Commissioner of Patents Applies to Appeal Aristocrat Ruling

In a development that should surprise nobody – least of all readers of this blog, where I have foreshadowed it twice – on 20 July 2020 the Commissioner of Patents filed an application for leave to appeal the decision in Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778 to a Full Bench of the Federal Court of Australia.  I wrote about the original decision back in June, and a further decision relating to costs earlier in July.  While the Commissioner does require the Full Court to agree to hear the appeal, I anticipate that the Court will adopt the same practice as in earlier similar cases, and hear the application for leave, and the substantive appeal, concurrently.

This should be an important appeal. The Aristocrat case presents the Full Court with an opportunity to draw a clear distinction between patent-eligible and ineligible computer-implemented inventions.  The case concerns electronic gaming machines (EGMs).  On the one hand – as the primary judge found – an EGM is very much a material product, and not an ephemeral scheme or abstract idea.  It is thus arguably just as eligible for patent protection as a traditional mechanical gaming machine.  On the other hand, in a number of recent cases the Full Court has found that taking an unpatentable method, scheme or idea, and ‘merely’ implementing it through generic programming of conventional hardware does not transform it into a patentable invention.

An argument may be made that the claims in Aristocrat differ from those in other cases, where computer-implemented processes were found to be patent-ineligible, only inasmuch as a number of the recited hardware elements are specific to EGMs.  These elements were not, however, novel or inventive, either individually or in combination, at the priority date.  They were, in fact, well-known and conventional within the specific context of the regulated gaming industry in Australia.  It was this context, as much as anything else, that led the primary judge to conclude 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.

I would note also that, in contrast to something of an abstract nature, an EGM is ‘a device of a specific character’ upon which one could painfully stub one’s toe, if one were not careful!  The question is whether the primary judge was therefore correct to conclude, as he did, that such a device is inherently patent-eligible, without proceeding to consider – as the Full Court has done in previous cases relating to computer-implemented methods – whether there is any invention in the computerisation of the method itself.

The case number for the appeal in the NSW Division of the Federal Court of Australia is NSD787/2020.

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Tags: Appeal, Australia, Computer programs, Games, Patentable subject matter

COVID Update – Apparent June ‘Surge’ in Provisional & Innovation Patent Filings Driven by Self-Filers and Chinese Applicants

At first glance, Australian patent filing numbers for June look surprisingly like good news for the pandemic-ravaged economy.  Australian provisional filings were up 4.5% on the same period in 2019, while innovation patent filings were up by an astonishing 141%.  Overall ‘original’ filing work (i.e. new applications not claiming priority from any earlier filing) by patent attorneys was up by just over 15%.  On closer inspection, however, these headline figures present an overly rosy view of the underlying reality.  The boost in provisional filings was driven entirely by self-represented applicants, while the surge in innovation patent filings – which was also responsible for the gains in original filings – was the result of another month of heavy use of the Australian innovation patent system by Chinese applicants.  As a result, the only real beneficiary of the stronger filing numbers in June is IP Australia, which saw patent application fees increase by nearly A$37,000 when compared against the same month in 2019.

One small sliver of more positive news is that Australian standard patent applications were very slightly (0.3%) higher in June 2020 than in June 2019.  This is the first month since March to show any year-on-year gain, following very significant declines in April and May.  It was assisted, however, by the fact that the month of June began on a Monday this year, giving it the maximum possible number of business days – two more than in 2019.  Without this, we may just as easily have seen a further decline in filings in June.

Over in New Zealand – where the total application numbers are significantly smaller than in Australia, and thus subject to larger relative fluctuations – filings have continued to hold surprisingly steady, with complete (standard) applications up by 1.7% and provisional filings up by 8.5% year-on-year for June.

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

Actions Trump Intentions in Determining Infringement of ‘Swiss’ Claims in Australia

In what might well be the final word on the scope and effect of so-called ‘Swiss type’ claims in Australia – at least for the foreseeable future – an enlarged panel of five judges of the Federal Court has clarified what is required for infringement of this form of claim: Mylan Health Pty Ltd v Sun Pharma ANZ Pty Ltd [2020] FCAFC 116.  A Swiss type claim (the terminology used by the Court in this case, although they are also known as ‘Swiss-style’ or simply ‘Swiss’ claims) is generally of the form: ‘Use of [compound X] for the manufacture of a medicament for treatment of [condition Y].’  Such claims invoke a kind of legal fiction, in that according to the normal rules of interpretation the scope of the claim encompasses any and every method of making a medicament of any kind that includes the compound X as an active ingredient, subject only to this being suitable for treating the new condition.  Interpreted in this way, a Swiss type claim would never be valid in the usual case that medicines containing compound X already exist for the purpose of treating one or more different conditions.  We have collectively agreed, however, that as a matter of law a Swiss type claim is to be construed as if reciting the new therapeutic purpose (i.e. ‘treatment of condition Y’) imposes a distinct limitation on the scope of the claim sufficient to impart novelty to the invention.

In the Mylan case, a representative Swiss type claim – namely claim 1 of Australian patent no. 2006313711 – was:

Use of fenofibrate or a derivative thereof for the manufacture of a medicament for the prevention and/or treatment of retinopathy, in particular diabetic retinopathy.

