Federal Court Ruling on Patent-Eligibility of Business Processes Leaves Questions Unanswered

On Monday 10 November 2014, the Full Court of the Federal Court of Australia handed down its long-awaited decision in Research Affiliates v Commissioner of Patents [2014] FCAFC 150.

The court dismissed applicant Research Affiliates’ appeal, finding that its invention, which relates to the construction and use of passive portfolios and indexes for securities trading, is ineligible for patent protection.

Along with many others, we have been waiting for this decision in the hope that it would provide useful guidance in relation to the patent-eligibility of inventions broadly regarded as ‘computer-implemented business processes’.

In summary, however, the Research Affiliates decision is not the ‘silver bullet’ we had hoped for.  While it may be helpful in establishing patent-eligibility in some cases, overall it may not bring a great deal of additional clarity to the question of what is required for a computer-implemented invention to be patent-eligible.

For applicants with pending applications in this field we therefore recommend, where practical, waiting for further developments.  These include: the outcome of another pending appeal in the case of RPL Central v Commissioner of Patents; a possible High Court appeal by Research Affiliates; and any changes that may be made to the practice guidelines followed by Australian patent examiners in view of the Research Affiliates decision.

A few further comments on the Full Court’s decision follow.

The Bad News

Unfortunately, the judgment is disappointing in terms of guidance.

Although the court has found that the Research Affiliates claims are ineligible for patent protection (i.e. not for a ‘manner of manufacture’ under Australian law), the primary reason for this finding is that the patent application offers nothing more than disclosure of an unpatentable business ‘scheme’, or ‘abstract idea’, in combination with a very general direction to implement the scheme on a standard computer.

While this may identify a specific class of subject matter that is not patentable, it provides little guidance on the necessary characteristics of patent-eligible inventions, in which the use of information technology is more integrally bound with the claimed methods and systems.

We are therefore concerned that the court’s decision may not result in any significant change in current Patent Office practice.  Almost any claim to a computer-implemented invention can be reduced to the implementation of an ‘abstract idea’ on a ‘standard computer’, particularly considering that the court does not define what is meant by ‘abstract’ in this context.  As a result, there remains a significant subjective component to the determination of whether or not the substance of the invention resides wholly in an unpatentable abstract idea.

In a case in which a disagreement with an examiner over patent-eligibility comes down to a difference of ‘opinion’ regarding the appropriate characterisation of the claimed invention, it is generally open to the examiner to stand ground and maintain the objection.

The Good News

This is not to say that there is nothing good or useful in the judgment.  We are, for example, very pleased with a positive discussion of the approach employed by the judge in the RPL Central case (at paragraphs [95]-[100] of the decision).  Watermark represents the patent owner in the RPL Central case, and last year we successfully appealed the Commissioner’s decision finding the claims not to be patent-eligible.

This passage of the judgment, with others, also supports the proposition that where a method is ‘tied to a machine’, or the technology is ‘integral’ to the claimed invention, it will be patent-eligible.

In this regard, then, the Research Affiliates decision does provide applicants with some additional ammunition that may be useful to argue for the patentability of claims directed to computer-implemented inventions, including those that may be considered ‘business processes’.

The court has also confirmed the continuing patent-eligibility of a broad range of computer-implemented inventions (at, e.g., paragraph [111]).

Future Developments

There are a number of likely future developments:

  • most immediately, the Commissioner of Patents will need to decide whether or not to proceed with the RPL Central appeal – we obviously cannot know her intentions in this regard, however our expectation is that the appeal will go ahead;
  • we also think it likely that Research Affiliates will make an application for leave to appeal the decision to the High Court – however, any such application will not be heard until around the middle of next year;
  • in the meantime, the RPL Central appeal will most likely be heard and (hopefully) decided, and we would hope and expect that this will provide us with clearer guidance as to the requirements for inventions that are patent-eligible.

The Full Court’s judgment in Research Affiliates confirms that disclosing an unpatentable concept in a patent application, and then seeking to claim this as an invention by ‘merely’ directing that it be implemented via computer using standard techniques, is insufficient to confer patent-eligibility.

Beyond this, however, it leaves many questions unanswered, particularly regarding the extent to which a specific, rather than ‘generic’, computer-implementation may be sufficient to render an otherwise ‘abstract’ idea patentable.

Answers to these questions may need to wait for a more suitable case.  Perhaps RPL Central will prove to be that case?