09 June 2020

Federal Court Finds Computer-Implemented Gaming Machine Patent-Eligible in Australia

Gaming MachinesOn appeal from a decision of a delegate of the Commissioner of Patents, a single judge (Justice Burley) of the Federal Court of Australia has found that the claims of a number of innovation patents owned by Aristocrat Technologies Australia Pty Ltd, directed to electronic gaming machines (EGMs), are directed to patent-eligible subject matter: Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778.  As the judge put it in the first paragraph of the judgment, the central question in the case was ‘whether a claim to an [EGM], which includes a combination of physical parts and computer software to produce a particular outcome in the form of gameplay, is a manner of manufacture’ (referring to the test for patentable subject matter under the Australian Patents Act 1990).

In a series of five decisions relating to computer-implemented inventions issued by Full Benches of the court since 2014 – including one from an expanded bench of five judges – a ‘two step’ approach to assessing patent-eligibility of such inventions has emerged.  The first step is to construe the patent specification, from the perspective of the person skilled in the relevant art, to identify the claimed invention.  This is to be determined as a matter of substance, and not merely based on the particular form of the claims.  If the invention, in substance, comprises patent-ineligible subject matter, such as a mere scheme, idea, or business method, then the second step involves an enquiry into whether the claimed computerisation involves some further contribution sufficient to render the invention patent-eligible.  It is not enough, as the Full Court has made clear, simply to ‘put’ an otherwise unpatentable scheme, idea, or business method ‘into’ a computer.

In the present case, however, the judge effectively short-circuited this enquiry, finding at the first step that Aristocrat’s claims were, in substance, for ‘a machine of a particular construction which implements a gaming function’.  As a result, the question of patent-eligibility was resolved immediately – an EGM is not a mere scheme or a business method, and is thus a ‘manner of manufacture’.  There was, the judge concluded, no need to proceed with step two.

This finding seems straightforward enough, and accords with common sense.  As the judge also observed, there is no dispute that an old-style mechanical gaming machine would be patent-eligible, so why should the outcome be any different if the same functionality is implemented using modern technology?  On the other hand, however, the form of the claims in the present case is not necessarily so different from those in a number of the earlier decisions where the inventions were found not to be patent-eligible.  I therefore suspect that this decision may not yet be the last word on the patentability of EGMs under the ‘manner of manufacture’ test.

The Role of Expert Evidence

Both Aristocrat and the Commissioner of Patents filed extensive evidence from lay and expert witnesses.  The expert witnesses fell into two categories: four (two on each side) were gaming experts, and two (one on each side) were Human Computer Interaction (HCI) experts.  The six expert witnesses were cross-examined, and also combined to prepare two joint expert reports.  A considerable portion of the court’s reasons is occupied with discussion of the experts and their evidence.

However, as was recently clarified by the Full Court in Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86, the role of expert evidence in determining whether or not a claimed invention is for a ‘manner of manufacture’ is limited (see Rokt’s Computerised ‘Marketing Scheme’ Fails Patent-Eligibility Test on Appeal).  The judge in Aristocrat acknowledged this aspect of the Rokt decision, at [27], further observing that:

  1. the role of expert evidence in construing the specification ‘is to place the Court in the position of the person acquainted with the surrounding circumstances as to the state of the art and manufacture as at the priority date’;
  2. ‘[t]ypically, the Court will read the specification with the benefit of expert evidence as to the meaning of words that are terms of art, or with an explanation of technical concepts relevant to the understanding of the invention as described and claimed. The question of construction remains with the Court’;
  3. the question of manner of manufacture ‘involves the application of the common law principles developed to separate patentable inventions from schemes or methods of business, which is an issue to be determined by the Court, and not the evidence of an expert’.

‘As a consequence of these matters,’ the judge concluded at [28], ‘much of the evidence given by the experts was extraneous to the real dispute between the parties.’

Put less tactfully, the extensive expert evidence was largely a waste of the court’s time and the parties’ resources.  As I observed when writing recently about the Rokt case, it is my hope that the Full Court’s discussion of the limited role of expert opinion in the eligibility analysis will reverse the trend of increasing reliance on expert testimony in these cases.  Aristocrat has been decided after Rokt, although it was heard – expert evidence and all – long beforehand.  It is unlikely that we will see such use of experts in future ‘manner of manufacture’ cases.

