business method

Aristocrat gets special leave

The High Court has granted Aristocrat special leave to appeal the Full Federal Court’s ruling that Aristocrat’s application for an electronic gaming machine (EGM or “pokie”) was not patentable subject matter.[1]

The patent application

Aristocrat’s application is entitled ‘A system and method for providing a feature game’ – App. No. 2016101967; yet another problematic “innovation” patent.

The Commissioner and Aristocrat were in agreement that the case rose or fell on the patentability of claim 1:

(1) A gaming machine comprising:

(1.1) a display;

(1.2) a credit input mechanism operable to establish credits on the gaming machine, the credit input mechanism including at least one of a coin input chute, a bill collector, a card reader and a ticket reader;

(1.3) meters configured for monitoring credits established via the credit input mechanism and changes to the established credits due to play of the gaming machine, the meters including a credit meter to which credit input via the credit input mechanism is added and a win meter;

(1.4) a random number generator;

(1.5) a game play mechanism including a plurality of buttons configured for operation by a player to input a wager from the established credits and to initiate a play of a game; and

(1.6) a game controller comprising a processor and memory storing (i) game program code, and (ii) symbol data defining reels, and wherein the game controller is operable to assign prize values to configurable symbols as required during play of the game,

(1.7) the game controller executing the game program code stored in the memory and responsive to initiation of the play of the game with the game play mechanism to:

(1.8) select a plurality of symbols from a first set of reels defined by the symbol data using the random number generator;

(1.9) control the display to display the selected symbols in a plurality of columns of display positions during play of a base game;

(1.10) monitor play of the base game and trigger a feature game comprising free games in response to a trigger event occurring in play of the base game,

(1.11) conduct the free games on the display by, for each free game, (a) retaining configurable symbols on the display, (b) replacing non-configurable symbols by selecting, using the random number generator, symbols from a second set of reels defined by the symbol data for symbol positions not occupied by configurable symbols, and (c) controlling the display to display the symbols selected from the second set of reels, each of the second reels comprising a plurality of non-configurable symbols and a plurality of configurable symbols, and

(1.12) when the free games end, make an award of credits to the win meter or the credit meter based on a total of prize values assigned to collected configurable symbols.

(emphasis supplied by Middleton and Perram JJ).

The new or innovative feature lay in the feature comprising the free game integer – integers 1.10 to 1.12. It was apparently common ground that the other features were part of the common general knowledge for electronic gaming machines.

In the Full Court, Middleton and Perram JJ at [3] and [4] explained:

3 It is not suggested that there is anything inventive about Claim 1’s EGM except for its feature game and it is in all other respects an unremarkable EGM. (Because the 967 Patent is an innovation patent strictly the question is whether there is anything innovative about it, but nothing turns on the distinction between inventive and innovative for present purposes). A feature game is a secondary game awarded to a player on the occurrence of a defined event in the ordinary or ‘base’ game of spinning reels, termed a ‘trigger event’. Once the feature game is enlivened by the trigger event the feature game appears and the player is able to play it and potentially to win further prizes. When the feature game is completed the EGM reverts to the base game.

4 The point of feature games is to encourage players to keep wagering on the EGM by making it more interesting to do so. Since the revenue generated by an EGM is a function of the amount wagered upon it – in New South Wales up to 15% in the long run – the more successful a feature game is in keeping the player wagering, the more lucrative the EGM is for its operator. A successful feature game is therefore commercially valuable both from the perspective of the class of persons who operate EGMs and from the perspective of those who manufacture and distribute them to that class. The Respondent (‘Aristocrat’) is part of a world-wide group of companies engaged in the manufacture and distribution of EGMs and is the particular member of the group which owns the 967 Patent.

Their Honours then explained how the free game feature worked at [11] – [12]:

11 The game defined by integers 1.10–1.12 is in fact not a single game at all but rather a family of games with particular common attributes. On the occurrence of a trigger event (integer 1.10) the player is awarded one or more free games of the feature game (integer 1.11). The feature game (integer 1.11) consists of a second set of reels. Amongst the symbols on these reels are ‘configurable’ symbols. The patent does not define a configurable symbol but it does provide for them to be assigned prize values by the computer on which the game is played, which is known as the game controller (integer 1.6). A preferred embodiment of the invention suggests that the configurable symbol may be overlaid with the amount of the prize which has been assigned to it (although this is not a necessary feature of integer 1.11 and any symbol will do). In that preferred embodiment, the configurable symbol is an image of a pearl and it is configured by the overlaying on that image of different prize amounts, e.g., some pearls appear with ‘250’ and others with ‘1000’, where those figures represent credits.

12 Returning to the feature game, each time a configurable symbol appears in the display grid at the end of the free game that particular symbol position on the relevant reel stops spinning for any remaining free games and the configurable symbol remains locked in place in any subsequent play of the feature game (i.e. if the player still has any free games left). When the player eventually runs out of free games in the feature game a prize is awarded related to the number of configurable symbols which have been locked in place (integer 1.12). In the preferred embodiment the prize is the sum of the assigned values on the pearls which have been frozen on the display grid but integer 1.12 is consistent with the prize being calculated in some other way.

Burley J

At first instance (on appeal from the Commissioner), Burley J considered that the case law required a two stage assessment of patentable subject matter:

  1. The initial inquiry was whether or not the claim was for a mere scheme or business method of the type that was not the proper subject matter for a grant of a patent.
  2. If so, a second inquiry arose: whether or not the claim involved the creation of an artificial state of affairs where the computer was integral to the invention, rather than a mere tool in which it was performed. That is, was there invention in the computerisation of the claimed method?

Each step was to be undertaken as a matter of substance rather than mere form.

Applying that methodology, Burley J avoided the whole mere scheme or business method controversy by holding that the claim was for a mechanism of a particular construction where the integers interacted to produce a particular product – an EGM.

