More on DABUS – this time in Old Blighty

Ann Dufty, whom many of you will know, has pointed out to me that Dr Thaler’s lack of success in the UK was not limited “merely” to rejection by UKIPO. Dr Thaler’s patent application has been rejected by Marcus Smith J sitting in the High Court of England and Wales.

Under the Patents Act 1977 (UK) s 7(2) is in similar terms and, one might say, to the same effect as s 15 of the Australian Act:

(1) Any person may make an application for a patent either alone or jointly with another.

(2) A patent for an invention may be granted –

(a) primarily to the inventor or joint inventors; 
(b) in preference to the foregoing, to any person or persons who, by virtue of any enactment or rule of law, or any foreign law or treaty or international convention, or by virtue of an enforceable term of any agreement entered into with the inventor before the making of the invention, was or were at the time of the making of the invention entitled to the whole of the property in it (other than equitable interests) in the United Kingdom; 

(c) in any event, to the successor or successors in title of any person or persons mentioned in paragraph (a) or (b) above or any person so mentioned and the successor or successors in title of another person so mentioned; and to no other person.

(3) In this Act ‘inventor’ in relation to an invention means the actual deviser of the invention and ‘joint inventor’ shall be construed accordingly.

(4) Except so far as the contrary is established, a person who makes an application for a patent shall be taken to be the person who is entitled under subsection (2) above to be granted a patent and two or more persons who make such an application jointly shall be taken to be the persons so entitled.”

Sub-section 7(3) does not have an obvious counterpart in the Australian legislation but, DABUS aside, one would think Australian law is to the same effect. Putting to one side the question whether or not an AI can be an inventor, Australian law would consider the person who made the invention the inventor.[1]

In the English case, Dr Thaler’s substantive arguments were essentially the same as those advanced in Australia.

As to the meaning of “inventor”, Marcus Smith J at [45(3)] first noted that Lord Hoffmann in Yeda had agreed with Laddie J’s view that an inventor was a “natural person”:

The inventor is defined in section 7(3) as “the actual deviser of the invention”. The word “actual” denotes a contrast with a deemed or pretended deviser of the invention; it means, as Laddie J said in University of Southampton’s Applications [2005] RPC 220, 234, the natural person who “came up with the inventive concept.” It is not enough that someone contributed to the claims, because they may include non-patentable integers derived from prior art: see Henry Brothers (Magherafelt) Ltd v Ministry of Defence [1997] RPC 693, 706; [1999] RPC 442. As Laddie J said in the University of Southampton case, the “contribution must be to the formulation of the inventive concept”. Deciding upon inventorship will therefore involve assessing the evidence adduced by the parties as to the nature of the inventive concept and who contributed to it. In some cases this may be quite complex because the inventive concept is a relationship of discontinuity between the claimed invention and the rior art. Inventors themselves will often not know exactly where it lies.

Marcus Smith J then noted that he had not been cited any authority which explained why inventors were confined to natural persons only. His Lordship said at (a):

There is no authority to which I was referred or which I have myself been able to find which explains why the inventor is limited to natural persons only, as opposed to including also legal persons. Whilst one can see the need to limit Class (a) and so the term “inventor” to someone having personality, the exclusion of legal persons from the definition seems less clear-cut. The 1977 Act could, after all, have explicitly referred to “natural persons” rather than just the “inventor”.

Next his Lordship pointed out that DABUS was not, on any view, a person. Then, in contrast to Beach J at [135] – [145], Marcus Smith J considered that the requirement for a valid patent to have an inventive step was decisive:

It seems to me that, when once the notion of an “inventive step” is factored in, the restriction of the term “inventor” to natural person becomes inevitable. An “invention” by definition[29] must involve an “inventive step”, which is something “not obvious to a person skilled in the art”.[30] It is difficult to see how an inventive step can conceived of by a corporation – which must act through agents – without also striking one of those agents. In other words, the inventive step in the mind of a natural person is attributed to the corporation, which only has the inventive step in its “mind” by virtue of such attribution.[31] There is some sense in keeping the definition of inventor close to that which must arise out of the mind of an individual.

Accordingly, DABUS was not an inventor for the purposes of UK law.

Thaler v The Comptroller-General of Patents, Designs and Trade Marks [2020] EWHC 2412 (Pat)


  1. University of Western Australia v Gray [2009] FCAFC 116; 179 FCR 346 at [248] citing [Polwood Pty Ltd v Foxworth Pty Ltd][polworth] (2008) 165 FCR 527. For the counterparts to s 7(1) of the UK Act see ss 29 and 31.  ?

DABUS “over there”

Judge Brinkema, sitting as a District Court Judge in the Eastern District of Virginia, has upheld the USPTO’s rejection of Thaler’s DABUS applications on the basis that DABUS cannot be an inventor under the US Act.

In the United States, Dr Thaler has two patent applications – US Application Serial Nos 16/524,350 and 16/534,532. In both, DABUS was the nominated inventor and Dr Thaler claims entitlement on the basis of assignment.

As you will no doubt recall, DABUS is a “creativity machine” or artificial intelligence.