That being said, the judge did not completely disregard the expert evidence in Aristocrat.  One key aspect of the evidence that appears to have had some influence on his construction of the specification and claims, and possibly on the outcome, is the role of standards and regulation in the design and operation of EGMs.  As discussed at [97]:

…the expert evidence reveals that the skilled reader understands upon reading the specification that EGMs are subject to regulatory supervision. These standards impose requirements on all EGMs with respect to many areas, including: the construction of their cabinets; the artwork used; the cash input systems used; how the metering of credits is recorded; the manner in which information is presented to users; and the fact that audible alarms must sound if errors are detected or security features require it. The National Standard also imposes requirements on the “return to player”, namely limits on the theoretical/estimated statistical expectations of the minimum and maximum returns of prize money to the player.

A ‘Two Step’ Approach to Patent-Eligibility

After reviewing recent Full Court decisions relating to patent-eligibility of schemes or business methods (Grant v Commissioner of Patents [2006] FCAFC 120, Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177, Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161, Watson v The Commissioner of Patents [2020] FCAFC 56, and Commissioner of Patents v Rokt [2020] FCAFC 86), the judge in Aristocrat explained (at [91]) that the reasoning in these cases…

…involves an initial question of whether the claimed invention is for a mere scheme or business method of the type that is not the proper subject matter of a grant of letters patent. Once that question is answered in the affirmative, the subsequent inquiry becomes whether the computer-implemented method is one where invention lay in the computerisation of the method, or whether the language of the claim involves (to use the language employed in Rokt at [84]) “merely plugging an unpatentable scheme into a computer”.

Thus the decision In Aristocrat appears to confirm that the approach emerging from the Australian authorities is a two step process, not dissimilar from that followed in the United States.  As the US Supreme Court explained in Alice Corporation Pty Ltd v CLS Bank International 573 US 208 (2014):

First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts. If so, we then ask, ‘[w]hat else is there in the claims before us?’ To answer that question, we consider the elements of each claim both individually and ‘as an ordered combination’ to determine whether the additional elements ‘transform the nature of the claim’ into a patent-eligible application. We have described step two of this analysis as a search for an ‘inventive concept’ — i.e., an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.’ (Citations omitted.)

Even so, some confusion about the respective roles of the two steps of the inquiry appears to remain.  At paragraph [94] of the Aristocrat decision, the judge went on to say (emphasis in original):

Central to Encompass, and the other cases to which I have referred, is the finding that after close examination of the specification and the claims in issue, the invention as disclosed and claimed is no more than a scheme or mere idea. Once the Full Court made those findings, in each case they proceeded to consider whether, despite this conclusion, the invention was nevertheless patentable.

This does not seem quite right to me, because if the claimed invention is truly no more than a scheme or mere idea then surely that is the end of the matter – it is not patent-eligible.  The explanation (quoted previously) at paragraph [91] of the judgment is different, in that it does not include the words ‘no more than’, and is, in my view, a more accurate statement of the approach that emerges from the authorities.  That is, one must first ask whether the claimed invention is ‘for’ an unpatentable scheme, idea, or business method.  If so, then it is the purpose of the second part of the inquiry to ascertain whether the claim as a whole recites something ‘more’, such that the claim transcends, as a matter of substance, the ineligible subject matter in order to define a patentable ‘manner of manufacture’.  If not, then – and only then – can it be said that the claimed invention is no more than the ineligible scheme, idea, or business method.  As the Full Court stated in RPL Central, at [96]:

The fact that it is a scheme or business method does not exclude it from properly being the subject of letters patent, but it must be more than that. There must be more than an abstract idea; it must involve the creation of an artificial state of affairs where the computer is integral to the invention, rather than a mere tool in which the invention is performed.

Patent-Eligible at the First Step

Ultimately, however, the decision in Aristocrat is straightforward, because the judge did not find it necessary to proceed beyond the first question.  As he stated at [95]:

I do not consider that, properly understood, the invention described and claimed, when understood as a matter of substance, is to a mere scheme or plan. It is to a mechanism of a particular construction, the operation of which involves a combination of physical parts and software to produce a particular outcome in the form of an EGM that functions in a particular way. Accordingly, it is unnecessary to consider the second enquiry.

He went on to explain, at [96], that the claimed invention comprises identified hardware, firmware and software components, including:

  1. a display able to show reels emulating the physical reels used in mechanical gaming machines;
  2. a credit input mechanism having at least a coin input chute, a bank note collector, a credit card reader, or a ticket reader;
  3. a game play mechanism, having either physical or on-screen buttons operable by a player; and
  4. a game controller comprising a processor and memory containing the game program code and symbol data defining the reels.

