31 August 2013

At Last – ‘Software Patent’ Appeal Upheld in Australian Court

RPL Central Pty Ltd v Commissioner of Patents [2013] FCA 871 (30 August 2013)

Champagne uncorkingAppeal – from opposition decision of the Commissioner of Patents – patentable subject matter – whether computer-implemented information system and process a ‘manner of manufacture’

Justice Middleton, in the Federal Court of Australia, has found the claims of an innovation patent relating to an automated information and evidence gathering system to relate to a patent-eligible ‘manner of manufacture’.

I usually put any disclaimers or disclosures of interest at the bottom of a post, but on this occasion I am putting them right up-front (although for some readers, at least, this will not be news).

RPL Central Pty Ltd is a client of my employer, Watermark Intellectual Asset Management.  I drafted the patent specification which is analysed by Justice Middleton in forensic detail in RPL Central Pty Ltd v Commissioner of Patents.  My colleagues within Watermark’s IP Law firm ran the Federal Court appeal against the Patent Office decision finding all of the patent claims to be invalid on subject-matter grounds (i.e. not for a ‘manner of manufacture’ under the Australian law).  I was involved throughout the process, even joining the lawyers in court last December.

I am therefore, not even remotely, an unbiased observer in this case, and I am openly delighted – for myself, my colleagues, Counsel who acted in the matter, and our client – that Justice Middleton upheld the appeal.  I am also relieved that my work has (so far) survived the scrutiny to which it has been subjected.  I have to say, also, that it is a somewhat surreal feeling to see words and drawings that I produced now reproduced in a Federal Court judgment.  In the overall scheme of things, so few patents actually become the subject of court proceedings that many practitioners may go their entire careers without this happening to them.  Most, I dare say, would be glad of this!

You need not worry, however, that my bias will influence my reporting of this case.  Indeed, I am obliged to adhere closely to the facts, and to refrain from venturing any opinion on the merits of Justice Middleton’s reasons.  The judgment is subject to a possible application (by either party) for leave to appeal to a full bench of the Federal Court of Australia, until 20 September 2013.  As such, there is the possibility that anything I say could, and might, be used against me (or, more to the point, my client) in a court of law.

So what you will be getting in this post, other than my personal observations above, is a brief factual rundown of the background to this case, and a few key excerpts from Justice Middleton’s reasons.  (And, yes, I am aware that even the selection of passages from the judgment might reflect my own opinions on what is ‘important’, but I trust that this will be taken in the spirit in which it is intended – as a guide to readers who may be too time-poor to read the full 174 paragraphs of the judgment right away.)

Background

Australian Innovation Patent No. 2009100601, entitled ‘Method and System for Automated Collection of Evidence of Skills and Knowledge’, was filed on 22 June 2009.  It was subsequently examined, and certified on 13 October 2009.  In the course of examination, objections of lack of novelty were raised.  The claims were amended in response.  There was no objection that the claims did not define a ‘manner of manufacture’.

The patent was subsequently opposed by Myall Australia Pty Ltd, on grounds of lack of novelty.  The opposition was unsuccessful on this basis, however all claims in the patent were found invalid on the alternative ground, raised by the Commissioner’s delegate, that they did not define a manner of manufacture, i.e. that they were not directed to patent-eligible subject matter.  (See Computer-Implemented Invention Found Unpatentable.)

RPL Central appealed that decision to the Federal Court of Australia.  Myall withdrew from the proceedings.  The Commissioner was substituted as respondent, and became an active participant.

The Judgment

The decision is lengthy (174 paragraphs in total, or 56 pages in its printed version).  However, setting aside brief introductory and concluding passages, it can be conveniently divided into six parts:
  1. extensive discussion of the specification and claims, paragraphs [4]-[47];
  2. brief discussion of the role of the Commissioner, paragraphs [48]-[52];
  3. relevant legal principles on manner of manufacture, paragraphs [53]-[110];
  4. summary of the parties’ submissions, paragraphs [111]-[124];
  5. analysis, i.e. application of the law to this case, paragraphs [125]-[161]; and
  6. discussion of the relevance of the intervening decisions in the Research Affiliates and Dynamite Games cases, paragraphs [162]-[172].
The sixth part, in which Justice Middleton distinguishes RPL Central from Research Affiliates is interesting, bearing in mind that he is on the three-judge panel which will hear the appeal in that case.  However, I do not think it would be appropriate for me to comment any further on that matter at this time.
The Law on Manner of Manufacture in Australia
A single judge of the Federal Court of Australia must follow precedent set by higher courts, i.e. the High Court of Australia, and the Full Court of the Federal Court of Australia.  As Justice Middleton states (at [126]-[127]):

In undertaking this analysis, I am bound to apply the key criteria articulated by the High Court in NRDC (and elaborated upon by the Full Courts in CCOM and Grant).

