.  They did not result in a substantive effect that can be correctly considered to result in patentable subject matter.

He rejected all claims as failing to claim a manner of manufacture.

Photo courtesy of author Golbenge under Creative Commons licence.

Foot steps have inventive steps

In Foot Steps Orthotics Pty Limited v Foot Science International Limited [2011] NZIPOPAT 5 (11 April 2011) we see a patent application for an orthotic insert survive an obviousness and subject matter challenge.  We also see an acknowledgement that many patentable inventions are collocations of known parts.

The patent application

Foot Steps Orthotics Pty Limited (the applicant) filed New Zealand patent application 534105 on 15 January 2003.  The application claimed priority from an Australian provisional application filed on 16 January 2002.

Claim 1 of the patent reads as follows:

1.  An orthotic insert having a first and a second portion, said first and second portions being formed from heat mouldable ethyl vinyl acetate, said second portion adapted to provide support in the heel region of a person’s foot and being formed of a material of higher resistance to deformation than said first portion, wherein said insert is heat mouldable to conform to said person’s foot such that to fit said insert to said person’s foot said insert is heated until it softens sufficiently to permit an upper supporting surface of said insert to conform to said person’s foot to provide desired biomechanical support and then subsequently cooled, where upon cooling said upper supporting surface of said insert retains the shape to which it has conformed, and wherein said second portion has a substantially J-shaped configuration which extends partially around the periphery of said insert corresponding to said heel region and arch region of said person’s foot and a lateral section of said second portion extends above said upper supporting surface of said first portion to support said arch region of said person’s foot.

Foot Science International Limited (the opponent) unsuccessfully challenged the claims on the grounds that they were obvious in view of prior publication, obvious in view of prior use and that they did not relate to an invention.  It is this last ground that is worth discussing a little more.

Broadening of invention

The applicant argued that the definition of ‘invention’ has broadened over the years and referred to Hughes Aircraft Company [1995] NZIPOPAT 3 (3 May 1995) (see my blog post).  According to Hughes:

“...there has over the years been a progressive widening of the boundaries of subject matter which fall within the definition of ‘invention’ and that the Commissioner must give the benefit of any doubt as to patentability to the applicant.”

The applicant also highlighted a useful summary of relevant case law in George N Haddad v The Commissioner of Patents [2000] NZIPOPAT 8 (2 May 2000) (see my blog post), which states that the Hearing Officer in Hughes:

“...quoted with approval and applied the test cited in the Australian Patent Examiners’ Manual: Does the invention claimed involve the production of some commercially useful effect?”

The Hearing Officer noted that Hughes and Haddad relate to broadening the definition of invention to include subject matter that may have not comfortably fitted within the traditional interpretations of ‘manner of manufacture’.

The cases did not really relate to the matter of patentability of collocations vis-à-vis ‘mere’ collocations which is what the opponent had raised under this ground.

Mere collocation

The opponent pointed to 5 essential features of claim 1.  These are:

1. a first and second portion.
2. the second portion has a density greater than the first portion.
3. the orthotic can be heated, moulded to a person’s foot, and it then retains its shape when cooled.
4. the second portion is ‘J’-shaped to provide support around the heel and to the arch region.
5. the second portion overlaps the first portion at the arch region.

The opponent said that all of these features were individually and severally known.  It said that each of these features formed part of the common general knowledge before the priority date.  It said that each of the features performs its own proper function in a predictable and known manner.  The features did not interrelate to produce a new or improved result.

The applicant referred to British Celanese Ltd v Courtaulds Ltd (1935) 52 RPC 171 at 193:
It is accepted as sound law that a mere placing side by side of old integers so that each performs its own proper function independently of any of the others is not a patentable combination, but that where the old integers when placed together have some working inter-relation producing a new or improved result then there is patentable subject-matter in the idea of the working inter-relation brought about by the collocation of the integers.

The applicant said there were three conditions to be satisfied for a combination to be patentable:

1. The combination of known integers/components is a new combination.
2. The new combination of known integers/components provides an improvement or enhancement over that of the sum of individual integers/components. In other words, the components of the combination need to have some working interrelationship.
3. That it is not obvious to combine these known integers/components.

The Hearing Officer acknowledged that many [patentable] inventions are collocations of parts that are known in the art.

He concluded that the claims related to an invention.  He observed that it had not been shown to him that the combination was not new.  He said the applicant seemed to have created a novel orthotic which is simple in construction, easy to manufacture, and that can be easily fitted to a patient’s foot.  He had already found that the combination was not obvious.

Further steps

The Hearing Officer dismissed the opposition and ordered that the patent application proceed to issue.

Photo courtesy of author Marco Abis under Creative Commons licence.