A corresponding claim for a method of treatment is claim 7 of the same patent:

A method for the prevention and/or treatment of retinopathy, the method comprising administration of fenofibrate or a derivative thereof to a patient in need thereof.

While both types of claims are allowable in Australia (as discussed further below), a key distinction between them is the identity of a direct infringer.  A Swiss type claim is directed to the manufacture of a product, and thus may be directly infringed by the manufacturer – normally the party that a patentee would want to restrain.  Method of treatment claims, on the other hand, are directly infringed in the course of treatment, i.e. by a physician and/or patient, who are typically not the desired targets of infringement action.  A patentee must therefore generally rely on indirect or contributory infringement provisions in order to pursue a manufacturer or supplier on the basis of a method of treatment claim.

In this case, the Court found that both the Swiss type claims and the method of treatment claims were invalid for lack of novelty and/or inventive step in view of various prior art disclosures.  Thus there could be no infringement in any event.  However, the Court nonetheless considered important questions of the interpretation and requirements for infringement of Swiss type claims.  In particular, the Court determined that ‘infringement of a Swiss type claim is concerned with what the allegedly infringing manufacturer has done, not what it intended to do.’

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Tags: Claim construction, Infringement, Patent law, Pharmaceuticals

Costs Award Discounted for ‘Over-Egged’ Evidence in Aristocrat Case

In a postscript to last month’s decision in Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778 (see Federal Court Finds Computer-Implemented Gaming Machine Patent-Eligible in Australia), the court has now ruled that the Commissioner of Patents should pay only 50% of Aristocrat’s costs associated with its expert evidence: Aristocrat Technologies Australia Pty Limited v Commissioner of Patents (No 2) [2020] FCA 974.  Under the usual practice in Australia (i.e. the so-called English Rule) a losing party can expect to be ordered to pay the reasonable costs (including attorney’s fees) of the successful party.  In this instance, however, Justice Burley was partially persuaded by the Commissioner’s argument that much of Aristocrat’s evidence ‘was irrelevant or of very limited utility’, and consequently applied a discount in respect of the costs associate with expert evidence (but not the lay evidence that was also adduced by Aristocrat).

As I reported last month, the expert witnesses in the case 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.  However, in light of the decision of the Full Court in Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86 – which was decided after the hearing in Aristocrat, but prior to the judgment being handed down – it is now clear that the role of expert evidence in determining whether or not a claimed invention is for a patent-eligible ‘manner of manufacture’ is limited (see Rokt’s Computerised ‘Marketing Scheme’ Fails Patent-Eligibility Test on Appeal).  Aristocrat’s position was, essentially, that its approach to the expert evidence had been reasonable, in view of the way in which the approach to patent-eligibility seemed to have been developing in Australia prior to Rokt – particularly within the Patent Office, including the decision appealed in this case by Aristocrat.

Perhaps influenced by the Judgment of Solomon, Justice Burley determined that the costs (though fortunately not – unlike the biblical baby – the experts themselves) should be split in two, finding (at [12]):

There is merit in the Commissioner’s submissions, in the sense that the expert evidence adduced by Aristocrat somewhat over-egged the pudding. Even making allowances for the uncertainties arising from the development of the law in relation to the patentability of inventions involving computerisation, there was really no justification for calling three experts in separate fields to attempt to establish that there was a “technical effect” in Aristocrat’s secondary argument. Aristocrat was perhaps entitled to be creative in attempting to justify the patentability of its invention, but that should not be funded by the Commissioner, even on an ordinary basis. I agree that the Commissioner should bear 50% of the costs of Aristocrat’s experts.

Additionally, the judge rejected Aristocrat’s contention that it should also receive its costs associated with the original Patent Office decision made by a delegate of the Commissioner, finding (at [8]) that ‘[t]he delegate acted as a neutral arbiter performing a statutory function’ and that the Commissioner had not ‘engaged in any conduct that would remotely warrant an order of costs against her in relation to the decision from which the appeal was brought.’

The court’s orders also grant the Commissioner a stay of the orders requiring Aristocrat's innovation patents to be certified (but not the costs orders) for a period of 14 days (until 24 July 2020), within which she may apply for leave to appeal to a Full Bench of the Federal Court of Australia.  I anticipate that an application for leave will be filed.

[Correction: An earlier version of this article incorrectly stated that the costs orders had been stayed pending any appeal by the Commissioner.]

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Tags: Australia, Computer programs, Costs, Games, Patentable subject matter

How Many Patents Are There?

A question that I see asked from time-to-time is: ‘how many granted, enforceable patents actually exist?’  The answer obviously changes almost every day, as old patents cease or expire, and new patents are granted.  That being said, as of 6 July 2020 there were, according to IP Australia’s records, 160,822 standard patents in force in Australia, along with 1,254 certified innovation patents.  Of these, the enforceable standard patents were most likely to be around seven years old (in the sense that the mode of the distribution of patents by effective filing year was 2013), while certified innovation patents were most likely to be around five years old.

There were, additionally, 76,634 pending standard patent applications, of which 6,260 were already accepted, i.e. almost certain to become granted patents within the next few months.  There were also 6,974 innovation patents registered, but not certified.  However, based on past performance it is likely that somewhat less than 10% of all of innovation patents that are not yet certified will ever be certified.

In this article I present annualised charts of all the Australian patents and applications that had a ‘live’ status on 6 July 2020.

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Tags: Australia, Patent analytics