To highlight the ludicrousnessfictional nature of the universe we are operating in, Dr Thaler as the owner of DABUS executed the assignment to himself:

In view of the fact that the sole inventor is a Creativity Machine, with no legal personality or capability to execute said agreement, and in view of the fact that the assignee is the owner of said Creativity Machine, this Assignment is considered enforceable without an explicit execution by the inventor. Rather, the owner of DABUS, the Creativity Machine, is signing this Assignment on its behalf.

When the America Invents Act was passed, amongst other things it inserted a definition of “inventor” into the Act so that 35 USC §100(f) provides:

(f) The term “inventor” means the individual or, if a joint invention, the individuals collectively who invented or discovered the subject matter of the invention.

Perhaps (with respect) unsurprisingly, Judge Brinkema ruled that “individual” meant a natural person.

In doing so, her Honour was fortified by the natural or ordinary meaning of the word. Contextually, there were also other references in the Act where Congress had used the term “individual” in reference to the inventor. (For example, §115(a)(1) and (b)(2).)

In addition, the Supreme Court had construed the term “individual” in the Torture Victim Protection Act as referring to a “natural person”. And several Federal Circuit decisions had declared that “inventors must be natural persons” albeit not in the context of the meaning of §100(f).

Judge Brinkema then explained that Dr Thaler “having neither facts nor law to support his argument” contends that policy considerations and the general purpose of the Constitution’s Patent Clause required the statute to be interpreted to permit AIs to be inventors:

Allowing patents for AI-Generated Inventions will result in more innovation. It will incentivize the development of AI capable of producing patentable output by making that output more valuable …. Patents also incentivize commercialization and disclosure of information, and this incentive applies with equal force to a human and an AI-Generated Invention. By contrast, denying patent protection for AI-Generated Inventions threatens to undermine the patent system by failing to encourage the production of socially valuable inventions.

Patent law also protects the moral rights of human inventors and listing an AI as an inventor where appropriate would protect these human rights …. [I]t will discourage individuals from listing themselves as inventors without having contributed to an invention’s conception merely because their name is needed to obtain a patent. Allowing a person to be listed as an inventor for an AI-Generated Invention would not be unfair to an AI, which has no interest in being acknowledged, but allowing people to take credit for work they have not done would devalue human inventorship.

Judge Brinkema considered that binding rulings of the Supreme Court and the Federal Circuit repeatedly held that policy arguments could not override a statute’s plain language. Her Honour also pointed out that, when Congress passed the America Invents Act, AIs were in existence and it was aware of them. Moreover, the USPTO’s own consultations had not exposed any strong support for AIs to be inventors.

Ruling against Thaler, Judge Brinkema concluded:

As technology evolves, there may come a time when artificial intelligence reaches a level of sophistication such that it might satisfy accepted meanings of inventorship. But that time has not yet arrived, and, if it does, it will be up to Congress to decide how, if at all, it wants to expand the scope of patent law.

What does this mean for Australia?

Plainly, the American context is not directly applicable to Australia since, as Beach J pointed out at [118], our Act does not have a definition of “inventor”. So, there is much greater scope for policy arguments to operate.

In that connection, the USPTO report cited by Judge Brinkema can be found here.

Ordinarily, I would be on the side of progress: the NRDC view of the world rather than D’Arcy v Myriad. Our courts, of course, must fit within the D’Arcy v Myriad world view unless Parliament were to bestir itself.

Apart from South Africa (which I understand does not undertake substantive examination of patent applications), Dr Thaler’s applications have been rejected on the ground that an AI is not an inventor by the UKIPO and EPO as well as in the USA. Government policy, which appears to have aligned with the Productivity Commission‘s argument that Australia as an intellectual property importing nation should not be out of step with the international environment, would suggest that an AI should not qualify as an inventor. Can we really afford to keep repeating the mistake made in the 3M case? However, an appeal is pending in the EPO. Maybe there will be an appeal in the USA too but the Federal Circuit’s prior indications do not augur well for the success of that.

It is also difficult to comprehend why, if as our Courts have ruled, that authors for copyright purposes must be humans, the same does not apply to inventors. Of course, our law now explicitly recognises moral rights as part of an author’s rights and there is no corresponding provision under Australian patent law. But both types of rights are justified by the same rationales – natural law or Lockean theory of property and, even, the so-called utilitarian theory.

I guess we shall see.

Thaler v Hirshfield ED VA, 2 September 2021 1:20-cv-903 (LMB/TCB)

Lid dip, Prof. Dennis Crouch at Patently-O.

DABUS Down Under take 3

Following last month’s ruling in Thaler that an AI could be an inventor for the purposes of Australian patent law, the Commissioner of Patents has announced her intention to appeal the decision to the Full Court.

Pursuant to s 158(2), the Commissioner requires leave to appeal. Bearing in mind that Beach J’s decision is the first substantive consideration anywhere in the world to accept that an AI could be an inventor for the purposes of the Patents Act, however, that should not prove too much of an obstacle in this case.

Thaler v Commissioner of Patents [2021] FCA 879

Thaler: the robots have arrived DownUnder

In what may well be a world first,[1] Beach J has upheld Thaler’s appeal from the Commissioner, ruling that an AI can be an inventor (or at least that someone who derives title to the invention from an AI can be an entitled person).

Stephen L. Thaler applied for a patent, AU 2019363177, entitled “Food container and devices and methods for attracting enhanced attention”.[2] The application named the inventor as:

DABUS, The invention was autonomously generated by an artificial intelligence

The application was made through the PCT so, as a result, reg. 3.2C(2)(aa) required the applicant to provide the name of the inventor. The Commissioner had used the identification provided to reject the application on the basis that an “inventor” must be a natural person, which an AI obviously was not.