While this blogger welcomed the result, it did raise a rather awkward question: why did putting the integers in a box create patentable subject matter when essentially the same functionality could also be supplied over a network including, dare one say it, the Internet.

The Commissioner appealed.

The Full Court

All three judges (Middleton, Perram and Nicholas JJ) unanimously allowed the appeal. Middleton and Perram JJ delivered the main opinion and Nicholas J delivered a separate concurring opinion.

All three judges accepted unreservedly that a mere scheme or abstract idea was not patentable subject matter.

All three judges also accepted that whether something is patentable subject matter was to be determined as a matter of substance rather than mere form.

Middleton and Perram JJ

At [14] – [15], Middleton and Perram JJ considered that the feature game itself defined by integers 1.10 to 1.12 was a mere abstract idea for purposes of patent law. This was because either it was the definition of a family of games with common attributes and so akin to the rules of a game. Or it was because it was a method of increasing player interest in the EGM and so increasing the operator’s gaming revenue. On that view, it was just a business scheme or scheme.

At [16], their Honours accepted that an invention which physically embodied an abstract idea and gave it some practical application could be patentable subject matter. Thus, a mechanical poker machine which allowed a game (the abstract idea) to be played could be patentable. In such a case, however, the patent would protect the physical embodiment and not the abstract idea:

But the patent protects the invention which is the poker machine and not the abstract idea consisting of the game which it plays. This is consistent with decisions on board or card games to the effect that the game itself, no matter its ingenuity, does not comprise patentable subject matter but the physical apparatus used for playing the game (such as cards or the board) may do so ….

Crucially, their Honours then held that the implementation of the game by means of an unspecified computer program could not be a manner of manufacture unless the implementation resulted in some development of computer technology rather than its utilisation. At [18], their Honours said:

The implementation of an abstraction such as that disclosed by integers 1.10–1.12 by means of an unspecified computer program to be executed on the computer which is the game controller will not give rise to a patentable invention unless the implementation itself can be seen as pertaining to the development of computer technology rather than to its utilisation …. [2]

Middleton and Perram JJ next accepted that Burley J’s approach could be workable where the subject matter of the claimed patent was obviously implemented in a computer. In other cases, however, it had the potential to lead to a wrong result especially where “for example, whether a claimed physical apparatus such as an EGM is, in truth, no more than a particular kind of computer.”

Instead, Middleton and Perram JJ proposed at [26] a different two-step analysis:

(a) Is the invention claimed a computer-implemented invention?

(b) If so, can the invention claimed broadly be described as an advance in computer technology?

In the present case, the claimed invention was a computer-implemented invention.

First, although the apparatus claimed was an EGM (or poker machine), it was in substance a computer. At [32] – [34], their Honours found that the EGM was a game control computer (integer 1.6) attached to a random number generator (integer 1.4, another computer) with some input and output devices (respectively, integers 1.2, 1.3 and 1.5 (input) and 1.1 (output)) with associated software instructions (integers 1.7, 1.8 and 1.9 and the feature game 1.10 – 1.12).

Secondly, to avoid the (erroneous) conclusion that the claimed invention was for the practical implementation of an abstract idea in a device, at [50] their Honours considered it was necessary to distinguish between a claim for an invention which was a computer and a claim for an invention implemented in a computer.

As a claim for either type of invention could appear to be a claim for a computer, it was necessary to identify what was in fact the substance of the claimed invention.

Here, the correct characterisation of the claim had to take into account the two elements of the claim: one element being the EGM (in effect, the computer) and the other element being the feature game and, importantly, the feature game was the only innovative feature of the claim.

As the feature game was to be executed in the computer, at [56] Middleton and Perram JJ considered the relationship of the feature game elements to the computer elements was one of implementation. Accordingly, the claim was to a computer-implemented invention.

Turning to the second question (b), Middleton and Perram JJ held that the claimed invention was not directed to an advance in computer technology. At [63], their Honours said:

Because the invention is the implementation of a feature game on the computer which is an EGM, the next question is whether what is put forward as inventive (or innovative) about Claim 1 pertains to the development of computer technology or merely its use. The fact that integers 1.10–1.12 leave it entirely up to the person designing the EGM to do the programming which gives effect to the family of games which those integers define inevitably necessitates the conclusion that Claim 1 pertains only to the use of a computer. Indeed, it purports to do nothing else. Claim 1 is silent on the topic of computer technology beyond that the person implementing the invention should use some.

It did not matter that the claim improved player engagement or improved subjective satisfaction. That had nothing to do with developing or advancing computer technology. Similarly, the use of configurable symbols for prizes was of no assistance. That might advance gaming technology but was not an advance in computer technology.

Nicholas J

Nicholas J reached the same conclusion but by a somewhat different route.

Like Middleton and Perram JJ, his Honour started from the proposition that mere schemes and abstract ideas are not patentable. At [115] Nicholas J considered that to be patentable the case law required a claimed invention to relate to some technological innovation:[3]

The Full Court noted at [100] the distinction drawn in Research Affiliates at [94] between a technological innovation which is patentable and a business innovation which is not. The use of the expression “technological innovation” emphasises the need to identify a technological contribution in a field of technology. The desirability of providing patent protection to technological innovations is reflected in Art 27(1) of the Agreement on Trade Related Aspects of Intellectual Property Rights which relevantly provides that “… patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application …”. The language of “technological innovation” has now been adopted in s 2A of the Act which refers to the promotion of economic wellbeing through technological innovation as an object of the Act.

An interesting invocation of the new Objects clause in the Act.

