28 November 2021

Patent-Eligibility of Computer-Implemented Inventions – Appeals Court Says an ‘Advance in Computer Technology’ is Required

Easy Money SlotsIn a unanimous decision – Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd [2021] FCAFC 202 – a Full Bench of three judges (Middleton, Perram and Nicholas JJ) of the Federal Court of Australia (‘Full Court’) has reversed last year’s ruling by Justice Burley that claims directed to a so-called ‘feature game’ implemented on an electronic gaming machine (EGM) constituted a patent-eligible ‘manner of manufacture’ under Australia law.  (A ‘feature game’ is a secondary, or bonus, game triggered by the occurrence of a defined event in the ‘base’ game of spinning reels.)  As I explained at the time, Justice Burley applied a two step test, asking firstly 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’ and then – if this question is answered in the affirmative – ‘whether the computer-implemented method is one where invention lay in the computerisation of the method’ as opposed to ‘merely plugging an unpatentable scheme into a computer’.  He found the claims to be patentable at the first step, because they were directed to ‘a mechanism of a particular construction’, i.e. a gaming machine.

The Full Court has rejected Justice Burley’s test, with the majority (Middleton and Perram JJ) proposing an alternative two step test (at [26]) which asks firstly whether the claimed invention is ‘a computer-implemented invention’ and then – if so – ‘can the invention claimed broadly be described as an advance in computer technology’.  The majority determined that Aristocrat’s EGM, despite being claimed in terms of a combination of hardware and software components, was in substance a computer-implemented invention, and that the asserted contribution of the claimed invention ‘pertains only to the use of a computer’ and not to ‘the development or advance of computer technology’ (at [63]-[64]).  As such, they concluded that the claims were not directed to patent-eligible subject matter.

The third judge of the Full Court, Nicholas J, arrived at the same ultimate conclusion, by different reasoning.  He agreed with the majority that Justice Burley’s two step test was not the correct approach, because it failed to ‘engage with the Commissioner’s submission that the invention as described and claimed was in substance a mere scheme or set of rules for playing a game implemented using generic computer technology for its well-known and well-understood functions’ (at [135]).  However, rather than embarking upon an inquiry as to whether Aristocrat’s claims were directed to a ‘computer-implemented invention’ he simply observed that ‘the substance of the invention, as described and claimed, resides in the game program code which embodies a computer implemented scheme or set of rules for the playing of a game’ (at [138]).  He further reasoned (at [140]-[142]) that the game code does not solve any ‘technological problem’, nor does it exhibit any ‘unusual technical effect due to the way in which the computer is utilised’, and therefore that there is nothing ‘about the way in which the game code causes the EGM to operate which can be regarded as having transformed what might otherwise be regarded as purely abstract information encoded in memory into something possessing the required artificial effect.’

While the Full Court found the representative claim at issue to be unpatentable, it did not entirely foreclose the possibility that there may be patent-eligible aspects to the inventions disclosed in Aristocrat’s four innovation patents.  The case has been remitted back to Justice Burley to determine any residual issues in light of the Full Court’s judgment.

There are positive and negative aspects to this decision.  On the plus side, the approach taken by the majority brings some clarity to the approach to be taken in construing and assessing claims to computer-implemented inventions, which often comprise a physical apparatus defined in terms of (possibly conventional) hardware, configured via software for particular functionality.  On the down side, however, the majority also relied upon the existence of ‘an advance in computer technology’ to confer patent-eligibility upon a computer-implemented invention, without providing clear guidance on what, exactly, is covered by this terminology.  The decision also perpetuates an uncertainty that exists around the exact role to be played by prior art information in applying the ‘manner of manufacture’ test to assess patent-eligibility.

The Good News – Clarity on ‘Computer-Implemented Inventions’

In some ways, this decision brings some welcome clarity to the law regarding the patentability of computer-implemented inventions.  There has long been, in my view, a need for some clear rationale for distinguishing and disregarding unremarkable or conventional hardware elements in a claim directed to a computer-implemented invention, and focussing on the actual contribution made by the inventors, which in many cases is provided through programming alone.  This was really how – according to the Full Court – Justice Burley fell into error.