Beach J rejected this approach. At [10], his Honour summarised his conclusions:

in my view an artificial intelligence system can be an inventor for the purposes of the Act. First, an inventor is an agent noun; an agent can be a person or thing that invents. Second, so to hold reflects the reality in terms of many otherwise patentable inventions where it cannot sensibly be said that a human is the inventor. Third, nothing in the Act dictates the contrary conclusion.

There are a number of strands to his Honour’s reasoning. Perhaps, the most striking feature of his Honour’s reasoning is his Honour’s emphasis the role of patents in encouraging technological development and the importance of not impeding progress by shutting out new developments.

DABUS

Dr Thaler was the owner of the copyright in DABUS’ source code. He was also responsible for and the operator of the computer on which DABUS operated. He did not, however, produce the claimed invention.

As the description of the “inventor” indicates, the claimed invention was an output from the operation of DABUS.

Beach J did not propose to offer a definition of “artificial intelligence”. His Honour considered that DABUS, at least as described in Dr Thaler’s evidence, was not just a “brute force computational tool”. Instead, it was appropriate to describe DABUS as semi-autonomous.[3]

DABUS itself consisted of multiple neural networks. At first, the connections between these networks was trained with human assistance by presentation of fundamental concepts. As the system accumulated knowledge, the networks connected themselves into increasingly longer chains. And then DABUS became capable of generating notions itself – the unsupervised (by humans) generative learning phase. Once in this phase, DABUS was capable of randomn generation of concepts and identifying those which were novel. In addition, it was trained or programmed to identify significant concepts which continued operation further reinforced. At [41], Beach J summarised:

The upshot of all of this, which I accept for present purposes, is that DABUS could be described as self-organising as a cumulative result of algorithms collaboratively generating complexity. DABUS generates novel patterns of information rather than simply associating patterns. Further, it is capable of adapting to new scenarios without additional human input. Further, the artificial intelligence’s software is self-assembling. So, it is not just a human generated software program that then generates a spectrum of possible solutions to a problem combined with a filtering algorithm to optimise the outcome.

Beach J accepted at [42] Dr Thaler’s evidence that:

DABUS, and its underlying neural paradigm, represents a paradigm shift in machine learning since it is based upon the transient chaining topologies formed among associative memories, rather than activation patterns of individual neurons appearing within static architectures ….

Beach J’s reasons

At [118], Beach J pointed out that no specific provision in the Act precluded an artificial intelligence from being an “inventor”.

Secondly, Beach J considered that patent law is different to copyright law which specifically requires human authors and recognition of moral rights.

Thirdly, as it was not defined in the Act, the term “inventor” should be given its ordinary meaning. Dictionary definitions did not help with this as more was required “than mere resort to old millennium usages of that world.”[4] Instead, at [120]:

the word “inventor” is an agent noun. In agent nouns, the suffix “or” or “er” indicates that the noun describes the agent that does the act referred to by the verb to which the suffix is attached. “Computer”, “controller”, “regulator”, “distributor”, “collector”, “lawnmower” and “dishwasher” are all agent nouns. As each example demonstrates, the agent can be a person or a thing. Accordingly, if an artificial intelligence system is the agent which invents, it can be described as an “inventor”.

Importantly, Beach J took into account the purpose of the patents system. At [121], his Honour explained:

in considering the scheme of the Act, it has been said that a widening conception of “manner of manufacture” is a necessary feature of the development of patent law in the twentieth and twenty-first centuries as scientific discoveries inspire new technologies”.[5]

Accordingly, it made little sense to apply a flexible conception of subject matter – “manner of (new) manufacture under s 18(1)(a) – but a restrictive interpretation of ”inventor“. This would mean an otherwise patentable invention could not be patented because there was no ”inventor”.

Beach J’s purposive approach was reinforced by reference to the newly enacted objects clause:

The object of this Act is to provide a patent system in Australia that promotes economic wellbeing through technological innovation and the transfer and dissemination of technology. In doing so, the patent system balances over time the interests of producers, owners and users of technology and the public.

It was not necessary to identify an ambiguity before resorting to the objects clause. The objects clause should always be considered when construing legislation.

It was consistent with the object of the Act to interpret “inventor” in a way which promoted technological innovation. Allowing “computer inventorship” would incentivise computer scientists to develop creative machines. Moreover, the object of the Act would not be advanced if the owners of creative computers resorted to trade secret protection instead of the patent system.

At least, with respect, his Honour’s approach shows that s 2A can operate in favour of technological development by encouraging patenting rather than, as many feared, a cat’s paw justifying resort to an ex post analysis[6] in favour of ‘user rights’.

In a further bold development, Beach J considered ([135] – [145]) that the Act is “really concerned” with inventive step. Under s 7(2), the issue was whether or not the patent claimed a sufficient technological advance over what had gone before to warrant the grant of a monopoly. How that advance was made was not relevant.

Descending to the detail of s 15, Beach J first pointed out at [157] that s 15 is directed to who may be granted a patent and does not define who is an inventor. Beach J accepted that DABUS was not a person and so under s15 could not be a person entitled to the grant of a patent. Even though s 15(1)(a) identified “a person who is the inventor” as the first person entitled to the patent, this was not determinative. It was directed to a different issue than definition of “an inventor”.

