05 December 2022

Why Would IP Australia Encourage Software Innovators to File for Patents?

Bemused IP Australia – the government agency responsible for administration of Australia’s patent, trade mark and design registration systems – has an important role to play in educating the public about the value of intellectual property and the requirements and processes for securing IP rights.  Generally speaking, I think it does a good job of this.  In particular, the News and Community section of IP Australia’s website includes links to many useful webinars and case studies that explain how the various types of IP rights work, and how they may be used to add resilience and value to a business.  This is (presumably) the work of the Communications, Public Awareness & Education team within the Customer Experience Group at IP Australia (see here for information on the organisational structure).  However, a recently-added case study suggests that this team may not be as familiar as it could be with the work of the Policy & Stakeholders Group or the Patents Examination Group.

I am referring to the case study Longtail UX: Patented Digital Products, which was published on 29 September 2022.  The case study discusses the experience of the Australian company Longtail UX (LUX), which describes itself as ‘the world’s first Customer Acquisition Platform’, in deciding to pursue patent protection for its technology.  Put very simply, LUX has developed a software platform that automatically generates additional pages – particularly for e-commerce sites – that are highly relevant to specific search terms by aggregating information (e.g. product descriptions) extracted from existing pages.  The advantage of this is that when someone searches for the specific term, e.g. using Google, the corresponding automatically-generated page will appear far higher in the search results than any of the original pages which were only partly relevant to the search.  Personally, I think that is a pretty clever idea.  And it must work fairly well, because LUX has been around since 2013 and counts many well-known online businesses (both in Australia and overseas) among its clients.

The case study tells the story of a business that started out with no IP protection strategy, and which first considered patents primarily as a marketing tool.  Later on, however, LUX came to realise that patents could add real value that could be important when raising capital or looking at a potential sale of the business.  Now – a number of years and two families of patent applications further down the road – LUX is on the verge of expanding into Europe, and extolling the virtues of engaging patent professionals to guide the company through the complicated process of obtaining patents in Australia and overseas.

Regular readers of this blog will already know what is missing from this encouraging story about patents adding value to an innovative business.  LUX’s inventions are computer-implemented.  And they are applied to the field of search engine marketing.  This does not necessarily mean that they cannot be patented, in Australia or elsewhere.  But it does mean that even if they can be patented, the process these days is very likely to be more complex, drawn out and expensive than would be expected in less contentious fields of technology.  Yet there is no mention of this in the case study, despite the fact that IP Australia has become a world-leader in pushing the limits of patent-(in)eligibility of computer implemented inventions through the courts, and is now one of the more challenging IP offices around the world for obtaining patents on such inventions.

So how is LUX actually faring with its patent acquisition strategy?  I have taken a look at the progress of its applications in Australia, the United States and Europe, and found that its fortunes have been more mixed than the case study reveals.

Disparate Outcomes in the US, Australia and Europe

LUX has filed two families of patent applications.  The earlier family, based on a provisional application originally filed in 2013 is entitled ‘Improvements in Website Traffic Optimization’, while the later family is based on a provisional application filed in 2016 and is entitled ‘Improvements in Landing Page Generation’.  Both families proceeded via international applications filed under the Patent Cooperation Treaty (PCT) (publication numbers WO2015039165 and WO2017197430 respectively) and have proceeded into the national phase in at least Australia, the USA, the European Patent Office (EPO), Japan and China.  Details of the examination procedures in each case are readily available for the Australian, US and EPO cases.  These are also all jurisdictions in which difficulties are often encountered in securing granted patents for computer-implemented inventions.

The earlier application had a straightforward prosecution in Australia.  Expedited examination was requested upon entry into the Australian national phase on 5 February 2015, and the application was accepted on 21 March 2015 without any objections being made based on subject matter eligibility or prior art.  Prosecution of the earlier application in the US was a little more complicated, however a patent was eventually issued on 24 December 2019.  The stumbling blocks in the US were primarily related to prior art, with no substantive objections being raised to the eligibility of the claimed subject matter.

A patent on the later application was also recently issued in the US, again following a prosecution primarily raising prior art rejections, without substantive objections to the eligibility of the claimed subject matter.  In Australia, however, a first examination report has issued in which objections have been raised against all claims, both for lack of novelty and/or inventive step, and as patent-ineligible subject matter under Australia’s ‘manner of manufacture’ test.  Experience, and the continuing steady stream of Hearing Office decisions relating to eligibility of computer-implemented inventions, indicate that these latter objections can be difficult to overcome, regardless of merit.

Both applications are facing significantly greater challenges in Europe.  Under the EPO approach to computer-implemented inventions, the presence of any technical features in the claims (e.g. a ‘processor’) is sufficient to overcome the initial subject matter threshold, however any claimed features that are regarded as ‘non-technical’ are disregarded for the purpose of assessing inventive step.  Often, what remains is considered to be ‘notoriously well-known’ computer hardware or functionality.  Thus, in Europe, a subject matter issue ends up becoming an inventive step problem.  That is what has happened to both of LUX’s European applications.  The earlier application was formally refused following oral proceedings before the Examining Division, and LUX has appealed that decision in what must be becoming an alarmingly expensive exercise.  The later application is at an earlier stage of examination, but thus far appears to be heading down the same path, with the Examining Division already having rejected LUX’s initial attempts to overcome a subject-matter-based inventive step objection.

Conclusion – Case Study Meets Reality

The point of all this is not to offer an opinion on whether or not LUX’s inventions are patent-eligible in Australia, the US, and Europe.  (For what it is worth, my view is that the LUX technology provides a technical solution to a technical problem that arises specifically from the manner in which web search engines operate, and that its inventions ought to be regarded as patentable subject matter.  But I recognise that this might not necessarily align with the law in various jurisdictions.)

My point is that it is not especially surprising to find that LUX is experiencing difficulties in patenting its inventions in Europe.  Nor is it surprising that LUX has received a subject matter objection to its more recent Australian application, or that patenting computer-implemented inventions in Australia has become more challenging since its first application was examined – there have been four relevant decisions of the Full Federal Court since then (Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177, Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161, and Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86, not including the problematic Aristocrat decision), none of which have made life any easier for applicants in this technology area.

This being so, and with IP Australia having itself been so heavily invested in restricting the patentability of computer-implemented inventions for over a decade now, it is somewhat baffling that it would present such a positive case study on the benefits of pursuing patent protection in this area of technology.  It is true that innovative businesses need to identify, manage and protect their IP, and that patents can add significant value.  But the laws relating to patent-eligibility in various jurisdictions mean that innovators in some fields of technology have less access to patent protection than others.  This could have been addressed in the case study.  For example, it might have been useful for LUX to share its very different experiences in the US and Europe.

Quite aside from anything else, it seems a bit odd that one group within IP Australia is encouraging software innovators to consider filing patent applications on their inventions while another group is assessing many of those inventions – including one by the subject of the case study itself – as ineligible for patenting.


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