At [116], Nicholas J considered it was important to avoid an excessively rigid or formulaic approach to this issue. This was because the technological advance may lie in the field of computer technology. However, the required technological advance could also lie in a field of technology outside the computer:

… it is not appropriate to adopt an excessively rigid or formulaic approach to the question whether a computer implemented scheme is a manner of manufacture. This is especially true in situations where there may be no clear distinction between the field to which the invention belongs, and the field of computer technology. There may well be a technological innovation in the field of technology to which the invention belongs even though it cannot be said that there has been some technological innovation in the field of computers. The field of the invention may encompass different fields of technology that have their own technical problems that lie “outside the computer”. Moreover, the solutions to these problems may necessarily rely upon generic computing technology for their implementation. That does not necessarily render such solutions unpatentable.

His Honour gave as an example at [120] a computer-implemented invention for running a refrigerator in a more energy-efficient way. This might not involve an advance in computer technology but could well be patentable where the invention lay in the field of refrigeration technology. So, there could also be patentable subject matter in the way a gaming system or machine functioned even if there had not been an advance in computer technology.

Turning to Aristocrat’s patent application, Nicholas J considered at [135] that Burley J’s two-step test did not adequately address the Commissioner’s submission that the claim was for nothing more than the (unpatentable) rules of a game implemented in generic computer technology for its well-known and well-understood functions.

Citing RPL at [96], the fact that the feature game instructions were embodied in a computer was not sufficient to qualify as patentable subject matter. While the purpose of the invention was to provide a different and more enjoyable playing experience, the claim was not directed to overcoming any technological problem. At [141], his Honour explained:

The specification does not identify any technological problem to which the patent purports to provide a solution. Nor did the expert evidence (insofar as it was made available to us) suggest that the invention described and claimed in the specification was directed to any technical problem in the field of gaming machines or gaming systems. Rather, as the specification makes clear, the purpose of the invention is to create a new game that includes a feature game giving players the opportunity to win prizes that could not be won in the base game. Ultimately, the purpose of the invention is to provide players with a different and more enjoyable playing experience. The invention is not directed to a technological problem residing either inside or outside the computer.

Generic computer technology / software

While acknowledging that the phraseology had been used in earlier Full Court decisions, Middleton and Perram JJ considered at [35] to [42] that testing whether the claimed invention merely involved a generic computer or generic software was not “especially helpful”. It was preferable to focus on whether the claimed invention related to an advance in computer technology.

In contrast, Nicholas J (who had participated in the earlier cases) was not so troubled. At [112], his Honour considered it could be a useful signpost to patentability (or not) to ascertain whether the computer or software was just conventional computer technology being used for its well-known and well-understood effects.

Where to now

The law relating to “manner of manufacture” is a mess.

Following NRDC and before about the mid–2000s, the issue hardly, if ever, came up. Since the mid–2000s, there have been numerous cases; it is perhaps no exaggeration to say there are more, indeed way more, cases each year than in the previous 50 years.

And, unless one is prepared to say that it’s a computer-related invention and so it is not patentable subject matter (which the Courts repeatedly do not say), it is very hard to say what will pass the threshold and what will not.

One issue is that the cases are replete with comments like there is nothing new or inventive about that. That suggests that what is really the issue is lack of novelty or inventive step.

That though gives rise to a whole set of sub-issues. First, the whole situation is exacerbated by the abominations called “innovation patents”, which don’t actually require any invention, just that what is claimed (in effect) be new.

Secondly, proving lack of inventive step is a complicated, expensive and risky gamble – especially under our law before the Raising the Bar amendments.

Thirdly, while cases like CCOM, IBM and Welcome-Catuity could provide a principled approach to this issue, that could well end up with Australian law granting patents in circumstances where the USA and the EU would not. Not a situation the Productivity Commission would favour. And, it is far from clear that any clear or consistent approach has emerged in either jurisdiction, especially the USA.

The reason, or at least one of the reasons, why NRDC was a “watershed” in patent law was that it got rid of the artificial pigeon-holes or categories of “vendible product” which, as the NRDC judgment so tellingly demonstrated, had resulted in such inconsistent and unpredictable results to the test of manner of manufacture. Instead, it adopted an open-ended, flexible approach directed to achieving the objects of patent law.

Against that background, one might argue that Nicholas J’s approach, with respect, allows a degree of flexibility and forward-thinking which may not follow from the approach taken by Middleton and Perram JJ. Whether his Honour’s approach provides any more certainty may be debated but at least it would avoid a narrow categorisation. Whether that is an approach that finds favour with the High Court, or what direction it might take, remains to be seen.

[Some typos were corrected on 24 June 2022]


  1. That is, not a ‘manner of manufacture’ for the purposes of Patents Act 1990 s 18(1)(a) and 18(1A)(a). Exceptionally, special leave was granted on the papers.  ?
  2. Citing Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177; 238 FCR 27 at [96] and [102] (Kenny, Bennett and Nicholas JJ).  ?
  3. Nicholas J considered that Research Affiliates at [115] – [119] (and RPL Central applying it) broadly equated the requirement for a technical contribution or technological innovation to the “artificially created state of affairs” required under the NRDC test.  ?

Aristocrat’s electronic gaming machine is patentable

Burley J – one of the judges in the Full Court’s Rokt ruling – has upheld Aristocrat’s appeal and ruled that four of its innovation patents[1] for electronic gaming machines (EGMs) were manners of manufacture and not mere schemes or rules for a game.