Justice Burley was influenced by the fact that Aristocrat’s claims were directed to a combination of hardware and software constituting a physical gaming machine.  He reasoned that if such a machine ‘implemented mechanically, the old-fashioned way, without using software but instead using cogs, physical reels and motors to create the gameplay’ (Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778 at [102]), then would undoubtedly have been patent-eligible.  While that is certainly one way of looking at the matter, the problem which arises is that the EGM hardware elements included in the claims are entirely conventional for such machines, and the only novel feature is the functionality defined for the feature game.  As I observed in the conclusion to my article on Justice Burley’s decision, but for the ‘EGM-specific’ components, there is nothing to distinguish Aristocrat’s claims from numerous prior cases in which inventions implemented in software running on general purpose computer hardware have been found to be unpatentable. 

The majority in the Full Court, on the other hand, conducted an extensive analysis of the claimed invention, finding firstly that the EGM – despite the inclusion of components not normally present in a general purpose computer – is nonetheless a computer, observing (at [50]) that:

…there is a distinction to be drawn between a claim for an invention which is a computer and a claim for an invention which is implemented on a computer. Both may take the form of what appears to be a claim for a computer. Indeed, that is precisely what has happened in this case.

The majority went on to find that ‘the substance of the invention … is that feature game implemented on the computer which is an EGM’, and that the claimed invention ‘is therefore a computer-implemented invention’ (at [56]).  Only then did they turn to an evaluation of whether the substance of that computer-implemented invention is patent-eligible.  They concluded that is is not, because what was ‘put forward as inventive (or innovative) about Claim 1’ pertained not to ‘the development of computer technology’ but ‘merely its use’, further observing that ‘Claim 1 is silent on the topic of computer technology beyond that the person implementing the invention should use some’ (at[63]).

Earlier in their judgment (at [14]) the majority also observed that the ‘feature game’ elements of Aristocrat’s claims might be characterised either as ‘akin … to the rules of a game’, or as a business scheme ‘for increasing player interest in an EGM and hence for increasing revenue to the operator’.  But both of these classes of subject matter – i.e. rules for playing games and business schemes – have long been regarded as unpatentable abstract ideas.

The Bad News – What Is an ‘Advance in Computer Technology’?

Having clarified an approach to interpreting claims directed to computer-implemented inventions, in my view the majority have unfortunately also muddied the waters with their assertion that patent-eligibility is dependent upon there being an ‘advance in computer technology’.  The problem is that it is not clear exactly what they mean by this term.

Taken literally, an ‘advance in computer technology’ might require a contribution that improves computers generally – the kind of work that might be performed by a computer scientist or computer architect, for example – as distinct from an improvement to the use of computers in some other field of endeavour.  The majority themselves acknowledge, at [65], that improvements in the implementation of feature games provided by Aristocrat’s invention ‘may constitute advances in gaming technology but they are not advances in computer technology’.  They go further, at [93], stating an apparent policy principle:

The encouragement of novel uses of computers is not the point of this area of patent law. Its purpose is the encouragement of novel uses of computers to advance computer technology.

It seems unlikely, however, that the majority intends that computer-implemented inventions will only be patent-eligible when they contribute improvements to the technology of computers themselves.  If so, this would exclude inventions in many fields of technology merely because, in the modern world, the most practical and cost-effective implementation is through software.  In his concurring judgment, Justice Nicholas provides a pertinent example (at [120]):

It follows, for example, that a computer implemented scheme or idea (eg. an algorithm) for running a refrigerator in a more energy efficient way may be patentable even though the relevant technical contribution resides in the scheme or idea rather than in the workings of the computer with which the scheme or idea is implemented. If the result of the contribution of the refrigeration engineer who conceived the scheme or idea, and the computer engineer who implemented it using conventional (or generic) computing technology, is a more energy efficient refrigeration system, then the invention may well be patentable even though the technical contribution resides in the field of refrigeration technology rather than computer technology.

But in using exactly the same terminology here – ‘computer technology’ – Justice Nicholas appears to set himself at odds with the majority.  He expressly identifies the patent-eligible invention in his example as residing in the field of refrigeration technology and not in the field of computer technology.  Presumably, he intends this to be understood in the narrow sense of ‘the technology of computers themselves’.  On the other hand, a simple substitution in the statement of the majority at [65] would lead to the conclusion that this invention ‘may constitute advances in gaming refrigeration technology but they are not advances in computer technology’, and that the majority would therefore consider it to be unpatentable.