Although DABUS could not be an entitled person, Beach J found that Dr Thaler qualified as an entitled person at least on the basis of s 15(1)(b). At [167], his Honour explained:

Dr Thaler is the owner, programmer and operator of DABUS, the artificial intelligence system that made the invention; in that sense the invention was made for him. On established principles of property law, he is the owner of the invention. In that respect, the ownership of the work of the artificial intelligence system is analogous to ownership of the progeny of animals or the treatment of fruit or crops produced by the labour and expense of the occupier of the land (fructus industrialis), which are treated as chattels with separate existence to the land.

By this means, his Honour neatly side-stepped philosophical questions, some of which he had adverted to earlier. For example, at [131] Beach J asked:

If the output of an artificial intelligence system is said to be the invention, who is the inventor? And if a human is required, who? The programmer? The owner? The operator? The trainer? The person who provided input data? All of the above? None of the above? ….

Beach J returned to this aspect of the problem at [194]:

more generally there are various possibilities for patent ownership of the output of an artificial intelligence system. First, one might have the software programmer or developer of the artificial intelligence system, who no doubt may directly or via an employer own copyright in the program in any event. Second, one might have the person who selected and provided the input data or training data for and trained the artificial intelligence system. Indeed, the person who provided the input data may be different from the trainer. Third, one might have the owner of the artificial intelligence system who invested, and potentially may have lost, their capital to produce the output. Fourth, one might have the operator of the artificial intelligence system. But in the present case it would seem that Dr Thaler is the owner.

As Dr Thaler combined in the one person the roles of owner, programmer and operator, he was entitled to the fruits of its operation. Would different problems arise if, instead of being embodied in the one person, each of the functions identified lay in a different person?

Returning to [131], Beach J continued immediately following the extract quoted above, saying:

…. In my view, in some cases it may be none of the above. In some cases, the better analysis, which is consistent with the s 2A object, is to say that the system itself is the inventor. That would reflect the reality. And you would avoid otherwise uncertainty. And indeed that may be the case if the unit embodying the artificial intelligence has its own autonomy. What if it is free to trawl the internet to obtain its own input or training data? What about a robot operating independently in a public space, having its own senses, learning from the environment, and making its own decisions? ….

If one can start with the AI as the inventor, that arguably simplifies the analysis in terms of entitlement as the person claiming to be the entitled person will need to show some claim over the results of the operation of the machine.

One final point. It is not clear from the reasons the extent to which Beach J was referred to the controversies around the world arising from Dr Thaler’s applications. It didn’t matter.

At [220], his Honour pointed out that they were irrelevant to the task before him: the interpretation of the words of the Australian Act.

I am not at all sure that “the world” has reached a settled position about the question whether AIs can be inventors. One would hope, however, Australian law does not head down yet another path where “we” are granting patents for things which are not patentable in their ‘home’ countries. It will, for example, be another 12 years or so before we are finally in something like parity on inventive step with the “rest” of the world and have escaped the constraints of the pre-Raising the Bar tests of inventive step.

Two questions

This short summary cannot do justice to the detailed arguments developed over 228 paragraphs.

As discussed above, Beach J accepted that DABUS could not be granted a patent as it was not a person and s 15 specifies that the grantee of a patent must be a person. The Commissioner had proceeded on the basis that the terms of s 15 were predicated on the “old millennium” understanding that title to an invention flowed from the person who was the inventor just as subsistence and ownership of copyright flows from the person who is the author of the work. Beach J has sidestepped that on the basis that s 15 is concerned only with entitlement, not definition of who is an inventor. Nonetheless, one might think s 15 was drafted in this way on the basis that entitledment flowed from the inventor. It does also seem somewhat curious that an AI can be an inventor but not entitled to a patent because it is not a person.

Secondly, much of the controversy overseas has been about whether Dr Thaler’s creation acts autonomously or semi-autonomously or is just an exercise in brute computing. See for example Rose Hughes’ report on IPKat. Beach J appears to have had some evidence from Dr Thaler about how DABUS was designed and worked. Thus at [43], his Honour accepted Dr Thaler’s “assertion” that:

DABUS, and its underlying neural paradigm, represents a paradigm shift in machine learning since it is based upon the transient chaining topologies formed among associative memories, rather than activation patterns of individual neurons appearing within static architectures. From an engineering perspective, the use of network resonances to drive the formation of chaining topologies, spares programmers the ordeal of matching the output nodes of one [artificial neural network] with the input nodes of others, as in deep learning schemes. In effect, complex neural architectures autonomously wire themselves together using only scalar resonances.

Reinforcement or weakening of such chains takes place when they appropriate special hot button nets containing memories of salient consequences. Therefore, instead of following error gradients, as in traditional artificial neural net training, conceptual chains are reinforced in proportion to the numbers and significances of advantages offered. Classification is not in terms of human defined categories, but via the consequence chains branching organically from any given concept, effectively providing functional definitions of it. Ideas form as islands of neural modules aggregate through simple learning rules, the semantic portions thereof, being human readable as pidgin language.