[2]

The parties charaterised claim 1 of the 2016101967 patent as having 12 integers:

A gaming machine comprising:

(1.1) a display;

(1.2) a credit input mechanism operable to establish credits on the gaming machine, the credit input mechanism including at least one of a coin input chute, a bill collector, a card reader and a ticket reader;

(1.3) meters configured for monitoring credits established via the credit input mechanism and changes to the established credits due to play of the gaming machine, the meters including a credit meter to which credit input via the credit input mechanism is added and a win meter;

(1.4) a random number generator;

(1.5) a game play mechanism including a plurality of buttons configured for operation by a player to input a wager from the established credits and to initiate a play of a game; and

(1.6) a game controller comprising a processor and memory storing (i) game program code, and (ii) symbol data defining reels, and wherein the game controller is operable to assign prize values to configurable symbols as required during play of the game,

(1.7) the game controller executing the game program code stored in the memory and responsive to initiation of the play of the game with the game play mechanism to:

(1.8) select a plurality of symbols from a first set of reels defined by the symbol data using the random number generator;

(1.9) control the display to display the selected symbols in a plurality of columns of display positions during play of a base game;

(1.10) monitor play of the base game and trigger a feature game comprising free games in response to a trigger event occurring in play of the base game,

(1.11) conduct the free games on the display by, for each free game, (a) retaining configurable symbols on the display, (b) replacing non-configurable symbols by selecting, using the random number generator, symbols from a second set of reels defined by the symbol data for symbol positions not occupied by configurable symbols, and (c) controlling the display to display the symbols selected from the second set of reels, each of the second reels comprising a plurality of non-configurable symbols and a plurality of configurable symbols, and

(1.12) when the free games end, make an award of credits to the win meter or the credit meter based on a total of prize values assigned to collected configurable symbols.

No doubt oversimplifying, it seems the “clever” aspect of the patent was the use of a combination of configurable symbols and non-configurable symbols in which the display of a pre-determined number of configurable symbols on a base reel triggered free or bonus games. The configurable symbols were retained in the “free” game, while the non-configurable symbols were replaced with symbols from a second set of “reels”.

On the appeal, the Commissioner’s primary argument was that the claims were just claims to “a generic computer implementation”, leaving the hardware and software uncharacterised where the only features that distinguished the claimed invention from previous EGMs were the scheme or rules of the game. Thus, at [80] Burley J summarised the Commissioner’s submission:

integers 1.1 to 1.6 reflect the components of an EGM, including hardware (for example a display) and software (for example a random number generator) and some that are a combination of both (for example a game controller comprising a processor and memory). These were all standard components of EGMs.

Integers 1.7 to 1.12 deal with the conduct of the game and amount to a scheme or set of rules for doing so.

Amongst other things, the claim does not define any hardware features of the “game controller comprising a process or a memory” or any technical means by which the necessary processing functions are performed to implement the game. No software application or program code for carrying out the steps is defined by the claims. There is no suggestion of ingenuity in their implementation, which is left entirely to the skilled person reading the claim.

Consideration

In a point which bears emphasising (as it appears so often overlooked or misunderstood), Burley J began by reiterating that the ground of manner of manufacture is a separate and discrete requirement of validity, independent of other grounds like novelty, innovative step, utility and secret use. So, as his Honour pointed out at [84]:

whilst a claim for a ball point pen would fail for anticipation and inventive step, it would still be a claim for a manner of manufacture.

After referencing the “scheme” line of cases,[3] Burley J considered at [91] they mandated a two stage inquiry:

  1. The initial inquiry was whether or not the claim was for a mere scheme or business method of the type that was not the proper subject matter for a grant of a patent.
  2. If so, a second inquiry arose: whether or not the claim involved the creation of an artificial state of affairs where the computer was integral to the invention, rather than a mere tool in which it was performed. That is, was there invention in the computerisation of the claimed method?

Each step was to be undertaken as a matter of substance rather than mere form.

According to his Honour, it was at the second stage that it became necessary to identify whether or not the “contribution” was “technical in nature” or solved a “technical” problem or merely required a “generic” computer implementation.

The present case was different to the “mere scheme” line of cases because what was claimed was a mechanism of a particular construction where the integers interacted to produce a particular product. At [95], his Honour summarised:

the invention described and claimed, when understood as a matter of substance, is to a mere scheme or plan. It is to a mechanism of a particular construction, the operation of which involves a combination of physical parts and software to produce a particular outcome in the form of an EGM that functions in a particular way.[4]

Accordingly, it was unnecessary to embark on the second inquiry required for “mere scheme” cases.

As there was a physical product, therefore, it appears that the instant claims were conceptually different to those in Emcompass and Rokt. Burley J considered the instant claims were conceptually more like those upheld by Nicholas J in Konami and Dowsett J in LTH Consulting where, for example, Nicholas J had explained:

the inventions in suit claimed are not “mere ideas” but “new and useful gaming machines and new and useful methods of operation producing new and improved results”.

In opposing this claim, the Commissioner was labouring under the difficulty of the many, many patents already granted for EGMs and gaming machines generally. Moreover, the Commissioner necessarily conceded (consistently with his Honour’s ball point pen example) that the claim would have been a manner of manufacture if it had been implemented “the old-fashioned way, without using software but instead using cogs, physical reels and motors to create the gameplay”.

Thank goodness for that blow in favour of modernity and technological developement! One might question whether, when putting the elements into a box qualifies as a manner of manufacture, offering exactly the same functionality online accessible through a browser would also qualify as a manner of manufacture. Indeed, the specification refers to the invention being implemented alternatively by a “thick client” architecture or a “thin client” architecture.[5] And, if it did, how would one reconcile that with Rokt?

Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778


  1. All four were divisionals from the same parent: AU 2015210489.  ?
  2. In this image from the decision, the vertical, numbered lines represent a portion of 5 “reels” (showing 3 symbols per reel) and the horizontal, lettered lines are rows.  ?
  3. Grant v Commissioner of Patents [2006] FCAFC 120; 154 FCR 62; Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150; 227 FCR 378; Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177; 238 FCR 27; Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161; 372 ALR 646; Watson v The Commissioner of Patents [2020] FCAFC 56 and Commissioner of Patents v Rokt [2020] FCAFC 86.  ?
  4. At [96], Burley J expanded on the physical components claimed and how they interacted through the software to produce an outcome and, at [97], his Honour referred to the tight regulatory supervision imposed on EGMs.  ?
  5. P. 4: “For example, a ”thick client“ architecture may be used wherein part of the game is executed on a player operable gaming machine and part of the game is executed remotely, such as by a gaming server; or a ”thin client“ architecture may be used wherein most of the game is executed remotely such as by a gaming server and a player operable gaming machine is used only to display audible and/or visible gaming information to the player and receive gaming inputs from the player.”  ?

Rokt take 2

As noted last week, the Full Court has allowed the Commissioner’s appeal and ruled that Rokt’s patent application for a digital advertising method is in fact an unpatentable scheme. Disagreeing with the trial Judge, the Full Court considered the case was no different to Encompass and just involved a scheme using the well-known and understood functions of computer technology.

Perhaps, the point of general application arising from this decision (barring a successful application to the High Court for special leave) is the very limited role for evidence in assessing whether a claim is a claim to a manner of manufacture for the purposes of s 18(1)(a).

The claim

Claim 1 is involved and was characterised by the Court as involving 12 integers:

(1) A computer implemented method for linking a computer user to an advertising message by way of an intermediate engagement offer which is operable to drive a higher level of engagement with the advertising message than if the advertising message was presented without the offer, the method comprising:

(2) providing computer program code to be delivered with publisher content to a computing device operated by the computer user and which computing device comprises an interface arranged to display the publisher content, the computer program code operable to be implemented by a processor of the computing device to perform the additional steps of:

(3) gathering engagement data associated with the user, the engagement data derived from interactions made by the user with the interface and related to at least one of the following:

an attribute of the publisher content;

an interaction with the publisher content by the computer user; and

an attribute of the user;

(4) communicating the engagement data as it is gathered to a remote advertising system implementing an engagement engine, the engagement engine operable to:

(5) continuously evaluate the engagement data to determine whether a predefined engagement trigger has occurred, the predefined engagement trigger being representative of a user response or action that is contextually relevant for presentation of the engagement offer;

(6) responsive to determining that the predefined engagement trigger has occurred, selecting an engagement offer from a pool of different engagement offers stored by the remote advertising system that is relevant to the evaluated engagement data and wherein,

(7) where multiple engagement offers are deemed to be relevant, the engagement engine implements a ranking algorithm operable to dynamically rank the relevant engagement offers based on at least one of: > >(a) an engagement score determined from one or [more] performance metrics recorded from past user interactions with the corresponding engagement offers; > >(b) a revenue score determined from one or more revenue metrics recorded from past user interactions with the corresponding engagement offers, and

wherein the engagement engine selects which engagement offer to present based [on] the rankings;

(8) causing the interface to insert the selected engagement offer into the publisher content for displaying to the computer user;

(9) implementing the computer program code to determine an acceptance of the engagement offer by the computer user based on a user interaction with the engagement offer; and

(10) following the determined acceptance, presenting an advertising message comprising one or more advertisements selected from a pool of different advertisements on the interface and

(11) wherein user interactions with each of the presented advertisements are gathered by the widget script and communicated to the remote advertising system for use in selecting subsequent advertisements, and

(12) whereby the selection of [sic] engagement offer is additionally made such that there is no direct advertising benefit to the subsequent advertisers of the selected advertisements through presentation of the selected engagement offer to the computer user other than encouraging positive engagement by the user with the advertising system prior to presentation of the advertising message.

According to Rokt, one of the particularly clever, if not the clever, insight in this combination was the “engagement offer”. As the specification explained:

Through extensive testing, it has been found that initiating engagement with the advertisement system 10 by way of an engagement offer results in a more positive and deeper engagement with advertisements subsequently presented to the consumer (i.e. during the engagement journey) than if those advertisements were presented in the traditional search or display based manner, as described in the preamble. In turn, the consumer is more likely to continue to engage with the advertisement system 10, thus creating a sustainable advertising revenue module which is of benefit to each of the advertisement system 10, publishers 12 and advertisers 14.[1]

The Full Court explained that engagement offers could take any of numerous forms “including coupons, discounts, vouchers, scratch and win prizes, surveys and polls, competitions, video images, free games and the like.” Or, as their Honours summed up, “click bait”.

The trial judge

Based on the expert of evidence of Professor Verspoor, the trial judge had allowed Rokt’s appeal from the Commissioner’s rejection of the application on the basis that the claims were not directed to a “manner of manufacture”.

Given the Full Court’s ruling it is worth noting what Professor Verspoor had been asked to do. Professor Verspoor had given evidence directed to four questions:

(1) What is the “substance” of the invention? In other words, what specifically lies at the heart of the invention?

(2) Does the invention solve a technical problem?

(3) Is the use of a computer (or computers) integral to carrying out the invention, or could the invention be carried out in the absence of a computer (or computers)?

(4) Does the invention involves [sic] steps that are foreign to the normal use of computers (as at December 2012)?[2]

Based on Professor Verspoor’s evidence in answer to these questions, the trial judge had found that the introduction of the intermediate “engagement offer” to provide an alternative advertising technique was the key feature of the claimed invention.

