research affiliates

Encompass is still too abstract to be patentable subject matter

A Full Bench[1] of the Federal Court’s appeal jusrisdiction has dismissed Encompass’ appeal against Perram J’s ruling that its computer-implemented method was not a patentable invention because it was not a manner of manufacture.

Encompass had two innovation patents covering its concept. It sued Infotrack for infringing them. Infotrack admitted its conduct would infringe, but contended the patents were invalid on the grounds that they did not claim a manner of manufacture and did not involve “an innovative step”.[2]

At first instance, amongst other things, Perram J found the claims did involve an innovative step, but were not patentable because they were not for a manner of manufacture.

Infotrack was joined in resisting the appeal by the Commissioner of Patents (appearing as of right pursuant to r 34.23. The Institute of Patent Attorneys also sought and obtained (on a limited basis) leave to intervene.[3]

The claimed invention

Encompass’ (innovation) patent claimed a computerised method and apparatus for displaying business intelligence about “entitites”. The idea seems to have been to facilitate searching of multiple third party electronic databases[4] to ascertain and present aggregated data about the “entity” of interest. Claim 1 provided:

A method of displaying information relating to one or more entities, the method including, in an electronic processing device:

a) generating a network representation by querying remote data sources, the representation including:

i) a number of nodes, each node being indicative of a corresponding entity; and,

ii) a number of connections between nodes, the connections being indicative of relationships between the entities; and,

b) causing the network representation to be displayed to a user;

c) in response to user input commands, determining at least one user selected node corresponding to a user selected entity;

d) determining at least one search to be performed in respective of the corresponding entity associated with the at least one user selected node by:

i) determining an entity type of the at least one user selected entity;

ii) displaying a list of available searches in accordance with the entity type; and,

iii) determining selection of at least one of the available searches in accordance with user input commands;

e) performing the at least one search to thereby determine additional information regarding the entity from at least one of a number of remote data sources by generating a search query, the search query being applied to one of the number of remote databases to thereby determine additional information regarding the entity; and,

f) causing any additional information to be presented to the user.

Crucially for the outcome of the appeal, the Court noted at [30] that neither claim 1 nor any of the other claims “characterised” the electronic process device which performed the method – “any suitable process system” may be used.

Encompass’ challenge

Basing itself on NRDC and CCOM, Encompass argued that the concept of manner of manufacture required the claim to give rise to an artificially created state of affairs which had economic significance. These requirements were satisfied, Encompass argued, because the claimed invention involved:

(a) the interrogation of remote data sources;

(b) the generation and display of the network representation;

(c) the interaction with the network node to initiate a further search;

(d) the determination that the results thereby produced relate to the same entity as the one produced from the first search (the contention that this is a step of the claimed method is an issue in this appeal); and

(e) the display of the results of that search.

Encompass argued that Perram J had erred by considering whether the claimed invention “improved the functionality of the machine”. This was said to be an erroneous incorporation of the “machine or transformation” test from US law.

The appeal

Despite what it described as the “oblique attacks” made by Encompass and IPTA on Research Affiliates and RPL Centrol, the Court considered at [77] the appeal did not raise any significant question of principle. Their Honours considered that, having regard to the submissions made by Encompass and IPTA, the correctness of the two earlier decisions was not seriously in doubt. Rather, the issue was whether Perram J had applied the principles from those cases correctly.

The Court started by noting that the High Court in Myriad had agreed with NRDC that the issue is whether the claimed invention is a proper subject for the grant of a patent.

At [80], therefore, the Court noted that to determine whether a claimed invention involves a manner of manufacture requires a characterisation of the claim.

At [81], the Court reiterated that this characterisation is to be undertaken as a matter of substance rather than merely as a matter of form.

At [83], the Court noted the Myriad majority had held the NRDC court had not been attempting an exhaustive definition of “manner of manufacture” when it referred to ‘an “artificially created state of affairs of economic significance”’. Further, the satisfaction of that formulation did not necessarily lead to a finding of “inherent patentability”.

