31 August 2022

High Court’s Failure Exposes the Festering Eligibility Sore in Australia’s Patent Laws

DisappointmentIn a keenly-awaited – and thus hugely disappointing – ‘decision’, the High Court of Australia has failed to satisfactorily resolve the question of whether patent claims directed to electronic gaming machine (EGM) technology developed by Aristocrat Technologies Australia Pty Ltd are directed to patent-eligible subject matter: Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCA 29.  With Justice Gleeson calling in sick on the crucial days, arguments in Aristocrat’s appeal from the adverse decision of the Full Federal Court of Australia were heard by just six judges of the High Court, which astute readers will notice is an even number.  The diminished bench split 3:3, with Kiefel CJ, Gageler and Keane JJ finding Aristocrat’s claims unpatentable, while Gordon, Edelman and Steward JJ would have allowed the appeal, concluding that the claimed invention was patent-eligible.  In this situation, section 23(2)(a) of the Judiciary Act 1903 provides that ‘the decision appealed from shall be affirmed’.  It does not, however, provide that the reasons of the court appealed from are affirmed.  On the contrary, one thing on which all six High Court judges appear to be in agreement is that the two-step approach taken by the Full Federal Court majority was not correct.  We were hoping for some clarity on the patent-eligibility of computer-implemented inventions.  Instead, we have been delivered two opposing, but equally authoritative, outcomes in the High Court, along with a Full Federal Court decision that stands affirmed, but which has been disapproved.

To say that this is an unsatisfactory situation would be one of the great understatements in the history of Australian patent law.  Oh, how the mighty have fallen!  In its famous and rightly-lauded 1959 decision in the NRDC case ([1959] HCA 67) the High Court delivered a judgment on patent-eligibility of such wisdom and prescience that the Australian government chose to retain the archaic language of ‘manner of manufacture’ as the touchstone of eligibility in the Patents Act 1990, placing its trust in the courts to continue development of the law to flexibly embrace the emergence of new and unpredictable technologies.  Yet here we are in 2022, and the High Court has tripped over the now relatively mature technology of computer software and tumbled flat on its face.

What follows is, I concede, a lengthy article, even by my usual standards.  But I am attempting to take up some important issues, and to suggest a different way forward on the treatment of computer-implemented inventions in Australia.  Following a relatively brief review of what actually happened at the High Court, I attempt to determine what, exactly, the split decision means for the lower courts, and other decision-makers such as patent office examiners and hearing officers that are bound by the authority of the courts.  I then look at how we arrived at the unsatisfactory position in which we now find ourselves, and argue that division among judges is not a new feature in this area of the law, and has in fact been evident in the Federal Court for some years. 

This leads me to the view that judicial development of the ‘manner of manufacture’ test has failed us in relation to computer-implemented inventions.  I think that a new approach is required to bring some certainty and clarity to the law and its application.  Firstly, I suggest that it would be productive for IP Australia to consult more widely with stakeholders in developing its examination practice in the wake of the Aristocrat case.  Beyond this, I think the Australian government needs to clarify its policy in relation to the protection of digital innovation, and to reach a principled position on the appropriate balance between competition and the patent incentive in the case of computer-implemented inventions.  And if the current law is not working for us, then the parliament may need to consider a legislative solution.

03 August 2022

Eligibility of Computer-Implemented Inventions Behind Unprecedented Numbers of Patent Office Rulings

image Once upon a time – not so very long ago, in fact – it was rare for the Australian Patent Office to issue a formal published ruling on the patent-eligibility of claims submitted for examination.  Indeed, ex parte decisions (i.e. those involving only the applicant and the Office) were generally in the minority, and most of those related to pharmaceutical extensions of patent term, allowability of amendments, and extensions of time to meet various deadlines.  Historically, the overwhelming majority of decisions have related to inter partes proceedings, such as patent oppositions.  That is, however, no longer true.  Following a peak in 2015, inter partes decisions have been falling, while ex parte decisions have been generally on the rise since 2011.  In 2021, ex parte decisions outnumbered inter partes decisions for the first time.  And in 2022 more ex parte decisions have been issued so far (i.e. up until the end of July) than in any past full year, with inter partes decisions once again lagging behind.

The sole driver of the growth in ex parte decisions has been patent-eligibility according to the ‘manner of manufacture’ test under Australian patent law.  The number of published Patent Office decisions relating to subject-matter eligibility of patent claims has risen from fewer than one per year in the 2000-2009 decade to 19 decisions in 2021 and 21 decisions in just the first seven months of 2022.  Since 2010 there have been 115 published decisions on eligibility, with the claims at issue being found ineligible in 100 of those cases.  Almost all of these have related to computer-implemented inventions.

The issue here is not that some subject matter is ineligible for patent protection.  That has always been, and will always be, true.  But the massive increase in published decisions is indicative of a more insidious problem.  Applicants rarely request hearings to appeal rejections by a patent examiner, and when they do it is usually because they genuinely believe that the examiner has got it wrong, and that the additional effort and expense is justified by good prospects of a better outcome when the matter is considered by an experienced hearing officer.  The unprecedented rise in applicants requesting hearings on patent-eligibility is due to a lack of clarity and coherence in the law.  And the fact that those applicants are so frequently wasting their time and money reflects the fact that the Patent Office has been championing an interpretation of the law that is at odds with the way in which it is being interpreted by the applicants and the patent attorneys advising them.

To be clear, the Patent Office on the one hand, and applicants and their attorneys on the other, are looking at exactly the same case law, and arriving at completely different conclusions as to how that law applies to particular claims.  Over the period during which this situation has arisen, there have been five Full Bench decisions of the Federal Court of Australia that should have served to clarify the law, but which appear to have had the opposite effect.  (For the record, those decisions are Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150, Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177, Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161, Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86, and Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd [2021] FCAFC 202.)

The Aristocrat decision is currently before the High Court, where it was heard on 9 and 10 June 2022 (transcripts at Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCATrans 103 and [2022] HCATrans 104).  While it might be hoped that the High Court will provide the clarity that has been lacking in the Federal Court decisions, I am not so optimistic.  Looking at what has been happening at the Patent Office over the past few years, I fear that whatever the High Court may have to say about the specific claims at issue in Aristocrat will be equally open to different interpretations when applied to different claims in other cases.

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