The Commissioner argued that the method was merely an unpatentable scheme to solve a business problem. The trial judge held, however, that the claim solved both a business problem and a technical problem. At [205], his Honour said:

The invention solved not only a business problem but also a technical problem. As to the latter, it provided a single platform in which user engagement data could be coupled with transactional data and user context data to provide a personalised ranking of engagement offers to the user. This technical problem of providing this single platform was solved by introducing the tracking database and the objects database and designing the ranking engine and the engagement engine which accessed and manipulated the data in the two databases to rank and select engagement offers. The ranking engine optimised the personalised output for the consumer. Critically, the ranking engine implemented a ranking algorithm which ranked the retrieved object by a combination of an engagement score and revenue score. I also accept the evidence Professor Verspoor gave, which is summarised at [46]-[54], [104]-[107], [134]-[135] and [145] above.

and at [207]:

I find that there was a business problem of attracting the attention of the user and having the user choose to interact with the advertiser, but this problem was translated into the technical problem of how to utilise computer technology to address the business problem. The invention aimed to solve this technical problem through the introduction of the engagement offer and identifying what steps the software needed to execute in order to modify dynamically the website that the user was browsing while they were browsing it to, first, implement in the web browser or device the concept of the engagement offer, second, to implement in the computer system the necessary software for selecting engagement offers and advertisements for the given user based on the previous interactions with the system and the interactions of other similar users and, third, to have that system interact with the widget in the web browser in real time.

Accordingly, his Honour found at [208] that the use of the computers was integral, rather than incidental, to the invention and so qualified as patentable subject matter.

The Full Court

As already noted, the Full Court allowed the Commissioner’s appeal from the trial judge’s decision. Rokt’s invention is not a manner of manufacture and so not a patentable invention.

Before the trial judge, the parties had advanced a substantial body of expert evidence, leading the trial judge to characterise the problem before him “as one that lay in the realm of fact”.

According to the Full Court at [72], that was wrong.

Whether a claim is directed to a manner of manufacture is a question of construction. Construction of a claim is a matter of law, to be determined by the Judge. The role of evidence is limited.

At [71], the Court stated:

it is fundamentally a matter for the Court to determine and characterise the invention having regard to the principles of construction that are now well settled.[3]

At [73], the Court explained:

The role of expert evidence in construing the patent specification and the claims is limited. It is to place the Court in the position of the person acquainted with the surrounding circumstances as to the state of the art and manufacture as at the priority date: Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at [24]; Myriad Genetics at [12]. Typically, the Court will read the specification with the benefit of expert evidence as to the meaning of words that are terms of art, or with an explanation of technical concepts relevant to the understanding of the invention as described and claimed. The question of construction remains with the Court. However, in his reasons, the primary judge adopted the approach of preferring the expert opinion evidence of Professor Verspoor over that of Mr Ries, and then adopting Professor Verspoor’s view as to the identification of the invention as claimed and characterised in the specification. It is not apparent that his Honour separately gave consideration to these matters. In our respectful view, that is an error in approach.

There is, however, at least this anomaly. If one is engaging in an exercise in legal construction, how does one decide whether the claim is nothing more than the implementation of a scheme by the use of a computer for its “well-known and understood functions”?[4] This is, apparently, not a function of evidence or even common general knowledge. At [91], the Full Court explained:

It is apparent that where the cases refer to “generic software” or to the use of computers for their “well-known” purpose, it is not a finding as to common general knowledge. Rather, it is a reference to computer technology that is utilised for its basic, typical or well-known functions. The means of determining that this is so is primarily by a careful review of the specification in order to ascertain, by construing that document, whether the invention described and claimed is in substance any more than a scheme that utilises computers in such a way. This is a question of characterising the invention as set out in the specification.

What appears to have been decisive in this case, as in Encompass, was that the hardware and the software to be used in implementing the method was “uncharacterised”. All that was identified in the claim was a series of high level instructions, leaving it to the user to write their own program.

Rokt argued that the High Court’s decision in Data Access[5] had differentiated between the realms of copyright and patent by identifying that patents are concerned with function, while copyright is concerned with forms of expression. Rokt submitted therefore, that there was no requirement for a claim to incorporate specific programming code.

At [114], however, the Full Court explained at [114] that Encompass was unpatentable because it was “just” an instruction to use computer technology for its well-known and understood functions”:

In Encompass the Full Court found that where the claims in suit do not secure, as an essential feature of the invention, any particular software or programming that would carry out the method and the method is entirely left to those wishing to use the method to devise and implement a suitable program for that purpose and all the specification teaches is that the processing system may be “suitably programmed” then the method is really an idea for a computer program, it being left to the user to carry out the idea in a computer system …. By the claim and the specification leaving entirely to those wishing to use the method to devise and implement a suitable computer program for purpose, it was apparent that the invention did not rise above the level of being an instruction to use computer technology for its well-known and understood functions to implement the scheme.

So, in Rokt, at [115]:

In the present case, the claim amounts to an instruction to carry out the marketing scheme. The level of abstraction at which it is expressed demonstrates that it does no more than provide a list of steps to be implemented using computer technology for its well-known and understood functions. Nothing in the specification suggests otherwise. This may be seen from the instructions explained as steps S1a to S10a in the specification (see [26] above). They comprise a list of general instructions to write software. Even if the scheme is new and ingenious, it is not made patentable merely because it can or must be implemented using computer technology. Rather, the language of the specification and the broad statements of steps required to be taken in claim 1 do no more than locate the scheme in computer technology, using its well-known and understood functions. The position is not distinguishable from that in Encompass. In our respectful view, the learned primary judge erred in finding otherwise. (emphasis supplied)

Another point to worry at

In addition to rejecting the relevance of the kind of expert evidence led (on both sides) before the trial judge, the Full Court was also critical of what Professor Verspoor’s evidence did address.