That does not seem right, and I suspect that the majority uses the term ‘computer technology’ in a broader sense that includes ‘computer technology as applied to other fields of non-excluded subject matter’.  If so, then their use of the term would encompass a computer-implemented invention that provides a technical improvement in refrigeration efficiency, while excluding a computer-implemented invention – such as Aristocrat’s – that does no more than put into effect an otherwise unpatentable system of game rules.

But the fact that this is not clear from the majority judgment – and that there is a different usage of the term ‘computer technology’ in the concurring judgment – is unfortunate.  I expect that it is going to lead to ongoing disagreements over exactly what does, and does not, constitute an ‘advance in computer technology’.

The Role of Prior Art in Construing Patent Claims

It is interesting to compare the approach taken by the majority of the Full Court to that applied by the European Patent Office (EPO).  In Europe, a claim that expressly recites physical hardware elements – as in this case – would pass the first hurdle of avoiding the excluded category of ‘computer programs … as such’ in Article 52 of the European Patent Convention.  However, when evaluating inventive step the EPO would ignore any non-technical features of the claim, including the integers relating to the rules of play for the feature game.  This would leave only the technical elements, i.e. the integers making up the ‘computer which is an EGM’ in the analysis of the Full Court majority.  However, since the EGM is not novel, there could be no inventive step, which would result in rejection of the claim.

Of course, the European approach is not valid in Australia, because there is no explicit or implicit bright-line rule in this country that only ‘technical’ features can contribute to inventive step, and the requirement for patent-eligible subject matter is a threshold test that precedes any evaluation of novelty and inventiveness.  And yet, as the majority acknowledges of its approach in this case (at [93]):

…it should be recognised that the approach adopted in this Court of requiring a computer-implemented invention to constitute an advance in computer technology before being accepted as patentable subject matter, is likely to overlap with the question of novelty. In very many cases it is likely that a patent which constitutes an advance in computer technology is also likely to be novel although we would stop short of saying that this is inevitable. But the converse is not true. It is quite possible for a computer-implemented invention which is novel to fail to constitute an advance in computer technology….

This is not to say that the grounds of ‘manner of manufacture’ and ‘novelty’ themselves overlap, which would defy High Court authority that ‘the grounds of invalidity themselves are, and must be kept, conceptually distinct’: Lockwood Security v Doric Products [2004] HCA 58, at [46].  But, as the High Court also observed in Lockwood, ‘factual matters may be relevant to more than one ground of invalidity’ and ‘[t]he issues may “intersect and overlap”.’

Even so, determining whether there is an ‘advance in computer technology’ surely requires consideration of the state of the art, which raises the question of how this comes into assessing patent-eligibility, as opposed to novelty and inventive step.  This is said, by the majority at [9], to be because the analysis ‘requires one to characterise the invention and this in turn requires one to construe the meaning of Claim 1.’  It is said that the claim’s meaning ‘is to be discerned from its terms read in light of the specification … as a whole and the relevant prior art’ (emphasis added).  This role for the prior art comes from D'Arcy v Myriad Genetics Inc [2015] HCA 35, at [12], where the plurality stated that this ‘inquiry requires a definition of the allegedly patentable invention’ which ‘depends upon the construction of the impugned claims read in the light of the specification as a whole and the relevant prior art.’  This, in turn, derives from the earlier decision of the High Court in Kimberly Clark Australia Pty Ltd v Arico Trading International Pty Ltd [2001] HCA 8, in which the unanimous Court said, at [24]:

It is well settled that the complete specification is not to be read in the abstract; here it is to be construed in the light of the common general knowledge and the art before … the priority date; the court is to place itself ‘in the position of some person acquainted with the surrounding circumstances as to the state of [the] art and manufacture at the time’.

As an aside, the turn of phrase above, ‘common general knowledge and the art’ – rather than ‘common general knowledge in the art’ or ‘common general knowledge and the prior art’ – seems a little strange.  I checked the official report of the judgment from the Commonwealth Law Reports, (2001) 207 CLR 1, and the language is the same.  I cannot help wondering if it is a long-standing typographical error that has led, through Myriad, to an unintended development in the role of the prior art in assessing manner of manufacture. 

