26 July 2015

Judge in Australian ‘Software Patent’ Cases Has No Issue With Gaming Claims

Pace Kitty Slot MachineAustralian Federal Court Justice John Nicholas has issued a decision in which he declares himself ‘satisfied’ that claims directed to the awarding of prizes by casino gaming machines satisfy the ‘manner of manufacture’ requirement for patent-eligibility in Australia (Aristocrat Technologies Australia Pty Limited v Konami Australia Pty Limited [2015] FCA 735).

Justice Nicholas is one of three judges – the other two being Justices Bennett and Kenny – responsible for deciding the appeals in the Research Affiliates and RPL Central ‘software patent’ cases.  The Research Affiliates appeal has already been decided, with the court determining unanimously that a computer-implemented scheme for generating a financial index is not patent-eligible in Australia (see Australia’s ‘Alice’: Appeals Court Denies Business Method Patent).  The RPL Central appeal was heard on 7 May 2015, and a decision is keenly awaited (see ‘Software Patents’ Back Under the Appeals Court Microscope).

As regular readers will already be aware, I am involved in the RPL Central case, and was present at the hearing in May.  It appeared to me that, of the three judges, Justice Nicholas was the most sceptical of the patent-eligibility of the claims in that case.  Having spoken to others who were also present, I do not believe I am alone in this view.  I am therefore a little surprised at how uncritical the judge has been of the claims in the Aristocrat case.  The Full Court in Research Affiliates referred positively the US Supreme Court’s decision in Alice Corporation v CLS Bank, and yet I do not think that Aristocrat’s claims would be considered patent-eligible in the US under the Alice standard.

Perhaps Justice Nicholas is not as sceptical of ‘software patent’ claims as his apparent criticisms during the RPL Central hearing might suggest?

‘Gaming Machines’ Are Computers

Aristocrat asserted three of its Australian patents against Konami, however only one of these – patent no. 754689 (‘the 689 patent’) – is the subject of a ‘manner of manufacture’ eligibility analysis in the court’s decision.  The patent relates to what is known as a ‘feature game’, which is a game that can be played during the course of a main game.  More particularly, the invention claimed in the patent (which has a priority date back in 1997) is directed to providing a ‘feature outcome’ when the main game has achieved a ‘trigger condition’.  In embodiments of the invention described in the patent specification, ‘a prize is always awarded in the jackpot feature game, the feature game being used to determine the size of the prize to be awarded.’

While the judgment does not go into a detailed analysis of the exact nature of gaming machines, or talk a great deal about the role of computers and programming, it appears not to have been contentious that modern gaming machines are computer-implemented, and that the game rules and interfaces are all created using software.  Expert witnesses called by both sides included people with computer science and mathematics degrees.  The 689 patent specification refers to ‘programs’ and ‘algorithms’, and is quite clearly directed to computer-implementations of the described invention.

The Claimed Invention

There are three independent claims in the 689 patent, all of which the court has found to be valid and infringed.  Claim 1 is for a ‘random prize awarding feature’, claim 25 for a gaming console ‘including a prize awarding feature’, and claim 43 for a ‘method of awarding a prize’.  Claims 1 and 43 are the most interesting from the point of view of an eligibility analysis, and are as follows:

1.    A random prize awarding feature to selectively provide a feature outcome on a gaming console, the console being arranged to offer a feature outcome when a game has achieved a trigger condition, the console including trigger means arranged to test for the trigger condition and to initiate the feature outcome when the trigger condition occurs, the trigger condition being determined by an event having a probability related to desired average turnover between successive occurrences of the trigger conditions on the console.

43.   A method of awarding a prize on a gaming console, the console being arranged to offer a feature outcome when the game has achieved a trigger condition, the method including testing for the trigger condition and when the trigger condition occurs offering the feature outcome, the trigger condition being determined by an event having a probability related to desired average turnover between successive occurrences of the trigger condition on the respective console.

What Kind of ‘Thing’ Is a ‘Feature’?