For example, having set out [205] of the trial judge’s analysis, the Full Court considered that Professor Verspoor had not even addressed the relevant question of what was actually claimed in claim 1, but had instead based her opinions on what was disclosed in the body of the specification. Their Honours said at [95]:

It is apparent that his Honour was not at this point adverting to the method of the claim, which refers to an engagement engine but contains no integer requiring a ranking engine (only a ranking algorithm). Nor does the claim require that there be a tracking database or an objects database. Those features are present in the system architecture identified in figure 3 in the specification, but not in claim 1. Section 18(1)(a) of the Patents Act draws attention to whether the invention so far as claimed in any claim is a manner of manufacture. That is, while the claims must be read with reference to the body of the specification, the invention is defined by the claims. Professor Verspoor, and the primary judge, relied upon the technical problem and solution identified in the specification, and the primary judge did not address the important question of whether the technical solution was claimed.

This with respect appears potentially difficult. Claim 1 with its concatenation of integers is not exactly straightforward. On what basis, for example, do lawyers or other patent advisers conclude that the reference in the claim to a “ranking algorithm” means *and* is something different to a “ranking engine”. Integer 7 for example refers to the “engagement engine” implementing a ranking algorithm “*operable to dynamically rank the relevant offers based on*” various criteria. [Edit]

These may not be the same things. The point is, understanding the claim may well not be simply an exercise in grammar and syntax which a person skilled in the tools of the lawyer’s trade can carry out.

More generally, one might wonder if the stipulation of those features in the claim, or a dependent claim, would have introduced sufficient detail into the claim to elevate the claim from unpatentable scheme to patentable manner of manufacture.

Some concluding comments

The clarification of the correct approach to determining whether a claim is to a manner of invention should be welcome. On the approach to this issue taken since at least Grant, however, it does mean that there is great scope for the Tribunal’s discretion to decide whether something should be patentable or not. That is of course inherent in the ‘proper question’.[6] For that reason, it could be argued that the NRDC Court sought to confine the inquiry – somewhat ironically undermined by Myriad – to a very limited examination of whether the claim was directed to “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.”[7]

It is difficult with respect to see why, if a claim consisting entirely of a combination of known integers in some new and inventive way can be valid subject matter,[8] the same should not apply equally to a new and ingenious combination of computer technologies. It has long been recognised that there can be invention in the idea or concept or principle even where the means of carrying it into effect are themselves not new or inventive. [9]

The difficult path we are travelling down is evident in the previously unheard of volume of cases we now have about manner of manufacture issues, no doubt exacerbated by the innovation patent. The problems are not confined to Australia. Indeed, matters have reached the state in the United States where a claim to a garage-door-opener, devices which have been patentable subject matter for 150 years (to quote Patently-O) has been held unpatentable as an abstract idea.

The issue becomes even more difficult of resolution where, accepting that Australia is a net importer of intellectual property generally and patent claiming technology, it becomes undesirable to grant patents in Australia for “things” which do not qualify for patent protection overseas, particularly in the patent applicant’s “home” jurisdiction. Given the lack of harmonisation internationally, however, there is no certainty that all, or even many, jurisdictions will reach the same result.

Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86 (Rares, Nicholas and Burley JJ)


  1. The numerals are references to elements illustrated in Figure 1 (shown at paragraph 13 of the Reasons).  ?
  2. The Full Court extracted key parts of the evidence of Professor Verspoor’s and the Commissioner’s expert, Mr Ries, at [36] – [44].  ?
  3. See also [93]. At [71], the Court cited [Jupiters Ltd v Neurizon Pty Ltd][jup] (2005) 222 ALR 155 at [67] as summarising “many” of the principles.  ?
  4. Rokt Full Court at [84] citing Commissioner of Patents v RPL Central Pty Ltd (2015) 238 FCR 27 at [96] and Encompass at [95].  ?
  5. Data Access v Powerflex Services (1999) 202 CLR 1 at [20].  ?
  6. ‘whether the subject matter in issue is “a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies”’. Perhaps borne down under the weight of so-called “innovation patents”, however, one might feel some skepticismto the notion that it is to be answered “consistently with a “widening conception of the notion [which] has been a characteristic of the growth of patent law”.  ?
  7. NRDC]nrdc 102 CLR at 275–277; CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 at 295 and Welcome-Real Time v Catuity. Ironically, since undone by the High Court in Myriad.  ?
  8. For example, AB Hässle v Alphapharm Pty Ltd at [6].  ?
  9. For example, Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (No 2) (2007) 235 CLR 173 at [59] – [60].  ?

Rokt loses the Commissioner’s appeal

The Full Court (Rares, Nicholas and Burley JJ) has upheld the Commissioner’s appeal against the ruling that Rokt’s digital advertising system was patentable subject matter as a manner of manufacture. So, barring special leave), another computer implemented “invention” isn’t patentable.

More analysis later.

Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86

A computer related invention is patentable

Robertson J has allowed Rokt’s appeal and held that its ‘computer implemented method for linking a computer to an advertising message by way of an intermediate engagement offer ….” was a manner of manufacture and so patentable subject matter.

The Commissioner had found (and here) that Rokt’s patent was not a manner of manufacture as required by s 18(1)(a) and so refused grant.

On the appeal, Robertson J found Rokt’s claims were patentable subject matter in application fo the principles from Research Affiliats and RPL Central on the facts.

Crucial to his Honour’s decision was evidence that computer systems at the priority date in December 2012 did not work in the way claimed, which was not just a routine use of the technology.

In response to the Commissioner’s argument that the method was just a business method, Robertson J said at [205]:

The invention solved not only a business problem but also a technical problem. As to the latter, it provided a single platform in which user engagement data could be coupled with transactional data and user context data to provide a personalised ranking of engagement offers to the user. This technical problem of providing this single platform was solved by introducing the tracking database and the objects database and designing the ranking engine and the engagement engine which accessed and manipulated the data in the two databases to rank and select engagement offers. The ranking engine optimised the personalised output for the consumer.  Critically, the ranking engine implemented a ranking algorithm which ranked the retrieved object by a combination of an engagement score and revenue score. I also accept the evidence Professor Verspoor gave, which is summarised at [46]-[54], [104]-[107], [134]-[135] and [145] above.