In any event, it makes no difference in the present case because, as the majority judgment confirms at [7], it was agreed by the parties that the construction of an EGM was common general knowledge at the relevant time.  Therefore any person skilled in the art, reading the specification and claims, would be in no doubt which elements of the claim correspond to the well-known EGM structure, and which were the software components that were said to constitute the distinguishing contribution.

Continuing Confusion Around Prior Art

In other cases, the boundaries between conventional computer elements, and the inventor’s contribution, may be less clear, and not so readily resolved by agreement on the scope of common general knowledge.  In such cases, should a decision-maker turn to other sources of prior art, such as documents that may be identified in searches?  The Federal Court continues to struggle to provide clarity on this question, with a number of Full Court decisions over the years seeming to offer conflicting guidance.

In CCOM Pty Ltd  v Jiejing Pty Ltd [1994] FCA 1168, the Full Court was clear (at [112]) that ‘in the 1990 Act, manner of manufacture, novelty, inventiveness and utility are stated as distinct requirements of a patentable invention’, so that ‘whilst a claim for the ball point pen now would fail for anticipation and obviousness, it would still be a claim for a manner of manufacture.’  The primary judge in CCOM thus came in for criticism to the extent that he may have been ’influenced in the determination of the issue as to “manner of manufacture” by asking whether what was claimed involved anything new and unconventional in computer use.’

The Full Court cited this passage from CCOM in Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 at [110], while also endorsing the relevance of considering (per International Business Machines Corporation v Commissioner of Patents [1991] FCA 625 at [16]) whether the claimed invention ‘involved steps which are foreign to the normal use of computers.’  It is difficult to see how one might determine whether or not something comprises a ‘normal use of computers’ without reference to the prior art.  Furthermore, much as ball point pens were once novel, but are now commonplace, something that is considered a ‘normal use of computers’ today may once itself have been as uncommon as the first ball point pen.

In Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177 at [112], the Full Court again looked to identify claimed steps that were ‘outside the normal use of computers’, concluding that because those steps did not ‘involve ingenuity themselves’ the claimed invention was an unpatentable scheme or business method.

An expanded five judge panel in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161 was also equivocal about the role of prior art in evaluating patent-eligibility of computer-implemented inventions.  The court observed, at [112], that ‘the primary judge made a number of statements about whether the method and apparatus described in the specifications resulted in a computer being used to do something it has not been used to do before’, and accepted that ‘his Honour’s use of this language suggests that other, conceptually distinct elements of patentability might have intruded into his Honour’s consideration of whether the claimed method and apparatus were directed to a manner of manufacture’, contrary to the guidance in CCOM.  But the court nonetheless declined to identify any error in the reasoning of the primary judge, given that they saw ‘no error in his Honour’s ultimate conclusion that no manner of manufacture is involved in the method and apparatus as claimed.’

On the other hand, in Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86, the Full Court was far less coy in calling out the inappropriate use of prior art information in assessing patent-eligibility.  At [85] the court observed that references to using a computer for ‘its well-known and understood functions’ do ‘not require, and should not be taken to encourage, a review of the common general knowledge beyond the use of the common general knowledge, to the extent necessary, to construe the specification.’

Further, the Full Court in Rokt stated, at [91] (emphasis added):

It is apparent that where the cases refer to “generic software” or to the use of computers for their “well-known” purpose, it is not a finding as to common general knowledge. Rather, it is a reference to computer technology that is utilised for its basic, typical or well-known functions. The means of determining that this is so is primarily by a careful review of the specification in order to ascertain, by construing that document, whether the invention described and claimed is in substance any more than a scheme that utilises computers in such a way. This is a question of characterising the invention as set out in the specification.

This statement from Rokt needs to be reconciled with the Aristocrat court’s acceptance that its requirement for ‘a computer-implemented invention to constitute an advance in computer technology before being accepted as patentable subject matter, is likely to overlap with the question of novelty.’  This can perhaps be achieved by keeping in mind that the role common general knowledge in construing a patent specification is to ensure that the technical information and terminology used in the description and claims be correctly interpreted.  The notional skilled reader, armed with this knowledge, also inherently ‘knows’ what constitutes a ‘normal’ use of computers in the relevant field of technology, and should be able to identify – merely from the content of the patent specification – the alleged contribution made by the invention.

