05 November 2013

It’s ‘Business as Usual’ on Software Claims at IP Australia

Keep Calm and Carry OnAnybody who thought that the success of RPL Central in its appeal against revocation of its innovation patent by IP Australia would change current Patent Office practice will, I am afraid, be sorely disappointed.

As most readers will be aware, there have been two decisions by the Federal Court of Australia this year in relation to the patent-eligibility of computer-implemented inventions, both resulting from appeals against rejection by the Commissioner of Patents.  The first related to two rejected patent applications by Research Affiliates, LLC, in which the rejection was upheld by Justice Emmett.  The second, as noted above, was the successful RPL Central appeal decided by Justice Middleton.

Research Affiliates is seeking to appeal its loss to a Full Bench of the Federal Court, while the Commissioner has applied for leave to appeal her loss in the RPL Central case.

This leaves applicants – and the Patent Office – in a difficult position.  The two Federal Court decisions are equally binding on patent examiners.  And, although appeals are pending in both cases, they nonetheless currently reflect the state of the law in Australia.  Arguably, the correct approach in this situation would be to determine, on a case-by-case basis, whether claims under consideration are ‘more like’ those in the Research Affiliates applications, or those in the RPL Central patent, and either reject or accept accordingly.

I have found, however, through recent experience, that this is not what is happening.  In practice, IP Australia’s current approach is to continue rejecting applications on the basis of the Research Affiliates decision, effectively ignoring the authority of RPL Central.

Why No Change in Practice?

To be fair, IP Australia is understandably concerned about the possibility that it may begin (once again) to allow certain types of claims which it had previously been rejecting, only for them to be found unpatentable following the Full Court appeals.  (Personally, I do not believe that there is any prospect of the Commissioner’s appeal against the RPL Central decision succeeding, however regular readers will be aware that I am not an unbiased observer in that case!)

There is a sense in which this really should not matter.  Nothing in the Australian Patents Act 1990 guarantees that any granted patent is valid (see section 20).  Indeed, it is clearly not unheard of for invalid patent claims to be granted, otherwise there would never be any successful invalidity defences run in court.  Examiners do not have perfect information available to them, either in relation to the facts (e.g. searchable access to all relevant prior art) or to the state of law, which is often only clarified as specific issues come before the courts.  With the best will in the world, and with all diligent effort, the examination process is inevitably imperfect.

On the other hand, invalid patents sitting on the Register serve nobody’s best interests.  They are ultimately worthless to the owner, because they cannot be successfully enforced in court.  In the meantime, however, they create uncertainty for competitors who may not be 100% confident of their invalidity.  IP Australia bears a great deal of the responsibility for the integrity of the Register, and tends to bear the brunt of criticisms that too many ‘weak’ or ‘invalid’ patents are granted.

Dealing With Uncertainty

So what is the Patent Office – or an applicant – to do during this period when the law is potentially in flux?

The answer for patent applicants is in some ways straightforward.  There is only a limited period within which to gain acceptance after a first examination report has been issued (now 12 months for a standard application, although there remain many applications pending which were initially examined prior to 15 April 2013 and which are therefore still subject to the old 21 month period).  So most applicants will conclude that they really need to have a go, at least once, at overcoming any objections raised, if any reasonable arguments can be made in support of acceptance.

The Patent Office is also adopting a simple approach – continue to reject based upon Research Affiliates.  I recently filed a response to an examination report which included an objection of ‘lack of manner of manufacture’ (i.e. ineligible subject matter), along with amendments specifically designed to make the claims more closely analogous to those in the RPL Central case.  The rejection was maintained, despite the amendments and substantial supporting argument.  Interestingly, however, the second examination report included the following note:

The Commissioner is aware that both of the aforementioned decisions are under appeal and, pending a decision of the Full Federal Court, examination will continue on the basis of current practice (ie the law as stated in Research Affiliates). However, it is noted that there are a number of provisions of the Patents Act that may permit patent applicants to preserve their interests pending clarification of the law and use of these mechanisms should be considered.

There are two things I find interesting about this statement.  First, it includes what seems to be an admission that the Office is going to continue its existing practice, relying only upon the Commissioner’s success in the Research Affiliates case, and ignoring the RPL Central decision.  Of course, some of the time this will be wrong, though the applicant’s option in such cases, to appeal the Office decision to the Federal Court, is hardly an attractive one given the costs involved (although I would note that it seems likely that the court would quite easily be persuaded to adjourn proceedings at an early stage pending the Full Federal Court judgments, which could limit costs to a few thousand dollars, rather than the tens of thousands likely to be involved in running a full appeal).

The second interesting aspect of the statement is the fact that it contains a positive encouragement to use the ‘mechanisms’ available for applicants to preserve their interests, which I read as primarily being the filing of divisional applications.  This is a practice to which IP Australia is, in general, quite strongly opposed.  Clearly, however, the current circumstances in relation to the patent-eligibility of computer-implemented inventions create a special case.  The main issue with chains of divisional applications is the uncertainty they can create with regard to the ultimate scope of patent rights available to the applicant.  However, uncertainty about the scope of rights available for computer-implemented inventions is unavoidable at present, until such time as the Full Federal Court issues a decision.


If you are (or your client is) an applicant who has had claims rejected by IP Australia for being directed to an unpatentable computer-implemented invention, do not expect any assistance from the RPL Central decision.

I cannot advise you simply not to bother arguing against such rejections, because every case is different.  For example, there may be applications which have been wrongly rejected even under the current practice, where suitable arguments and amendments may be successful.

However, pending at least one decision of the Full Federal Court we should not expect to see any significant change of practice from IP Australia.  For most applicants, then, the best strategy will be to keep rights pending, by filing a divisional application if necessary.

Incidentally, the Research Affiliates appeal is scheduled to be heard on 18 November 2013 in Sydney, before Justices Bennett, Nicholas and Kenny.  (Justice Middleton was originally assigned to the bench, but the Chief Justice considered that he disqualified himself by commenting on the original decision in his judgment in RPL Central.)  To ensure consistency at the Full Court level, the RPL Central appeal will not be scheduled until after a decision is handed down in Research Affiliates, which I anticipate will be in the first few months of 2014.


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