Rokt’s Computerised ‘Marketing Scheme’ Fails Patent-Eligibility Test on Appeal

Following an appeal by the Commissioner of Patents, a Full Bench of the Federal Court of Australia has overturned a decision of a single judge of the Court relating to the patent-eligibility of a computer-implemented invention.  The Full Court has ruled that a claimed method and system, developed by Singapore-based Rokt Pte Ltd, for providing ‘a dynamic, context-based advertising system, introducing a distinction between an engagement offer, without a direct advertising benefit, and an advertisement designed to lead directly to the sale of the product’ is not patent-eligible subject matter under the Australian ‘manner of manufacture’ test: Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86.

Broadly speaking, the claimed invention provides a mechanism whereby a user has an opportunity to engage with an offer (characterised by the Full Court as ‘click bait’) while accessing a web site before being presented with targeted advertising.  In this way, advertisements are presented only to those users that are most likely to interact with them, and make a purchase.  Since advertisers must often pay for placement of their advertisements within web pages, the invention provides an improvement in that the costs associated with placing advertisements in front of consumers who do not interact with them may be reduced.

In an earlier Patent Office decision, a Hearing Officer had found that ‘the substance of the invention in this case amounts to business innovation’, which was not patentable, and therefore refused Rokt’s patent application: Rokt Pte Ltd [2017] APO 34.  (A previous decision, relating to an alternative set of claims proposed by Rokt, had reached a similar conclusion: Rokt Pte Ltd [2016] APO 66.)

Rokt appealed to the Federal Court, where the primary judge (Justice Alan Robertson) reversed the Patent Office decision, finding that ‘[t]he invention solved not only a business problem but also a technical problem’, ‘… there was a business problem of attracting the attention of the user and having the user choose to interact with the advertiser, but this problem was translated into the technical problem of how to utilise computer technology to address the business problem’, such that ‘use of computers was integral, rather than incidental, to the invention in the sense that there is an invention in the way in which the computer carries out the business scheme’: Rokt Pte Ltd v Commissioner of Patents [2018] FCA 1988 at [205]-[208].

The Commissioner, in turn, appealed to a Full Bench of the Federal Court (composed of Justices Rares, Nicholas and Burley), which has now allowed the appeal, finding that ‘the invention is a scheme or, more accurately, a marketing scheme’, that ‘nothing about the way that the specification describes the computer hardware or software indicates that either is any more than a vehicle for implementing the scheme, using computers for their ordinary purposes’, and that ‘the claim amounts to an instruction to carry out the marketing scheme’ expressed at a ‘level of abstraction [which] demonstrates that it does no more than provide a list of steps to be implemented using computer technology for its well-known and understood functions’: Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86 at [108], [109], [115].  As such, the Full Court concluded that Rokt’s claimed invention is not a patent-eligible manner of manufacture, and that ‘the learned primary judge erred in finding otherwise.’

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Tags: Australia, Computer programs, Patent Office, Patentable subject matter

IPH Shutters ‘Intellectual Asset Advisory’ Business Glasshouse, with R&D Tax Specialists Picked Up by Grant Thornton

As reported on 20 May 2020 by the Australian Financial Review, and announced via a media release from business advisory firm Grant Thornton, around 10 staff specialising in R&D tax advice from IPH Limited (ASX:IPH) business Glasshouse Advisory are to transition to Grant Thornton by Monday, 25 May 2020.  I understand that the Glasshouse business itself is to close, with other staff made redundant.  Glasshouse is one of the businesses that IPH acquired – along with IP firms Shelston IP, Griffith Hack, and Watermark – in its takeover of Xenith IP Group Limited (formerly ASX:XIP) back in August 2019.  This is the second significant restructuring of the former Xenith businesses carried out by IPH, following the integration of Watermark into Griffith Hack.

While the AFR headline indicates that Grant Thornton bought the R&D tax division of Glasshouse, my interpretation is that no money has changed hands.  IPH has not issued any announcement to the Australian Securities Exchange (ASX), as would be required if the event were relevantly ‘material’ to the business.  And the Grant Thornton media release appears to be quite carefully worded, referring to the arrangement as a ‘transition’, and quoting IPH COO and acting Glasshouse Advisory EGM, John O’Shea, as saying:

We are delighted to have reached agreement for transfer of the Glasshouse Advisory R&D tax incentive practices to Grant Thornton and we see this as a positive next stage for Glasshouse’s R&D tax incentive business. Since our acquisition of Glasshouse Advisory as part of the Xenith Group in August 2019 we have undertaken a detailed review of the Glasshouse Advisory business and concluded that these aspects of the business would be better placed within a specialist business, more closely aligned to their service offering.