It will be recalled from the discussion of NRDC earlier in these reasons that when applying the Morton J ‘vendible product’ test to a process, a ‘product’ existed in that case for this purpose because there was an artificially created state of affairs, and something in which the new and useful effect may be observed (NRDC at 276-277). Such a ‘thing’ need not be an article – it may be any physical phenomenon in which the effect may be observed (NRDC at 276). The requirement that the product be ‘vendible’ relates to the requirement that the product have utility in practical affairs, or in other words, be of an industrial, commercial or trading character (NRDC at 275). Further, the invention must belong to the useful arts, not the fine arts, in the sense that the invention must have value to the country in the field of economic endeavour.
Value in the Field of Economic Endeavour
Justice Middleton dealt firstly with the latter element of the NRDC test (at [129]-[130]):

However, the invention that is the subject of the Patent is said to produce a useful result: it overcomes difficulties involved in seeking out relevant education providers, and enables the recognition of prior learning. I accept the statements to this effect set out in the specification (already reproduced in these reasons), and I further accept RPL’s submissions that the invention solves a problem in a field of economic endeavour, being the educational sector of the economy. In my view, this is sufficient to satisfy the requirement that the invention must belong to the useful arts, not the fine arts, as articulated in NRDC.

For the same reasons, I consider that the invention satisfies the ‘vendible’ requirement of the vendible product test as articulated by the High Court in NRDC – namely, the invention has utility in practical affairs in the way already considered, and that given its application to the education sector of the economy, can be said to be of an industrial, commercial or trading character.
‘Product’
His Honour then turned to the question of whether the claims related to a ‘product’, in the NRDC sense of an artificially created state of affairs, and something in which the new and useful effect may be observed (at [139]-[144]):

As previously summarised, the invention embodied by claim 1 enables the retrieval of relevant data from a remotely located server via the internet …, and the generation of questions for and presentation of questions to the user based on this data …. The effect of this process is experienced by the individual user on their computer. The user is then able to respond to these questions, which responses are transferred to the assessment server …. It is important to note that the involvement of the computer in the invention is described in these claims in such a manner that it is inextricably linked with the invention itself.

To illustrate the artificial effect created by the claims in question, it is useful to summarise the key aspects of the invention as articulated by RPL. RPL submitted that overall, the invention comprises a method and a system including, in practice, programmed computers operating together and employing data communications within a networked environment. A pre-existing server computer stores information pertinent to a recognised qualification standard. Another computer, specifically programmed to operate in accordance with the teaching of the Patent, retrieves the stored information by conducting data communications transactions via the internet. In the absence of the specific programming, this feature exists only in the general sense that the stored information may be accessed via the internet, although it is not made available for the purposes disclosed in the Patent. It is therefore a function of the computer, as taught by the Patent, to retrieve salient information for further processing.

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.

I am satisfied that it is apparent on the face of the specification that each of the steps of the method defined by claim 1 and the system defined by claim 5 requires or involves a computer-generated process. As just described, there are accordingly a number of physical effects which occur in implementing the invention defined by the claims. I further find that each of the computer-effected steps of the invention constitutes or gives rise to a change in state or information in a part of a machine, and therefore produces a physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation (Grant at 70 [32]). …

In my view, these effects are in the same category as existing inventions previously held by courts of this country to be patentable according to the NRDC principles: for example, the curve on a computer screen in IBM …, the Chinese characters represented on a computer screen for word processing in CCOM, and the writing of data onto a smart card in Catuity. I consider that the invention in this case can be distinguished from that in issue in Grant, which truly was ‘a mere scheme, an abstract idea, mere intellectual information’ with no relevant physical effect whatsoever. Such a thing has never been held to be patentable. There is clearly a physical effect in this case, as there is a component that has been physically affected, or a ‘change in state or information in a part of a machine’ (Grant at 70 [32]). The Commissioner submitted that this phrase did not form part of the ratio decidendi in Grant, as that case did not involve a computer, and in employing that expression, the Full Court were merely summarising the effect of Catuity, CCOM, State Street and AT&T. That may be correct. Nonetheless, I consider the statement to be a useful précis of the way in which the artificial state of affairs requirement may apply to computer programs, in accordance with the principles set out by the High Court in NRDC and the Full Courts in CCOM and Grant, and so adopt it here.
‘Significance’ and ‘Centrality’ of Physical Effect
The Commissioner had argued (in Justice Middleton’s words, at [145]) that ‘the physical effect required by the manner of manufacture analysis must be “significant” in that it is concrete, and also “central” to the purpose or operation of the claimed process; or that it otherwise arises from the combination of steps of the method in a substantial way’ and that (at [146]):

…in this case, although the use of a computer facilitates the operation of the claimed method (and makes it faster or more convenient), the computer (or the physical effect involved in its use) is not central to the operation or purpose of the claimed process. Rather, the Commissioner submitted, the information on the qualification and unit requirements and the information from individuals seeking assessment could be gathered by other means. The computer is merely a common mechanism to carry out the method in a more convenient way.

On this Justice Middleton stated (at [147]):

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

With regard to this specific case, His Honour stated (at [156]-[157]):

… I note in respect of the invention that is the subject of this proceeding that the claims expressly incorporate a computer into the methods and system claimed. The computer is a substantial, central or integral part of each claim. On this basis and for the foregoing reasons, I accept that any requirement of substantiality (if it exists in Australian law) would be made out in this case.