On the evidence, Robertson J found that known, exiting components were integrated into a new system in an innovative and previously unknown way. At [213], his Honour explained:

Taken in isolation, a database, a client-server architecture, the running of the Javascript program on a publisher’s website and the creation of a ranking engine to rank abstract data to achieve an ordered list were each known as at December 2012 but, in combination, the distinction between engagement offers and general advertising, coupled with the algorithms making use of background data for personalisation and ranking was a new combination of new and previously existing components and a new use of computer technology.

In this case, the evidence showed that the use of computers was integral to the invention, not just incidental. At [208] – [210], Robertson J said:

The use of computers was integral, rather than incidental, to the invention in the sense that there is an invention in the way in which the computer carries out the business scheme: see RPL Central at [107]. It was not feasible to store and manage large amounts of tracking data collected from real-time interactions with digital devices and manipulate large quantities of data for context-sensitive decision-making without the use of computers. The data bank that was the source of engagement objects and historical/tracking data was a critical component of the invention. I accept the applicant’s submission that the computer was not merely acting as an “intermediary” but that the substance of the invention involved the new functioning given to the computer. I accept Professor Verspoor’s evidence summarised at [55]-[57] above.
Storage and manipulation of data at the magnitude and speed that was required to implement the method could only be done on a computer or computers. The data analysis claimed in the patent could not be performed without a computer or computers, particularly having regard to the gathering, manipulation and subsequent use of the data by the engagement engine.
The user interactions took place on the user’s computer and it was integral to the invention that data be collected, and engagement offers presented, through that computer. The transmission and receipt of data over the internet to and from the advertising system could also only be done using computers.

Rokt Pte Ltd v Commissioner of Patents [2018] FCA 1988

Selected links from last week

Here is a selection of links to IP-related matters I found interesting this week:

Patents

Trade marks

Copyright

Not categorised

I hope you find some interesting. If you did or have a question, leave a comment or send me an email

RPL Central also refused special leave

The High Court has also refused RPL Central special leave to appeal.

RPL Central had applied for the grant of an innovation patent entitled ‘Method and System for Automated Collection of Evidence of Skills and Knowledge’.

Middleton J had upheld RPL’s appeal from the Commissioner’s decision to reject the application on the grounds it was not a manner of manufacture. The Full Court allowed the Commissioner’s appeal. In rejecting special leave, the High Court baldly stated:

The Full Court was plainly correct and, accordingly, none of the applicant’s proposed grounds of appeal enjoys sufficient prospects of success to warrant the grant of special leave to appeal. Pursuant to r 41.11.1 of the High Court Rules 2004 (Cth), we direct the Registrar to draw up, sign and seal an order dismissing the application with costs.

So, so far as patenting business methods goes in Australia, it looks like Research Affiliates will be the last word … for a long time.

If you have a question or wish to make a comment, feel free to post it in the comments box or send me an email.

RPL Central Pty Ltd v Commissioner of Patents [2016] HCASL 84

Science Fiction

Noted science fiction author, Kim Stanley Robinson, imagines a future oral argument trying to patent something in light of recent (US) judicial attempts to clarify business method patenting. Imagine what fun he could have in an imaginary place far far away!

Lid dip: PatentlyO

In the meantime, IPwars is also heading far far way for the holidays. Thank you for reading.

Season greetings! Wishing you a happy, safe and prosperous New Year!

(Not) patenting business methods

The Full Federal Court has upheld the Commissioner’s refusal to grant Research Affiliates’ patent for a computer implemented method for constructing a portfolio management index.

The central claim reads:

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 Court posed the issue before it as being:

whether computer implementation of an otherwise unpatentable business scheme is sufficient to make the claimed method properly the subject of letters patent.

One might think, put that way, there is only one answer. May be. It makes it very important, however, how one determines whether the “scheme” is itself unpatentable.

Another intriguing aspect of the decision is that, before it embarked on analysing whether this was indeed a “manner of manufacture, the Court engaged in a very extensive review of how this issue is approached in other jurisdictions, including the USA and UK.

Time pressures don’t permit extended analysis at this stage. In the meantime:

and no doubt others. It will be interesting to see what happens to the RPL Central appeal.

Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 (Kenny, Bennett and Nicholas JJ)

 

 

Software patents in the USA

Yesterday, the US Supreme Court heard oral argument on the question of the patentability of Alice Corporation’s software system for a method of payment, in denying the validity of which 10 judges of the Federal Circuit famously came up with 7 different opinions.

Several patents and claims are in issue, all relating to a computerized trading platform used for conducting financial transactions in which a third party settles obligations between a first and a second party so as to eliminate “counterparty” or “settlement” risk.

The question presented:

Whether claims to computer-implemented inventions-including claims to systems and machines, processes, and items of manufacture-are directed to patent-eligible subject matter within the meaning of 35 U.S.C. § 101 as interpreted by this Court?

As petitioner, the patentee (Alice Corp) will argue first. Respondent’s time will be split between CLS Bank and the US Government who has filed an amicus brief highlighting a misguided argument that “the abstract idea exception is patent law’s sole mechanism for excluding claims directed to manipulation of non-technological concepts and relationships.”

Transcript here. Some extracts here

One interesting point: the questioning of the advocates about which of the competing options proposed by the amici they preferred as solutions to the issue.

Summary of briefs with links to the briefs

Washington Post preview

Our own battles in this front are still proceeding with a decision awaited in the Research Affiliates appeal and RPL Central.

Meanwhile the USPTO has issued revised guidelines: 2014 Procedure For Subject Matter Eligibility Analysis Of Claims Reciting Or Involving
Laws Of Nature/Natural Principles, Natural Phenomena, And/Or Natural Products
.