NEWS

Inevitably some applicants will seek patent protection for inventions that push the boundaries of this new field of patentable invention. One such case and the ramifications for those seeking to patent business method-type inventions are discussed below.

The Stephen John Grant Decision²

This case relates to an Australian innovation patent³ that claimed a method for protecting an asset from loss as a result of legal liability. The claimed invention sought to exploit a “legal loophole” in the interplay between trusts, loans and securities. More particularly, claim 1 reads as follows:

An asset protection method for protecting an asset owned by an owner, the method comprising the steps of:

a) establishing a trust having a trustee,
b) the owner making a gift of a sum of money to the trust,
c) the trustee making a loan of said sum of money from the trust to the owner, and
d) the trustee securing the loan by taking a charge for said sum of money over the asset.

In an attempt to resolve objections by the Examiner, the applicant sought a hearing. One of the issues considered was whether the invention falls within the meaning of “manner of manufacture” – a concept that defines the types of inventions considered inherently patentable in Australia.

The Hearing Officer confirmed that the applicable law is as stated in the NRDC case⁴ (a case involving a patent application for a weeding process). In that case, it was held that, to fall within the limits of patentability, a process must be one that offers some advantage which is material, in the sense that the process belongs to a useful art as distinct from a fine art; and has value to the country in the field of economic endeavour.

This formulation of the law has been broadly affirmed in the years since the decision was handed down and restated in subsequent case law⁵.

Despite being coined in the early 1600s, the concept of manner of manufacture has generally demonstrated the flexibility required to adapt to emerging technologies ranging from genetic engineering to business method patents. In the Stephen John Grant decision it was acknowledged by the Hearing Officer that the claimed invention was of economic utility. However, with regard to the requirement that there be an “artificially created state of affairs” the Hearing Officer held that:

“The history of the development of the concept of manner of manufacture has consistently involved either the discovery of laws of nature or the application of technology based on the laws of nature. The present invention is fundamentally different in that there is no new law of nature, and there is no application of technology (in the broadest possible sense of the word) to implement the method of the invention. Rather the invention is a discovery in relation to the laws of Australia, useful in the affairs of the populace. The NRDC case requires there be an “artificially created state of affairs” in order for something to qualify as proper subject matter for the grant of a patent. I do not think that this is the case in the present patent. The invention resides in the law of Australia.”

The Hearing Officer stated that “legal loopholes” are inherently part of the law, and their application cannot give rise to an artificially created state of affairs any more than the application of any other part of Australian law. Furthermore, it was held that a fundamental property of law is that it is presumed to be known in its full extent, by all in society. Hence, there is no room for a discovery in the patentable sense within the realm of the laws of Australia. Additionally, it was held that all citizens are expected to obey the full range of law and therefore it is not appropriate to grant specific parties monopoly rights over certain aspects of Australian law. The Hearing Officer stated that “The law is for the populace at large; it is not for the use of one individual to the exclusion of all others who desire to follow the law”. On this basis, the Hearing Officer revoked the innovation patent. An appeal has been lodged.

Ramifications of Stephen John Grant Case for Patentees

Assuming that the reasoning of the Hearing Officer in the Stephen John Grant case is not overturned on appeal, it follows that objections are likely to be raised in relation to patent applications that attempt to establish a monopoly over a particular aspect of Australian law. It also follows that the Patent Office is now more likely to object that a business method-type invention is not for a ‘manner of manufacture’ if the invention is not defined in a manner that is capable of technological implementation. However, in many cases it may be possible to amend the patent specification to overcome such objections, particularly if the patent specification discloses a technological system for implementing the invention.

1.  Refer to U.S Patent No. 5,797,127 (a system for determining a price of an option to buy an airline ticket), U.S. Patent No. 5,960,411 (“one-click” method of placing a purchase order; the Amazon “one-click” patent), Australian Patent No. 712,925 (a smart-card based loyalty system), Australian Patent No. 733,969 (a conditional purchase offer management system).
2.  Stephen John Grant [2004] APO (26 May 2004).
3.  Australian Innovation Patent No. 2003100074.
4.  National Research Development Corporation (NRDC) v Commissioner of Patents (1959) 102 CLR 252.
5.  CCOM Pty Ltd v Jeijing Pty Ltd (1994) 51 FCR 260 in which it was stated that “The NRDC case … requires 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”.