This is a convenient juncture to comment on one particular feature of the Commissioner’s approach to the manner of manufacture inquiry in this proceeding. It was suggested in the Commissioner’s submissions that the invention that is the subject of the Patent could be performed without the use of a computer, and that if one were to strip away the computer aspects of the claims, one would be left with only ‘a method for performing an aspect of a business’. Even if this were true I do not accept that this is the appropriate way to approach the question of manner of manufacture. One should not subtract from the invention any aspect of computer implementation, and then determine whether what remains is the proper subject matter of letters patent. This is not consistent with Australian authority, and fails to give effect to the plain words of the claims of the Patent, which clearly prescribe computer implementation or involvement as an essential feature of the invention. I accept that to a certain extent, the court looks to the ‘substance’ of the claims, but by reference to what is actually claimed as necessarily informed by the specification.

Conclusion

In the interests of avoiding any potentially prejudicial commentary, I shall conclude merely by quoting Justice Middleton one more time, at paragraph [173]:

In light of the foregoing, I uphold the appeal.

Image credit: Niels Noordhoek (Own work) [CC-BY-SA-3.0], via Wikimedia Commons

4 comments:

Matt said...

Congratulations.

Mark Summerfield said...

Thanks, Matt. Obviously, we're very pleased! :)

Doug Calhoun said...

Hi Mark,

As I read through your post I was asking myself how this application would have fared under the new “computer program as such” exclusion in New Zealand. The key part of the new clause 10A is paragraph (3):

“A claim in a patent or an application relates to a computer program as such if the actual contribution made by the alleged invention lies solely in it being a computer program.”

From a purely logical approach the use of “solely” means that every invention must have one of: a solely software contribution; a partly software and a partly
“other” contribution; or a solely “other” contribution.



You noted that Justice Middleton found:

“It is important to note that the involvement of the computer in the invention is described in these claims in such a manner that it is inextricably linked with the invention itself.”

It seems to me that finding of inextricable linkage between the computer and the
invention found by Justice Middleton means the invention has a partly software
and a partly “other” (computer) contribution and would not be excluded by
clause 10A.

The examples in Clause 10A indicate that the actual contribution is to be assessed by considering what the invention has contributed to the art, that is, how the invention is novel and inventive over the prior art – a conflation of patent
eligibility (in the American usage) with patentability. Justice Middleton did
not expressly conflate eligibility with novelty and inventiveness in the manner
suggested by the NZ clause – so there is still wriggle room for those who
disagree.

What do you think?

Mark Summerfield said...

Hi Doug

I am not at liberty at present to express an opinion based on the specific circumstances of this case.

However, considering that the provisions in the NZ Patents Bill have been expressly designed to emulate the UK position, I would expect the decision of the UK High Court in Re Protecting Kids the World Over (PKTWO) Ltd [2011] EWHC 2720 (Pat) would be relevant to the assessment of patent-eligibility of future computer-implemented inventions in NZ. In that case, Mr Justice Floyd found (paragraph [34]):

I start with the proposition that the generation and transmission of an alert notification to the user/administrator is not a relevant technical process. I accept that in many cases this may be correct. Plainly it was correct in the case of two out of the three patents considered by Mann J in Gemstar, where information was simply displayed on a screen. But what is in play in the present case, namely an alarm alerting the user, at a remote terminal such as a mobile device, to the fact that inappropriate content is being processed within the computer, is in my judgment qualitatively different. First of all, the concept, although relating to the content of electronic communications, is undoubtedly a physical one rather than an abstract one. In that respect it was more akin to the third of the three patents considered by Mann J in Gemstar. Secondly, the contribution of claim 33 does not simply produce a different display, or merely rely on the output of the computer and its effect on the user. The effect here, viewed as a whole, is an improved monitoring of the content of electronic communications. The monitoring is said to be technically superior to that produced by the prior art. That seems to me to have the necessary characteristics of a technical contribution outside the computer itself.

This may be the high water mark for patent-eligibility of computer-implemented inventions in the UK, and perhaps therefore also for NZ. I will leave you to draw your own conclusions as to its application to the facts in the RPL Central case.

I would say that I think it unlikely that NZ courts will continue to take any guidance from Australian decisions in this area. The structure of clause 10A seems to make it pretty clear that the exclusion is 'carved out' from the concept of a 'manner of manufacture', i.e. that something might be a manner of manufacture according to existing principles but for the operation of clause 10A. Furthermore, Justice Middleton did not merely avoid expressly conflating eligibility with novelty and inventiveness -- at paragraph [109] he effectively says that one must not do this:

It must also be remembered that any court considering the application of NRDC is only dealing with the concept of manner of manufacture, which is a threshold consideration. Any validity inquiry remains to be determined quite separately, and on different criteria compared to the conceptual analysis dictated by the NRDC approach. It is unnecessary to introduce rigid criteria into this “manner of manufacture” inquiry, when the policy of the patents legislation can also be implemented through the application of the distinct grounds of invalidity set out therein.



Cheers,


Mark

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