The first thing I would note about claim 1 is that it is not exactly clear to me what it defines.  It purports to be directed to ‘a random prize awarding feature’.  It is clear enough that this ‘feature’ is implemented on ‘a gaming console’, however patent claims are traditionally directed either to tangible ‘things’ comprising one or more component parts, or to methods/processes comprising one or more procedural steps.  A ‘feature’, it seems to me, is the rather more intangible thing that occurs in the actual course of playing the game.  It might, I suppose, be said to be the consequence of the method in action, or something embodied in the software code stored and executing inside the machine. 

A lengthy discussion of the meaning of the terms ‘feature’, ‘feature outcome’ and ‘feature game’ at paragraphs [78]-[99] does not assist much, with the judge deciding that the word ‘feature’ should simply be given its ‘ordinary meaning’.  I am therefore somewhat surprised that the decision does not raise any question as to the nature of the subject matter covered by claim 1.

The method claim, on the other hand, is clear enough in its scope.  It recites steps of:
  1. testing for a trigger condition, which is determined by a (random) event having a probability which is related to a target average turnover of the gaming machine; and
  2. offering the ‘feature outcome’ when the trigger condition occurs.

Patent-Eligibility Authorities in the US and Australia

It is difficult to imagine the claims of the 689 patent surviving the Alice analysis for patent-eligibility in the US.  For starters, claim 1 directed to ‘a random prize awarding feature’ probably falls at the first hurdle, for not falling into one of the four statutory categories under 35 USC 101 of ‘process, machine, manufacture, or composition of matter’.

As for the method claim, triggering a ‘feature outcome’ in response to a random event based upon a probability does not appear to involve significantly more than the application, using a computer (i.e. ‘gaming console’), of an abstract idea or mathematical formula.

By the same token, it is not immediately apparent that the claims of the 689 patent do not fall foul of the reasoning set out by the Full Court (including Justice Nicholas) in Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150, e.g. at [118]:

The claimed method in this case clearly involves what may well be an inventive idea, but it is an abstract idea. The specification makes it apparent that any inventive step arises in the creation of the index as information and as a scheme. There is no suggestion in the specification or the claims that any part of the inventive step lies in the computer implementation. Rather, it is apparent that the scheme is merely implemented in a computer and a standard computer at that. It is no part of the claimed method that there is an improvement in what might broadly be called “computer technology”.

Yet, in the present case, Justice Nicholas barely even considers the possibility that the claims might not be for a manner of manufacture.  After rejecting Konami’s submissions on the point, he states simply, at [223]:

A mere idea that does not translate into a claim for a new and useful result is not within the concept of a manner of manufacture because it involves no more than “mere discovery” or “discovery without invention” …. However, the inventions claimed in the 689 patent are not “mere ideas” but new and useful gaming machines and new and useful methods of operation producing new and improved results.

Not only is the controlling decision of the Full Court in Research Affiliates not considered, it is not even cited in passing.  I find that to be incredibly surprising!

Conclusion – Where Is the Consistency?

Just to be absolutely clear, I do not think that the decision in the Aristocrat case is incorrect.  On the contrary, so long as gambling is legal it is clearly a competitive industry, and therefore should have the benefit of the same IP protections afforded to other industries (until, and unless, the government legislates otherwise in its role as regulator of that industry).

I can therefore see no good (legal) reason why new and innovative methods and machines for separating punters from their money should not be patent-eligible.

My problem is with the apparent inconsistency here.  Maybe there is a coherent and logical basis for distinguishing Aristocrat from Research Affiliates but, if so, this decision does not tell us what that basis might be.  In an earlier decision on a gaming patent, Dynamite Games Pty Limited v Aruze Gaming Australia Pty Limited [2013] FCA 163, Justice Emmett (who decided Research Affiliates at first instance) at least acknowledged the elephant in the room, expressing ‘some doubt’ as to whether the claims in that case were for a patent-eligible ‘manner of manufacture’ (at [172]).  However, he had already found the patents in question to be invalid on grounds of lack of innovative step and inventive step, and therefore dodged the eligibility issue.

Nonetheless, perhaps I should not protest – if Justice Nicholas sees nothing questionable in the Aristocrat claims, that might be good news for RPL Central.


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