Encompass’ reliance on the reasoning in CCOM was misplaced. The Full Court in CCOM had explained why the computer program in that case was a manner of manufacture in the following terms:

The NRDC case at 275–277 requires a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the field of economic endeavour. In the present case, a relevant field of economic endeavour is the use of word processing to assemble text in Chinese language characters. The end result achieved is the retrieval of graphic representations of desired characters, for assembly of text. The mode or manner of obtaining this, which provides particular utility in achieving the end result, is the storage of data as to Chinese characters analysed by stroke-type categories, for search including “flagging” (and “unflagging”) and selection by reference thereto.

First, however and as the High Court in Myriad had confirmed, this reaoning was a guide only and not a rigid formula.

Secondly, the Court rejected Encompass’ argument that the proposition in Grant that a manner of manufacture required a “physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation” was inconsistent with CCOM and Catuity. Rather, both CCOM and Catuity involved methods where a component was physically affected or a change in state or information in a machine.

The Court then confirmed that the presence of a physical effect in the broad sense envisaged in Grant was also not conclusive. (There being such a transformation in the electronic processing device’s state by performing Encompass’ method.) The question was whether the claimed invention as a matter of substance transcended an abstract idea or mere information.

Encompass’ claimed invention did not provide sufficient specificity to transcend the abstract idea. At [99], the Court explained:

99 the method claims in suit are, in truth, no more than an instruction to apply an abstract idea (the steps of the method) using generic computer technology. The appellants endeavoured to explain why the claimed method falls within the notion of an artificially created state of affairs by attributing computer functionality to the method: the computer (or, in the language of the claims, the electronic processing device) searches remote data sources; the computer generates a network representation; and the computer responds to a user’s selection to conduct a further search. The appellants also attributed computer functionality to the method by the computer determining additional information relating to the same entity. As we have previously noted, this involves the contentious question of “entity matching”—a step which the primary judge found was not a step in the claimed method. We discuss this below when dealing with the grounds relating to innovative step. But even if for present purposes “entity matching” is taken to be a step in the claimed method, neither it nor the other steps, individually or collectively, amount to anything more than a method in which an uncharacterised electronic processing device (for example, a computer) is employed as an intermediary to carry out the method steps—where the method itself is claimed in terms which amount to no more than an abstract idea or scheme. (emphasis supplied)

The Court accepted that Encompass’ method could not be implemented using “generic software”. This did not save the claims as they did not specify as an essential feature of the invention any particular software or programming. It was left to a user of the method to devise and implement their own suitable computer program. According to the Court, this was merely an idea for a computer program. As in Research Affiliates and RPL Central, at [101] the Court characterised Encompass’ claims as merely a “method … in an electronic processing device”, which itself is not characterised.”

Finally, the Court at [105] – [110] rejected Encompass’ criticism that Perram J had improperly required the claimed method to result in “an improvement in the computer” by reference to the Research Affiliates court’s discussion at [104] – [105] to Alice Corporation in the USA. The Court considered that Perram J’s reference to these matters, properly understood, was just “an inquiry into and search for possibly patentable subject matter by reference to a touchstone of such subject matter.”

So, there you have it; all cleared up!

Next up, the Commissioner’s appeal (NSD66 of 2019) against the finding that Rokt did claim a manner of manufacture.

IPTA’s intervention

The Court summarised IPTA’s intervention as seeking to contest the Commissioner’s approach to computer related inventions. The Court outlined how it understood IPTA’s proposed intervention:

72 IPTA’s submissions took issue with the Commissioner’s statement that, in considering the patentability of computer-implemented methods, a key consideration is determining where the alleged ingenuity lies. IPTA submitted that this statement is “misconceived” because it intrudes questions of novelty and inventive step into the question whether the invention is a manner of manufacture; it suggests that the way in which the method is implemented in the computer is decisive and directs attention away from the method as claimed; and it suggests that a method characterised as a business method or a scheme is unpatentable, whereas it is only methods or schemes that are no more than a method of doing business or an abstract idea (with no practical application or effect) that are not patentable.

73 IPTA submitted that the Commissioner’s “misconceptions” had become established practice when examining patent applications. IPTA said that this was of “central concern to IPTA and its members’ clients seeking patent protection for their inventions”. IPTA said, further, that these “misconceptions” are reflected in the Australian Patent Office Manual of Practice and Procedure (the Manual) on which the Commissioner’s delegates rely for authoritative guidance in the examination of patent applications. IPTA argued that this has “led … to a confused state of affairs in the examination of computer-implemented inventions, and will cause examination of many such applications to miscarry”.