Nowhere is there any mention of a ‘purchase’, or any suggestion of a price paid by Grant Thornton to acquire the Glasshouse R&D tax practice.  Indeed, it is unclear what Grant Thornton would be getting for any money they might pay out – certainly not the Glasshouse brand (which would be of no interest to them), nor any ‘rights’ in relation to the ‘transitioned’ staff (who are not indentured servants, and are of course free to vote with their feet if they are not in favour of the change in employer).  The Glasshouse client list might be worth something (the R&D tax advisory business is reported by the AFR as being worth around A$2.5 million annually), but I suspect that repeat business in this area is patchy, and that only a relatively small proportion of clients might be regarded as a reliable source of future income beyond the short term.

I understand that new roles have not been found for staff in other Glasshouse divisions, and that the business effectively ceases operation after 22 May 2020.

My take on this is that IPH most likely determined that Glasshouse was neither a sufficiently good fit with the other entities in the group, nor a large enough source of revenue, to justify its retention.  No doubt some efforts were made to find a buyer for the business, but in the end the best that could be done was to provide a new home for some of the staff, at Grant Thornton.

It is a dog-eat-dog world out there, especially in the publicly-listed segment of the IP profession.  Another significant stream of the Glasshouse business was patent research, including novelty and freedom-to-operate (FTO) searching.  Commonly an in-house function at many medium-to-large IP services firms, under Xenith’s ownership the patent searching capability was moved out of Griffith Hack into Glasshouse to form part of a broader IP strategy, valuation, and monetisation service offering.  While I feel for all of the people whose roles have been made redundant by the closure of Glasshouse – particularly in these challenging times – my sympathies are especially with the search and analytics specialists who might now be feeling – with some justification – that they would have been more secure had they remained within the traditional patent attorney firm environment.

From the outset, I have argued that the ‘bold experiment’ of public listings and formation of ‘ownership groups’ of firms is, as much as anything else, a response to the demands of achieving growth and improving efficiency and profitability in a challenging, low-growth, market.  In this sense, restructuring and associated redundancies are perhaps inevitable within the IP professions, regardless of ownership arrangements.  Even so, I cannot help feeling that Glasshouse Advisory, and a number of its people, have ended up as casualties of a failed experiment.

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Tags: Australia, Patent attorney profession

Free Online Seminar – Machine Inventors, Fact or Science Fiction?

In August 2019 the ‘Artificial Inventor Project’ team led by Ryan Abbott, Professor of Law and Health Sciences at University of Surrey UK, announced that it had filed a number of patent applications naming an artificial intelligence (AI) as inventor.  The AI, called ‘DABUS’, was developed by Missouri-based physicist Dr Stephen Thaler.  The filings – which garnered significant publicity – were a deliberate provocation, calculated to test patent laws and challenge the conventional notion that only a natural person can be an inventor.  The EPO, the UKIPO, and the USPTO have since rejected the applications for failing to meet requirements that an inventor designated in a patent application be a human being.  Even so, various IP organisations, including WIPO, the USPTO, and the EPO, have been actively exploring the implications of machine learning (ML) and AI for patent law and practice, including the question of whether a machine can invent.

So, have we really reached the point at which machines can challenge humans in the realm of creativity and ingenuity?  And, if so, why are we hearing about it from a law professor and a lone developer, rather than in peer-reviewed publications by leading AI research teams, or in media releases from well-known mega-corporations that have invested billions in this technology?  Furthermore, are we really expected to take seriously claims made by Dr Thaler that his AIs exhibit enhanced creativity as a result of infusing symptoms of ‘mental illness’ into their neural networks? 

Personally, I have been astonished at the lack of scepticism towards claims of machine inventorship, not only in the media, but also among many patent professionals, and within reputable IP offices.  Even the World Intellectual Property Organization (WIPO), in a recent draft issues paper on ‘Artificial Intelligence and Intellectual Property Policy’, went so far as to accept that ‘it would now seem clear that inventions can be autonomously generated by AI’, noting that ‘there are several reported cases of applications for patent protection in which the applicant has named an AI application as the inventor.’

Nonetheless, whatever I might think of DABUS as a specific example, major national and international IP organisations are responding to broader challenges presented by emerging ML technologies that, inventorship aside, raise genuine questions in relation to subject matter eligibility, obviousness, and sufficiency of disclosure. And since ML technologies can be applied in almost any field of endeavour, from engineering design through to drug discovery, these issues are not confined to inventions in the IT space.

Last month, I presented a webinar on this topic to members of the Institute of Patent and Trade Mark Attorneys of Australia (IPTA).  I have now recorded a version of that presentation, and am making it available as a free online seminar.  It can be viewed on YouTube, or via the embedded player below.  A PDF copy of the presentation slides [1.12MB] is also available for download.

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Tags: Artificial intelligence, Innovation, Inventorship, Machine learning, Patent law, Patentology seminars

The 2020 Australian IP Report: Revisited

Last month, I wrote about IP Australia’s release of the Australian Intellectual Property Report 2020 (‘IP Report’).  I focused in particular on data included in the ‘Patents’ section of the report, and raised some questions about the methodology and the accuracy of some of the results presented.  I am pleased to say that IP Australia (more specifically, Benjamin Mitra-Kahn, who is the General Manager & Chief Economist in the Policy & Governance Group) reached out to me regarding the issues raised in my article, and we have spent the past couple of weeks working through our respective data sets to identify the origins of the discrepancies between our numbers.  IP Australia will be updating the online version of the IP Report to incorporate a number of corrections.  In this article, I will run briefly through the issues that we identified, and present some updated numbers of my own.