Later his Honour asked at [127] – [128]:

Who sets the goal for the system? The human programmer or operator? Or does the system set and define its own goal? Let the latter be assumed. Further, even if the human programmer or operator sets the goal, does the system have free choice in choosing between various options and pathways in order to achieve the goal? Let that freedom also be assumed. Further, who provides or selects the input data? Let it be assumed that the system can trawl for and select its own data. Further, the larger the choice for the system in terms of the algorithms and iterations developed for the artificial neural networks and their interaction, the more autonomous the system. Let it be assumed that one is dealing with a choice of the type that DABUS has in the sense that I have previously described.

Making all of these assumptions, can it seriously be said that the system is just a brute force computational tool? Can it seriously be said that the system just manifests automation rather than autonomy? ….

If by “assumptions” his Honour is referring to the evidence from Dr Thaler at [42] and [43] which his Honour accepted, that is one thing. It may be quite another thing if they were in fact assumptions.

Where to now?

At the time of writing, the Commissioner is understood to be considering whether or not to appeal.

Thaler v Commissioner of Patents [2021] FCA 879


  1. The EPO refused the corresponding patent application with the oral hearing of the appeal to be heard on 21 December 2021. Apparently, the corresponding patent has been granted in South Africa which, I am given to understand, effectively does not operate a substantive examination system.  ?
  2. For an interesting discussion, see “The first AI inventor – IPKat searches for the facts behind the hype” and the later report on the USPTO’s consultations “Is it time to move on from the AI inventor debate? ?
  3. At [19] – [29], Beach J provides an overview of how his Honour understands artificial neural networks work.  ?
  4. At [15]. For the lawyers, [148] – [154] set out the technical arguments for the limitations of dictionaries in some detail.  ?
  5. Diplomatically (and consistently with precedent) citing D’Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at [18] perhaps the single biggest retreat from the teleological approach declared in NRDC.  ?
  6. For example, Mark A Lemley, ‘Ex Ante versus Ex Post Justifications for Intellectual Property ?

Do you have to pay for a software licence when you buy the business

It’s not an uncommon scenario: the client has bought a business, but some mission critical software is outdated and the licence is not transferable except on payment of a fee. What do you do: Pay the fee or “save” the money and keep using? Thawley J found that the licensor’s consent to some time to evaluate options meant Shepparton Partners (SPC) had an implied licence but thereafter infringed. Injunctions and $1,162,428.80 damages flowed.

I am guessing pretty much everyone in Australia at some point or another has experienced SPC’s canned fruit, vegetables or maybe fruit juices.

Some facts

To run its business, SPC Ardmona (SaleCo) used QAD’s enterprise resource planning ERP software. It used the ERP software for everything: for sales orders and inventory management, procurement, manufacturing planning and control, service and support project management, distribution and finance. SaleCo had a perpetual licence, but it was not transferable. SaleCo also paid an annual maintenance fee, which was paid up to 31 July 2019.

The version SaleCo used was the 2008 version. In 2018, however, QAD had approached SaleCo with a proposal to upgrade to the new, current 2017 version. SaleCo’s IT personnel agreed with the proposal but the price was sufficiently high that agreement required sign-off by SaleCo’s ultimate owner – Coca-Cola Amatil.

Coca-Cola Amatil had decided to sell the SPC business and didn’t want to spend that money. The sale eventually went through in June 2019 to SPC. Before the purchase went through, QAD had written to SaleCo and SPC stating it would consent to the transfer of the licence provided 3 conditions were met:

  1. Payment of a transfer fee of $424,392 and a maintenance fee for the next year of $177,816;
  2. Execution of an appropriate transfer agreement and a new licence agreement
  3. Satisfaction of conditions 1 and 2 before 30 June 2019, otherwise the offer was automatically withdrawn.

There was also a quote to upgrade to the new, current cloud-based version of $755,000 per annum (although the amount seems to have been negotiable).

SPC, however, considered the QAD 2008 version was not “fit for purpose” although not “useless” and persuaded QAD it needed more time to consider its options. By letter dated 27 June 2019, QAD extended the time for acceptance initially to 31 July. There were further meetings, discussions and email so that ultimately the time for acceptance was extended until November 2019.

In November 2019, QAD suspected that SPC was likely to go with a different vendor. It wrote to SPC pointing out it had had 5 months to make a decision and decision was required. SPC wrote back saying that responsibility for paying the transfer/licence fee was the responsibility of Coca-Cola Amatil or SaleCo.

SPC continued to use the QAD 2008 software until 28 September 2020 when it implemented Microsoft Dynamic 365 as its ERP software.

Even after 28 September 2020, however, SPC continued to use the QAD 2008 software for “non-production purposes” such as extracting historical information for quality control or financial reasons. Amongst other things:

  • before the changeover to Microsoft, SPC used the software in “day to day” use;[1]
  • SPC made modified or customised copies of the QAD 2008 software including “test and development reproductions”;
  • after the changeover to Microsoft, it made an ‘historical copy’ of the QAD 2008 software on a different server;
  • it also made “back-up” copies on its servers.

It appears that SPC expected it would need to keep using the QAD 2008 software for “non-production purposes” for another seven years.

An implied licence

Thawley J held (one would think largely uncontroversially) that the various ways SPC continued to use the QAD 2008 software involved reproductions of the whole or substantial parts of the software.