The Court, however, refused to buy into this fight on the grounds that the correctness or otherwise of the Commissioner’s earlier decisions was not a controversy before the court. The Court also refused to engage with what it described as “IPTA’s editorial comments” on the Manual of Practice and Procedure.

Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161 (Allsop CJ, Kenny, Besanko, Nicholas and Yates JJ)


  1. A sitting of the Full Court constituted by 5 judges, rather than the more usual 3 judges. A bench of 5 judges appears to be appointed where there appear to be inconsistent rulings of differently constutited (3 Judge) full courts or there may be some compelling reason to doubt the correctness of an earlier decision.  ?
  2. Patents Act 1990 s 18(1A).  ?
  3. IPTA’s intervention sought to challenge the Commissioner’s approach to computer related inventions  ?
  4. For example, land registries, ASIC company records, police records “or the like”.  ?

Encompass is still too abstract to be patentable subject matter Read More »

(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)

 

 

(Not) patenting business methods Read More »

Abstract principle, fine art or just unknowable

Mr Lisica applied for a patent, claim 1 of which reads:

An auscultative method that expounds upon the Natural Harmonics Series (NHS) and Mr Svetko Lisica’s Scientific Theory for Music’s decipherability and attunement, from the Invention’s Programmatic Specificity in a soniferous or visual realm for a new, useful, innovative and original Composition Engine and via its computations, providing the compositional harmonic materials that are put in the states of being manifested by the Invention’s unprecedented and original Musical Instrument and Sonic Biodynamical Brain Entrainment Bridge for Binaural Beats, into a stable unit of measure in exactitude for a tuning medium, herewith this Invention is the state or fact of existence, a practical Universal Intonation System that belongs with Music, The Absolute and The Beyond.

(The other claims are all dependent.)

Despite submissions to the Examiner, the Delegate at a hearing and an appeal to the Court, no-one (apart from Mr Lisica) really has any idea what the claimed invention is.

The Delegate rejected Mr Lisica’s application on the grounds that it was not a manner of manufacture and contravention of s 40(2) – the old form.[1]

Jessup J found only one objection was necessary: non-compliance with s 40(3) (in its old form):

The claims are, of course, critical to the exercise in which the court is now involved. It is here that the applicant encounters what is, for a court operating without the assistance of expert evidence, a fundamental difficulty. In my view, Claim 1, set out above, is not clear and succinct, as required by s 40(3) of the Patents Act. As a statement marking out the area of the public monopoly which the applicant seeks, the claim falls well short of the standard of clarity required. The ground of objection referred to in s 59(c) is substantiated in relation to the claim. I do not, therefore, consider that there is no lawful ground of objection of the kind referred to in s 49(1)(b). I would exercise the discretion arising under s 49(2) adversely to the applicant.

The Commissioner (or, rather, her officers) were a bit naughty. Mr Lisica had submitted 6 files in support of his application. The Examiner and the Delegate only opened and read 2 of them. Apparently, the other files were in SCM format, which the Patent Office couldn’t open.[2]

The naughty bit: no-one told Mr Lisica that the Patent Office didn’t read the files (because they couldn’t open them) until everyone got to Court for the trial. As Jessup J explained:

It may have required a modicum of ingenuity to open the SCM files – in a demonstration in court, the applicant himself did so. But the troubling aspect of the omission referred to above is not whether it was reasonable of the applicant to have expected the examiner and the delegate to open the files, but that the applicant was never informed of the difficulty which they were, apparently, experiencing, nor invited to remedy it. The examiner’s report was supplied to the applicant in the normal course, and it gave him no reason to suspect that four out of the six files which he had submitted had not been viewed or considered for such assistance as they may have provided in conveying the nature of the invention and how it was best performed. In that state of ignorance, the applicant made his submissions to the delegate, and he too dealt with the problems which the application involved without viewing all the files which constituted the application.