Users of the 2019 release of the IP Government Open Data (IPGOD) will want to take note of a problem with the ‘related patent information’ table (a.k.a. ‘ipgod128’), which records data relating to divisional and additional applications, whereby a number of entries are missing corresponding with applications filed during the final weeks of 2018.  This error resulted in my undercounting of divisional applications in 2018, such that I found an increase in 2019 where the IP Report identified a decline. 

Australian organisations, including a number of universities, that might have felt short-changed by the ‘top-five’ list of applicants presented in the IP Report, should be pleased by corrections that will reflect the true numbers of filings they made during 2019.

To some extent, IP Australia and I have agreed to disagree regarding the merits of distinguishing between ‘original’ and divisional applications, and of ranking applicants on the basis of ‘original’ filings rather than total filings (i.e. including divisional applications).  We do agree, however, that not all divisional applications are created equal, and that a more nuanced approach is necessary to develop a better understanding of how applicants use divisional applications, and what implications this may have for the operation of the patent system, as reflected in this tweet from IP Australia’s Office of the Chief Economist:

Hi Mark, thanks for the collaboration offline, and the ongoing conversation. As discussed, divs aren’t 2nd class filings, or perceived as such, but an important part of the current patent application story. Keen to explore how to better categorise them.

— IPAustraliaEconomist (@IPAustralia_OCE) May 8, 2020

While there may still be some minor differences between my numbers and those of IP Australia, due to changes in the live data between the times that we respectively extracted our information, the numbers in this article should be in substantial agreement with those in the revised version of the 2020 IP Report.

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Tags: Australia, IPGOD, Patent analytics, Patent Office

COVID Update – Still No Downturn in Patent Applications, as Self-Filers Focus on Pandemic Solutions

Last month I looked at Australian and New Zealand patent application filings over the first quarter of 2020 and observed that there were no signs – yet – of any obvious downturn as a result of the COVID-19 pandemic.  With April now added to the tally, this remains true.  So far, there does not appear to have been any significant decline in filings compared to the same period in the past two years, or at least no decline that can be discerned amid the ‘noise’ of normal week-to-week fluctuations.  And this is the case across all application types (standard, innovation, and provisional), as well as across applications filed using the services of patent attorneys, and ‘self-filed’ applications prepared and lodged by the applicant and/or inventor themselves.

One thing that is notable, however, is the number of self-filed applications that seem to be related, in one way or another, to the ongoing pandemic.  Out of 182 applications filed by self-represented applicants in April (mostly provisional and innovation patent applications), at least 60 – i.e. nearly one third – are directed to protective equipment, purported treatments, social distancing technologies, personal hygiene, and other COVID-related products, based upon their titles.

Below, I provide updated charts of filings, including April 2020, and a list of COVID-themed patent applications filed last month, for your information and entertainment.

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Tags: Australia, COVID-19, New Zealand, Patent analytics

Listed Group QANTM IP Acquires Sydney-Based Cotters Patent & Trade Mark Attorneys

On 6 May 2020, ASX listed holding company QANTM IP Limited (ASX:QIP) announced that it has reached agreement to acquire the boutique Sydney-based IP firm Cotters Patent & Trade Mark Attorneys.  The purchase price is A$6.3 million, paid in a combination of initial and deferred instalments.  Cotters is a small firm that – according to the Register maintained by the Trans-Tasman IP Attorneys Board (TTIPAB) – currently comprises four registered patent attorneys and three registered trade marks attorneys.  It is responsible for 272 Australian patent applications filed on behalf of clients during 2019.  By way of comparison, to the extent that staff numbers and patent filings are any guide, when Watermark (now integrated into Griffith Hack) was acquired by Xenith IP Limited (now merged into IPH Limited) for approximately three times the price of Cotters, it had filed over five times the number of patent applications (1444) during the last full calendar year (2015) prior to the acquisition and employed around four times as many professional staff.

In the announcement, QANTM (and former Xenith IP) CEO Craig Dower is quoted as stating that:

The Cotters business is differentiated from our existing businesses in Australia – Davies Collison Cave and FPA Patent Attorneys – offering a fixed-price service model, and servicing a client base complementary to our existing practices. Cotters was founded just prior to the GFC, and survived and thrived through that difficult period. Cotters will be a positive addition to the QANTM Group.

Read the full announcement [PDF 405kB].  Read on below for a comparison of the patent filing profiles of Cotters, and the other two firms making up the QANTM Group, Davies Collison Cave (DCC) and FPA Patent Attorneys (FPA).

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Tags: Australia, Patent attorney profession