A boost for business methods

The past few years have presented a number of challenges to applicants of business method and software patents in Australia. Shelston IP has been taking a special interest in developments, given our involvement in an upcoming appeal of Research Affiliates, the first Federal Court proceedings brought to challenge restrictive patentability thresholds of the Australian Patent Office.


Since 2010, the Australian Patent Office has embarked on something of a crusade against software and business method patents. A string of Patent Office decisions made it extremely challenging to obtain protection for inventions where the technology was perceived as being “business related” (as opposed to being traditionally scientific in nature). A preliminary decision in Research Affiliates (currently under appeal), did not provide much in the way of substantive judicial reasoning. However, a recent Federal Court decision in RPL Central Pty Ltd v Commissioner of Patents [2013] FCA 871 has altered the landscape dramatically. In RPL, Justice Middleton turned the tables on the Patent Office’s recent approach and provided a clear explanation about the evolution of the law, together with detailed reasoning about how the law was to be correctly applied.

The RPL decision is unequivocally supportive of the long standing approach of Australian courts to apply a broad and open interpretation to patentability:

It must always be remembered that any attempt to set forth any prescriptive requirements for what is a “manner of manufacture” would be impermissible on the approach taken by the High Court in NRDC. To deny patentability to any class of invention (whether tangible or intangible) which would otherwise come within the principles developed by the courts over centuries would be to fail to follow the core teaching of NRDC… The NRDC approach is one of flexibility, to allow for “excitingly unpredictable” and emerging inventions to be patentable. Whilst historically patents related to engineering, industry and applied science, the scope of patentable subject matter has expanded beyond these traditional areas.

By starting from this understanding of the fundamental principles of patentability, Middleton J considered (and then unequivocally rejected) various aspects of the Commissioner’s current position. For example, as to the Commissioner’s supposition that a change in information in a computer is insufficient to constitute an invention, Middleton J noted:

… each of the computer-effected steps of the invention constitutes or gives rise to a change in state or information in a part of a machine, and therefore produces a physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation.

As to the Commissioner’s argument that there is to be imputed a “substantiality” requirement in the context of physical effect, his Honour comments:

 First, it must be said that I do not accept that the Australian decisions that are binding upon me in respect of this issue –NRDC, CCOM and Grant – expressly import any such requirement of substantiality or centrality of physical effect. The Courts in those cases did not expressly identify a substantiality or qualitative assessment criterion as being part of the manner of manner of manufacture inquiry. Nor do I accept the Commissioner’s submission that such a requirement is merely the function of the application of these decisions “as properly understood”.

Finally, in relation to the Commissioner’s attempts to construe claims by first ignoring aspects of computer implementation, and then considering the “essence” of what remains, Middleton J went to some lengths to discredit such an approach:

This is a convenient juncture to comment on one particular feature of the Commissioner’s approach … that if one were to strip away the computer aspects of the claims, one would be left with only “a method for performing an aspect of a business” … One should not subtract from the invention any aspect of computer implementation, and then determine whether what remains is the proper subject matter of letters patent. This is not consistent with Australian authority, and fails to give effect to the plain words of the claims of the Patent, which clearly prescribe computer implementation or involvement as an essential feature of the invention.

These lines of jurisprudential reasoning might be seen as a rejection of the Commissioner’s reasoning by which so many patent applications have been refused. This hopefully earmarks a return to patentability thresholds during patent examination in Australia that are more consistent with the established law.

This is by no means the end of the saga. An appeal of the Research Affiliates decision will be heard by three Federal Court judges in November. Those many patent applicants with computer-implemented inventions that have had to bear the cost of the more recent examination practices of IP Australia will be encouraged to learn that Justice Middleton is among those three judges.