There may be an overlap with novelty, in the sense that while construing the patent specification the skilled reader may be unable to identify any technical contribution beyond the use of familiar programmable hardware in a conventional way merely to implement an unpatentable scheme or abstract idea.  A claimed invention can certainly lack novelty over common general knowledge alone, and a skilled person might recognise this, even when not specifically engaged in a formal novelty inquiry.

However, the extent to which prior art information beyond common general knowledge is relevant to the ‘manner of manufacture’ inquiry remains unclear.  CCOM’’s ball point pen analogy appears to rule it out, observing that something (including a computer) does not suddenly cease to be a patent-eligible manner of manufacture merely by becoming commonplace and familiar – although certainly it is then no longer novel.  The subsequent Full Court decisions have continued to endorse CCOM, while at the same grappling with the reality that a computer is not really like a ball point pen.  A ball point pen cannot be repurposed via software to implement such diverse functionality as generating an investment index (as in Research Affiliates), gathering online evidence of prior learning (RPL Central), displaying information retrieved from disparate data sources (Encompass), marketing sales offers to online users (Rokt), or being a casino slot machine (Aristocrat). 

The courts have therefore become wary of allowing the mere presence of computer components in a claim to bring an end to the ‘manner of manufacture’ inquiry (as it does to the subject matter inquiry at the EPO).  This causes them to continue to flirt with a role for prior art in assessing patent-eligibility, because that might sometimes be the only way to separate the allegedly inventive contribution from elements in a claim (such as computer hardware components) that are merely a conventional means by which the invention is implemented.  I therefore do not expect this uneasy tension between the simple rule of CCOM and the practical approach of the Full Court in more recent cases to disappear any time soon.

Conclusion – the Job Ahead for Applicants and Examiners

Many computer-implemented inventions – including all of those that have been found unpatentable in the recent series of Full Court decisions – are essentially software inventions that are wholly implemented via program code that executes on a conventional (and non-inventive) hardware platform.  The majority opinion in Aristocrat deals directly with these types of invention and, in my view, provides the clearest rationale to date for distinguishing the conventional hardware components in a claim from the software-based contribution for the purposes of assessing patent-eligibility.  My guess is that this will become the leading case guiding the eligibility analysis for such inventions, and will be embraced whole-heartedly by the Australian Patent Office.

The challenge, for examiners and applicants, will be interpreting what the majority means by an ‘advance in computer technology’.  As I have noted, it seems unlikely that this should be narrowly limited to improvements in the technology of computers themselves (e.g. algorithms that provide for faster data communications, more efficient memory management, reduced storage requirements, and so forth).  Patents are routinely granted, without controversy over eligibility, for inventions implemented entirely in software that provide new or improved products in many other fields of technology.  Precisely because these inventions are uncontentious, they do not end up before the Federal Court to resolve questions of patent-eligibility.

Indeed, the Full Court has not ruled out the possibility in the Aristocrat case that some aspect of the implementation of a new feature game in an EGM may comprise an ‘advance in computer technology’.  All three judges concurred that the case should be remitted to the primary judge to consider any residual issues in light of the Full Court’s guidance.

In cases where the contribution of the programming is to implement a method that itself falls within a category of unpatentable subject matter – e.g. business schemes, rules for playing games, or abstract ideas – it seems likely that this will not constitute an ‘advance in computer technology’, at least where the method is claimed at a relatively high level of generality.

However, where the programming results in a technical improvement in some field of technology, it is more likely that this would comprise an ‘advance in computer technology’.  This might also be so where the programming provides a technical advance in a non-technical field (such as business or finance), and the means of achieving that technical advance is described and claimed with sufficient specificity to be more than an instruction merely to use computer technology to implement an otherwise unpatentable scheme or method.

It is still possible that Aristocrat may seek leave to appeal this decision to the High Court.  Failing that, it remains to be seen what further developments may occur when the case returns to the primary judge.  Either way, this story is not yet over.


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