(His Honour did note that he was not suggesting any different result might have occurred if the correct process had observed.) Jessup J seems to be contemplating not allowing the Commissioner her costs:

In the orders which accompany these reasons, I shall lay out a timetable for the making of written submissions on costs. I shall, of course, consider any submission which the Commissioner makes in that regard, but I think I should say at this stage that one issue upon which I would expect to be addressed in that submission is whether the circumstances most recently discussed above in these reasons should be considered relevant to such entitlement to costs as the Commissioner might otherwise have as the successful party in this appeal.

Lisica v Commissioner of Patents [2014] FCA 433


  1. Relying amongst other things on Research Affiliates.  ?
  2. His Honour drily noted, even a file in .doc format does not comply with the Commissioner’s requirements.  ?

Abstract principle, fine art or just unknowable Read More »

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
.

Software patents in the USA Read More »

Alice corp

The Full Federal Court has reserved its decision in Research Affiliates’ appeal; the Commissioner’s appeal in RPL Central is still pending.[1]

In the USA, Alice Corp. had a patent for a computerised method of reducing “settlement risk”, a type of escrow arrangement: the 10 judges in the Federal Circuit Court of Appeals came up with 5 different opinions of which Justice Newman memorably said:

[The 5 judgments have] propounded at least three incompatible standards, devoid of consensus, serving simply to add to the unreliability and cost of the system of patents as an incentive for innovation. With today’s judicial deadlock, the only assurance is that any successful innovation is likely to be challenged in opportunistic litigation, whose result will depend on the random selection of the panel.

Now, the US Supreme Court has agreed to try to sort it out.

ALICE CORPORATION PTY. LTD. V. CLS BANK INTERNATIONAL, ET AL., Docket No. 13–298 (Supreme Court 2013) via Patently-O


  1. The Full Court has also reserved in Cancer Voices re isolated DNA (although one might think there’s little scope for that to get up after Apotex v Sanofi.  ?

Alice corp Read More »

Patenting computer programs or business methods in Australia

At the end of August, Middleton J overturned the Commissioner’s refusal to grant an innovation patent for RPL’s computerised method entitled ‘Method and System for Automated Collection of Evidence of Skills and Knowledge’. Instead, his Honour held that the method was a manner of manufacture and, novelty and inventive step having been satisfied, patentable.

What the claimed invention was

In essence, the claimed invention allowed a user to access a single point of entry (for example, over the internet using his or her browser), retrieve information about particular qualifications, which was presented in the form of questions to the user, then provide answers and supporting documentation (still for example over the internet), which was then processed by a relevant certifying institution and, if the relevant criteria were satisfied, the relevant qualification would be awarded or, if not, the user could be presented with information about what further steps needed to be undertaken to satisfy the necessary criteria.[1]

This bald summary hardly does justice to what was involved. For example, there are a large number of registered training organisations or TAFEs (RTOs). Collectively, they offer some 3,500 different qualifications and some 34,000 Units of Competency. Any individual RTO therefore offered only a very small set of qualifications or units. RPL’s method, first, circumvented the need for an individual user to identify which RTO was appropriate as RPL’s method retrieved all the necessary information from online databases. Then, RPL’s method converted the criteria into a form of questions which the user could answer. So, to take an example from the judgment, the element of competency required for a particular unit relating to aged care:

demonstrate an understanding of the structure and profile of the aged care sector

became:

Generally speaking and based upon your prior experience and education, how do you feel you can demonstrate an understanding of the structure and profile of the aged care sector?

and a particular performance criterion associated with that:

all work reflects an understanding of the key issues facing older people and their carers

was converted in RPL’s method to:

How can you show evidence that all work reflects an understanding of the key issues facing older people and their carers?[2]

for enabling individuals to get their competency or qualifications recognised under the nationally accredited Unit of Competency scheme.

The specification identified the advantages flowing from this method with its single point of contact:[3]

Individuals are provided with a service which simplifies the identification of relevant Units of Competency, and the gathering of associated assessment information to enable [recognition of prior learning] to be performed. Training organisations are relieved of much of the administrative cost associated with performing [recognition of prior learning]. By the time the training organisation is contacted, the relevant Unit of Competency has already been identified, and required information associated with each of the assessable criteria has already been gathered and packaged in a form enabling an efficient assessment in relation to the [recognition of prior learning] process.