However, in the period from 27 June 2019 to SPC’s November letter,[2] SPC had an implied licence to use the software so use in that period was not infringing. The implied licence arose from the 27 June 2019 letter and the course of conduct between the parties until November.

Infringement and damages

Use after that period was not licensed and therefore infringed.

Thawley J awarded QAD $662,428.80 in compensatory damages and an additional $500,000 by way of additional damages.

The $662,428.80 amount was the transfer fee plus a maintenance fee for one year plus GST. Given the compensatory nature of damages under s 115(2), that was the loss QAD suffered.

Additional damages were appropriate as SPC at all times knew it needed QAD’s consent to the transfer of the licence and that it was its responsibility to obtain that consent. Consequently, its infringement was flagrant. Also there was a need for deterrence.

Cross-claim against the vendors

SPC did run a cross-claim against Coca-Cola Amatil and SaleCo arguing that they had breached the business purchase agreement by failing to pay QAD the transfer and licence fees.

These claims were said to arise essentially from the vendors’ obligations to use “best endeavours” to obtain a transfer of the licence and do whatever they lawfully could, including rendering all reasonable assistance, to permit SPC to have the benefit of the licence of the QAD 2008 software. There were also obligations on SaleCo to hold its rights in the assets of the business on trust for SPC.

The wording of the business purchase agreement was perhaps not as clear as it could be: it did make specific provision that the vendors did not have an obligation to pay fees and charges for certain key assets.

In the result, however, Thawley J concluded there had been no breach of their obligations by the vendors. At all times, the managing director of SPC knew that payment of the transfer and maintenance fees would be SPC’s responsibility. A key indicator of this had been the fact that all negotiations with QAD were undertaken throughout the enitre period by SPC. Coca-Cola Amatil and SaleCo were never involved.

If you are a software vendor in this sort of situation, you may need to be careful about the terms you let the new owner evaluate your software. In the end, it wasn’t a financial problem for QAD because it only intended to charge a one-off fee. If the fee had been time based, say annual, it could have lost out. Purchasers and vendors also need to be clear about whose responsibility it is to pay the fees. Even if it were the vendor’s responsibility, the purchaser in SPC’s position was the one directly liable for infringement. An indemnity, or claim for breach of contract, would not be much help if the vendor has disappeared or distributed its assets after completion.

QAD Inc v Shepparton Partners Collective Operations Pty Ltd [2021] FCA 615 (Thawley J)


  1. Day to day use involved users connecting to the software using a user name and password. The QAD 2008 object code on SPC’s application software was then loaded into the server’s RAM and the code stayed in RAM until the server was shut down or (more likely) the user logged off: [79]  ?
  2. Or possibly 10 December 2019 when QAD formally notified SPC the licence was terminated.  ?

AGL, Greenpeace and free speech

AGL, one of Australia’s largest suppliers of electricity, gas and telecommunications, owns copyright in and has registered as a trade mark its AGL “logo”:

TM No 1843098

Greenpeace started running a campaign about AGL’s business “Still Australia’s Biggest Climate Polluter” which included the online banner:

You can see why that might upset someone at AGL.

That caused AGL to sue Greenpeace for copyright infringement and trade mark infringement.

Burley J has largely dismissed the claims.

Burley J held that there was no copyright infringement for uses like the example above as they were fair dealing for purposes of parody or satire.

Some other uses, however, did not make such use of irony, sarcasm or ridicule, or humorous juxtaposition, as to qualify as parody or satire. This seems largely to have turned on the absence of the pointed tag line Australia’s Greatest Liability in an example such as:

A Greenpeace protest poster image

These uses also did not qualify for the defence of fair dealing for the purposes of review or criticism. They did not, for example at [92], “rise above the level of protest statements that are critical of AGL as a company, and would not be understood to represent criticism of review, whether of the AGL logo or any other work.”

Burley J also rejected AGL’s case on trade mark infringement: Greenpeace was not using the AGL logo as a trade mark. At [102], his Honour explained

The use of the modified AGL logo is to identify that brand, and the company that it represents, as the subject of criticism. [Consumers]would not perceive Greenpeace to be promoting or associating any goods or services by reference to that mark. Rather, it is the use of the modified AGL logo to refer in terms to AGL and the goods and services that AGL provides: see, for example, Irvings Yeast-Vite Ltd v Horsenail (1934) 51 RPC 110 at 115 (Lord Tomlin), cited in Shell Company at 426 (Kitto J).

This, with all due respect, has to be right. His Honour’s approach, however, demonstrates with stark clarity the problem with the reasoning in the “parallel import” cases like the Full Court’s (overruled) decision in E & J Gallo Winery v Lion Nathan Australia Pty Ltd, most recently confirmed in the Scandinavian Tobacco case at [21] – [56] (although one could argue, apart from the Gallo case, the goods weren’t in fact parallel imports).

AGL Energy Limited v Greenpeace Australia Pacific Limited [2021] FCA 625 (Burley J)

p.s. AGL might feel doubly aggrieved by this as, back in the 1980s, it had successfully sued for copyright on the basis that there was no parody defence. It only took another (almost) 20 years, but the Act did finally get amended to bring in that revolutionary development.