Further, at [97] – as I have already noted above – the judge observed that persons skilled in the art would be aware that EGMs are subject to government regulations that impose a number of additional constraints on the operation of the machines.

He therefore concluded, at [98]:

The result is that to the person skilled in the art, the invention may be characterised as a machine of a particular construction which implements a gaming function. It yields a practical and useful result. Simply put, the machine that is the subject of the claims is built to allow people to play games on it. That is its only purpose. In this regard, the physical and virtual features of the display, reels, credit input mechanism, gameplay mechanism and game controller combine to produce the invention. It is a device of a specific character.

Additional Considerations in Favour of Patentability

In addition to the primary reasoning discussed above, the judge in Aristocrat considered some further factors suggesting that the claimed invention should be considered a patent-eligible ‘manner of manufacture’.

At [102] he observed that had the EGM been ‘implemented mechanically, the old-fashioned way, without using software but instead using cogs, physical reels and motors to create the gameplay, there is no doubt that it would be a manner of manufacture.’  There is no apparent reason why a computerised EGM should be disqualified from patent-eligibility when the equivalent mechanical technology is not.

Furthermore, at [103]-[105] the judge made note that other decisions of the Federal Court of Australia – including the relatively recent ruling in Aristocrat Technologies Australia Pty Limited v Konami Australia Pty Limited [2015] FCA 735 – have found similar EGMs to be patentable manners of manufacture.

Conclusion – Not Over Yet?

My feeling is that the finding in the Aristocrat decision is correct.  Gaming machines are patentable subject matter.  Regardless of one’s personal views on gambling, it is a legal – albeit highly-regulated – industry in Australia, and the physical machines used in this industry have long been the subject of patents, regardless of the technology used to implement them.

On the other hand, I think that it is at least arguable that the judge in this case has responded to the same ‘feeling’ and has, in finding the invention to be patentable, effectively taken a short cut.  On careful consideration, it is not apparent that there is anything in the claims themselves that necessarily distinguishes the Aristocrat case from others, such as Rokt, Encompass, or RPL Central, in which an opposite conclusion was reached.  This is certainly not the first case in which the claims have identified hardware, firmware and software components via which the invention was implemented.  As the Full Court said in Research Affiliates (at [117]):

The computer-implementation is an essential integer of the claimed process. That is, of course, important. It is of particular importance in the assessment of, for example, novelty and infringement. However, in examining whether a claimed invention is properly the subject of letters patent, it is necessary to look not only at the integers of that claimed invention but also at the substance of that invention.

The claimed EGM hardware differs materially from ‘ordinary’ computer hardware only in the provision of a ‘credit input mechanism’, and meters used, inter alia, to monitor compliance of the machines with regulatory requirements.  However, it was not in dispute that this hardware was entirely conventional within the gaming industry.

As such, it is apparent that, notwithstanding the hardware elements in the claims, the ‘inventive contribution’ of Aristocrat’s claimed EGM resides in the rules and algorithms for gameplay defined in the method steps performed by game controller when executing the game program code.

Viewed in this way, the judge could have found that the ‘substance’ of the invention resides in the rules for gameplay which, arguably, are per se an unpatentable mental process, abstract idea, or scheme.  This would not necessarily mean that any of the claims could not be for a patentable manner of manufacture.  However, in order to make this assessment the judge would have needed to proceed to step two of the inquiry, to determine whether the claim, considered as a whole, transcends the ineligible subject matter.

It is entirely possible that the same conclusion could be reached by this alternative path, i.e. that when considered as a whole the claims define ‘a device of a specific character’ which is patentable, despite the fact that the inventors’ contribution to the art resides in rules and algorithms for gameplay. 

I cannot help thinking, however, that the judge may have followed his own sense that an EGM is self-evidently patentable subject matter, to short-circuit the enquiry and jump directly to the conclusion.  In doing so, he seems to have been influenced by evidence of the particular standards and regulatory requirements that apply to EGMs in Australia.  While these would certainly be known to the skilled addressee of the patent specification, they are not directly reflected in the claims, and it seems somewhat incongruous that patent-eligibility could be affected by something extrinsic, such as regulation, that is subject to change over time – including during the term of a patent!  There is, arguably, a question as to whether, in construing the claims in light of known regulatory requirements, the judge in fact impermissibly imported elements of these requirements into the claims despite the absence of any corresponding features in the claim language itself.

I think it almost certain that the Commissioner will appeal.  I doubt very much that we have heard the last of this case.


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