Why this constituted a (patentable) manner of manufacture

Middleton J noted at [127] that the test for “manner of manufacture” laid down in NRDC, CCOM and Grant required that the claimed invention result in an artificially created state of affairs in which a new and useful effect may be observed. This had to be of utility in practical affairs or be of an industrial, commercial or trading character and belong to the useful arts, not the fine arts, so that its value lay in a field of economic endeavour.

These criteria were satisfied. The results of the method were useful because at [129] it overcame difficulties involved in seeking out education providers and enabled recognition of prior learning. This was relevant to a field of economic endeavour: the education sector of the economy and thus had the necessary industrial, commercial or trading character.

While the information about RTOs and particular Units of Competency could be accessed individually in undifferentiated form over the internet, the method provided a single point of entry. In addition to the single point of entry:

[141] The computer programmed in accordance with the Patent further operates to process the retrieved information and to automatically generate data comprising an alternate means of presentation. This alternate means comprises a series of questions which can be presented to an individual user along with user interface elements which implement an online form suitable for the receipt of responses to those questions. An assessment server is programmed, again according to the teaching of the Patent, to present the form to the computer of an individual user, who preferably requires only conventional web browser software to access the assessment server via the internet. In particular, the form provides not only for user-entered responses, but also for upload of one or more files stored on the user’s computer which may comprise, for example, evidence of the user’s competency with regard to the recognised qualification standard. This access to an online form occurs as a result of the retrieval, processing and presentation steps being conducted according to the teaching of the Patent.

The various stages in this process each gave rise to the physical effect required under Grant in the various changes of state in the computer’s memory.[4] Grant itself of course involved no such transformation since it did not involve any use of any computer – just a scheme for the use of a trust.

The Commissioner had recognised that such a transformation did take place, but it was not sufficient. In a line of decisions beginning with Invention Pathways, the Commissioner had ruled that: [5]

the “concrete effect or phenomenon or manifestation or transformation” referred to must be one that is significant both in that it is concrete but also that it is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way. Consequently while the step of building a house involves a concrete physical effect it is peripheral to the method of acquiring a house and indeed could hardly be said to characterise the subject matter of the method such that it is considered an artificially created state of affairs. I consider the same to apply to a business scheme implemented in some part by computer and do not believe the patentability of such a method can arise solely from the fact that, in a general sense, it is implemented in or with the assistance of a computer or utilises some part a computer or other physical device in a incidental way.”

The Commissioner argued that the use of the computer here was not central to the method, being merely a “common mechanism to carry out the method in a convenient way.”

At [147], Middleton J rejected the Commissioner’s view that NRDC, CCOM and Grant required the requirement of substantiality or centrality of a physical effect in the sense the Commissioner contended for.

In addition, Middleton J rejected the Commissioner’s argument that the claimed invention could not be a manner of manufacture as it could be performed without the use of a computer. His Honour rejected this as a matter of principle at [157]: it was not an appropriate way to approach the assessment required under NRDC, CCOM and Grant. In any event, as a matter of fact, the magnitude of the task meant it wasn’t practicable without the use of a computer:

[158] … as a matter of fact I accept that the magnitude of the task performed by the invention (as previously described) and the express terms of the claims themselves mean that the computer is an essential part of the invention claimed, as it enables the method to be performed.

While his Honour accepted that US cases could be persuasive, he noted he was required to apply the tests developed under Australian law and did not find any assistance in the present context.[6]

At [171] – [172], Middleton J distinguished the recent rejection by Emmett J of Research Affiliates claims for a method of generating an index of securities and assets. In Middleton J’s view the central difference was that the specification in Research Affiliates “contained virtually no substantive detail about how the claimed method was to be implemented by a computer”.[7] In contrast, there was detailed information about these matters in RPL’s specification and the computer was central to the method’s working.

RPL Central Pty Ltd v Commissioner of Patents [2013] FCA 871


  1. The terms of claim 1 are set out here.  ?
  2. Taken from [21] and [24] of the Reasons.  ?
  3. At [42] of the Reasons.  ?
  4. At [143] – [144].  ?
  5. Myall at [53].  ?
  6. While his Honour did not put it this way, that is perhaps unsurprising given the rather uncertain state of the US case law, e.g.  here and here.  ?
  7. An application for leave to appeal from Emmett J’s decision has been filed: NSD328/2013.  ?

Patenting computer programs or business methods in Australia Read More »