Fearless Girl – the sequel

The Fearless Girl replica statue is currently on display in Federation Square without any disclaimer (and has been for some time). In the wash-up from his Honour’s earlier reasons dismissing State Street Global’s claims, Beach J has now ordered that it can continue to be displayed either without any plaque or alternatively, with a plaque which states:

This statue is a limited edition reproduction of the original “Fearless Girl” statue in New York that was sculptured by the artist Kristen Visbal. The original statue was commissioned and is owned by State Street Global Advisors Trust Company. This reproduction is owned by Maurice Blackburn who purchased it from the artist. Maurice Blackburn has no association with State Street.

In his Honour’s principal reasons, Beach J had ruled that the display of the Fearless Girl replica and the way it had been used by Maurice Blackburn did not make any of the misrepresentations of association alleged by State Street Global. His Honour did also observe that the use of disclaimers for a period including about 3 months pursuant to an interlocutory injunction ordered by his Honour would have dispelled any misrepresentation of association (if it had been made).

State Street Global argued that a disclaimer should be required because of the uncertainty about what Maurice Blackburn might do with the replica statue in the future and might even sell it. Maurice Blackburn pointed out that, as his Honour had dismissed the claims of misrepresentation, there was no basis for any disclaimer. It also argued any disclaimer should await the determination of any appeal.

At [19], Beach J considered “SSGA seek too much, and MBL concede too little.”

At [21], Beach J considered there was sufficient material to warrant the exercise of his discretion. This appears to reflect his Honour’s summary of State Street Global’s contention:

SSGA say that absent appropriate disclaimers, there is nothing to stop MBL from engaging in the conduct that led to the present proceeding. SSGA say that having regard to uncertainty around MBL’s future intentions regarding the use or display of the replica, there remains a real risk that MBL’s use of the replica could give rise to future contraventions of the Australian Consumer Law. They note that I did accept that members of the Australian public may have known about the original Fearless Girl statue and the name “Fearless Girl”, and that such members may have associated the original statue and the name “Fearless Girl” with certain gender equality issues.

Pointing out that State Street Global’s proposed disclaimer was “an incomplete statement, fashioned to facilitate commercial advantage.  After all, MBL owns the replica, not SSGA.  And the artist was quite entitled to sell the replica to MBL for a use not inconsistent with the master agreement”, his Honour made an order in the form indicated.

One might think it unusual that there would be an injunction against future conduct which has not been found to occur. The “no plaque” option reflects this, but also means the name “Fearless Girl” cannot be used in a way which dilutes State Street Global’s association.

State Street Global Advisors Trust Company v Maurice Blackburn Pty Ltd (No 3) [2021] FCA 568

Artificial intelligences and inventions Down Under

The Commissioner of Patents has rejected the DABUS application Down Under.

Stephen L. Thaler applied for a patent, AU 2019363177, entitled “Food container and devices and methods for attracting enhanced attention”. The application named the inventor as:

DABUS, The invention was autonomously generated by an artificial intelligence

The application being made under the PCT, there was a formalities check, which, in reg. 3.2C(2)(aa), requires the Commissioner to check whether the named inventor has been identified.[1]

When the Delegate objected that an inventor had not been identified. Thaler explained why he considered DABUS was the inventor (in part):

The sole contributor to the invention is DABUS, an artificial intelligence machine that includes artificial intelligence programs written by the applicant. DABUS is capable of devising inventions without the involvement of a natural person who traditionally qualifies as an inventor. For the present invention, the machine only received training in general knowledge and proceeded to independently conceive of the invention and to identify it as novel and salient. How DABUS functions is described in detail in US Patent 10,423,875 and other patent specifications.

The Delegate understood from this response that DABUS is not a person as understood in law – an individual, a corporation or a body politic.[2]

There is no definition of “inventor” in the Act. Thus, Wilcox and Lindgren JJ had declared that the word bears its ordinary English meaning.[3]

At [12], the Delegate said:

…. Any standard dictionary shows that the traditional meaning of inventor is a person who invents. At the time that the Act came into operation (in 1991) there would have been no doubt that inventors were natural persons, and machines were tools that could be used by inventors. However, it is now well known that machines can do far more than this, and it is reasonable to argue that artificial intelligence machines might be capable of being inventors. I have no evidence whether the ordinary meaning of “inventor”, assessed at the present day, can include a machine. But if this were the ordinary meaning, would this be consistent with the other provisions of the Act?

So far as the other provisions and context provided any (limited) assistance, the Delegate considered at [20] that it was clear a patentee must be a person. This implied that an inventor also needed to be a person and, in any event, an inventor who was not a person could not be a patentee.

Although it was not part of the decision, it may also be noted that an author for the purposes of copyright must be a natural person. A computer-generated work is not an original work for the purposes of copyright as there is no author.[4] Of course, a patent can protect ideas or function while copyright protects the “expression” of ideas. At least to the extent that the rationale for granting protection in either system is the natural rights of a person to the fruits of their mental labour,[4] one would think the same considerations should apply.

Thaler has enlisted the services of Allen’s pro bono and appealed, No. VID 108/2021.

Stephen L. Thaler [2021] APO 5]


  1. Correct identification of the inventor(s) is important as a patent can be revoked if it is not granted to an “entitled person” (or all the “entitled persons” (see s 138(3)(a)) and a person can be an “entitled person” only if they can trace their chain of title back to the inventor(s): s 15(1)(a).  ?
  2. Citing Acts Interpretation Act 1901 (Cth) s 2C.  ?
  3. Atlantis Corporation Pty Ltd v Schindler [1997] FCA 1105; 39 IPR 29 at 54.  ?
  4. Telstra Corporation Limited v Phone Directories Company Pty Ltd [2010] FCAFC 149 at [90] (Keane CJ) and [117] – [119] (Perram J).  ?

