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Claim 1 of the patent read as follows:
“1. 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.”
Justice Branson, after considering the well known authority of the High Court in National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252, which took an expansive view of what is patentable, appears to open up new grounds for striking down business method-type patents (in addition to other patents). Her Honour makes the point that: “an invention should only enjoy the protection of a patent if the social cost of the resulting restrictions upon the use of the invention is counterbalanced by resulting social benefits”.
Her Honour found that in this case the particular trust structure arrangement lacked the appropriate “value to the country … in the field of economic endeavour”. Her Honour went on to hold:
“The economic utility identified by the Deputy Commissioner is not a utility of value to the country; it is a utility of value only to those whose assets are ultimately protected – and possibly to their professional advisers. The performance of the invention will not add to the economic wealth of Australia or otherwise benefit Australian society as a whole. For this reason, in my view, the invention the subject of the Patent is not a proper subject of letters patent according to the principles which have been developed for the application of s6 of the Statute of Monopolies.”
The difficulties in this case may have come about by the Patent Office failing to deal properly with the usual grounds of rejection for lack of novelty or obviousness. No doubt, little strength of expertise exists amongst the Examiner’s corps for dealing with searching for prior art in the area of trusts. If appropriate prior art was located the patent would never have been granted and these issues would never have arisen. The patent system does contain appropriate responses to deal with business method-type patents.
Of more concern to patent practitioners are the metes and bounds of this ground of rejection. Patent owners must now be ready to show the performance of their invention “adds to the economic wealth of Australia or otherwise benefits Australian society as a whole” and that the patent “advances the public interest”. This is obviously of concern to foreign applicants who may have to create ingenious arguments to satisfy this test. As her Honour has opened up the ground of rejection, no doubt extensive future efforts will be expended by litigants arguing nebulous concepts such as economic benefit.
The new Australian position has echoes in its European counterpart which attempts to introduce the concept of a “technically useful” effect as an extra requirement for a valid European patent, without a useful definition of the term. It also appears contrary to the more liberal position previously taken in Australia in cases such as the IBM case (IBM v Commissioner of Patents (1991) 22 IPR 417) that produced a more workable “commercially useful effect” test. The more liberal approach is also reflected in the United States in the State Street case (State Street v Signature 149 F 3d 1368 (1998)) that produced "a useful, concrete and tangible result” test.
As the case is likely to lead to vague rules being issued by the Australian Patent Office, patent applicants and practitioners should be concerned about the operation of these new grounds of rejection.
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