Fearless Girl!

Beach J has ruled that Maurice Blackburn did not breach any of State Street Global’s rights in the Fearless Girl statue by arranging for a replica to be displayed at the launch of a campaign to address the gender pay gap.

Image of Fearless Girl bronze sculpture in alley with tour group in background
Image by maggavel from Pixabay

In 2016, State Street had commissioned Kristen Visbal to create a life-size bronze statue which became known as “Fearless Girl” in connection with a campaign to promote State Street’s Gender Diversity Index exchange traded fund, known as the “SHE fund”.

The completed statue was installed and unveiled in Bowling Green Park on Wall Street, famously appearing to confront the Charging Bull statue.[1] This had been a wildly successful campaign with, amongst other things, over 4.6 billion Twitter impressions (?) and a “mere” 745 million Instagram impressions (?) in the first 12 weeks!

In 2019, Maurice Blackburn and a number of corporate and super fund backers negotiated an agreement with Ms Visbal for a fee of USD250,000 permitting them to display a Fearless Girl replica in Federation Square Melbourne[2] in connection with a campaign for Equal Pay Day.

After Maurice Blackburn sent out invitations to the unveiling of the Fearless Girl replica in Federation Square, State Street sued Maurice Blackburn and some of its co-funders for pretty much everything they could think of:

  • interference with contractual relations;
  • false, misleading or deceptive conduct in trade and commerce contrary to the Australian Consumer Law and passing off;
  • trade mark infringement; and
  • copyright infringement.

All the claims failed.

Beach J’s reasons for judgment run for some 1191 paragraphs over 274 pages. So, more considered analysis will have to await a later day (or days).

The central issue seems to have been the very specific nature of State Street’s rights to control further reproductions of the work and the careful way Maurice Blackburn had used Fearless Girl.

The terms State Street and the artist had negotiated included a clause granting State Street the exclusive rights:

to display and distribute two-dimensional copies, and three-dimensional Artist-sanctioned copies, of the Artwork to promote (i) gender diversity issues in corporate governance and in the financial services sector, and (ii) SSGA and the products and services it offers. …. (emphasis supplied)

and Ms Visbal also agreed that no other party could be authorised to use “the Artwork” as a logo or brand ….

Beach J held that the way Maurice Blackburn had used Fearless Girl in connection with the Equal Pay Day campaign did not fall within the scope of State Street’s exclusive rights. It also was not use as a logo or brand. Michaela Whitbourn has a nice summary.

However, it looks like there will need to be a further hearing to determine whether, and if so, how Maurice Blackburn may use and display its Fearless Girl replica in the future.

State Street Global Advisors Trust Company v Maurice Blackburn Pty Ltd (No 2) [2021] FCA 137


  1. Those of you out there with long(-ish) memories, might recall that that juxtaposition caused its own ‘moral rights’ controversy. Fearless Girl was later moved in April 2018 to its current position in front of the New York Stock Exchange.  ?
  2. Fed Square, of course, is not without its own controversies!  ?

IP Australia and Indigenous Knowledge – consultations

In September 2020, IP Australia published its work plan to make provision for the better protection of Indigenous Knowledge in Australia’s Intellectual Property System.

Now it has released a consultation paper on four topics from that work plan it wishes to advance.

As summarised in the Introduction, the consultation paper raises four topics:

  1. Establishing an Indigenous Advisory Panel – providing a formalised Indigenous voice to IP Australia.
  2. Measures for trade mark or designs using Indigenous Knowledge – changes to processes to ensure IK owners benefit from, or have consented to, the use of their IK as the basis for rights.
  3. New requirements to declare the source of Indigenous Knowledge used in new innovations – make it easier to determine if IK has been used in a patent or plant breeder’s right, and encourage conversations about access and benefit sharing.
  4. Labelling to promote authentic Indigenous Products – exploring interest in labelling schemes that distinguish authentic Aboriginal or Torres Strait Islander goods.

Topic 2, relating to trade marks and designs, notes that IP Australia may currently reject an application if the application uses “IK” which is secret or sacred; the name of a group or a nation where there is no connection to that group or nation or uses a an Aboriginal or Torres Strait Islander word which should be available for other business to use.

Noting the limitations in that range, the consultation paper seeks input on a range of issues including:

(a) whether people would have concerns providing a statutory declaration etc. as evidence to support an objection to an application;

(b) whether IP Australia should ask applicants whether they have consent to use the “IK”;

(c) the introduction of a check to assess whether an application would cause cultural offence to a community or communities;

(d) whether IP Australia should assess whether the the application involves a use of “IK” in a way which falsely suggests a connection to an Indigenous person, community or nation.

Other questions relate to tools for better identifying applications which involve the use of “IK”.

Topic 3 raises questions about whether patent applicants should be required to declare the source of (1) genetic resources and/or (2) traditional knowledge included in their applications or on which an application is based.

Additional questions relate to how such requirements would be implemented, enforced and, if not complied with, penalised.

The Overview page states that consultations close on 24 May 2021.