Great Software, Great Idea – But is it Patentable?

With the ever-increasing capacity of computers, and the opportunities for communication and information afforded by the Internet, many things are now possible which would not previously have been remotely practical.

The proliferation of software applications to solve problems and perform functions in ways that are often very innovative has led (both in Australia and elsewhere) to applications for patents to provide protection for these innovations.  The results, however, have generally been unsuccessful (see the report on some of these developments in the Spring 2014 edition of the DW Report.[i])

Is there an Invention?

The threshold question in an application for a patent involving computer software, or in any patent application, is whether or not what is claimed is an invention or, put in another way, whether it constitutes patentable subject matter.  In another area, this threshold issue has recently been considered by the High Court of Australia in D’Arcy v Myriad Genetics Inc.[ii]  The High Court found that a claim for an isolated nucleic acid was not a claim for a manner of manufacture, and that the existence of a genetic mutation indicating a susceptibility to types of cancer disclosed by the patent specification was a discovery, not a patentable invention.[iii]

The Full Federal Court of Australia late last year delivered its decision in the matter of Commissioner of Patents v RPL Central Pty Ltd.[iv]  The decision in RPL Central has been anticipated for some time following the decision of the Court in Research Affiliates LLC v Commissioner of Patents in 2014.[v]

Business Systems

It has long been established that something which can be characterised merely as a “business system” or a “business method” is not a manner of manufacture or patentable subject matter.  This was confirmed in Australia in Grant v Commissioner of Patents.[vi]  Mr Grant had conceived a method or system to protect an individual’s assets utilising a trust, a gift, a loan and a security.  The Full Federal Court found that, “This claim is ‘intellectual information’, mere working directions and a scheme.  It is necessary that there be some ‘useful product’, some physical phenomenon or effect resulting from the working of a method for it to be properly the subject of letters patent.  That is missing in this case.

Computer-related Business Systems

The implementation of business systems or methods by use of computers, and software to implement the functions required has led to further endeavours to obtain patents for these systems.  In the United States, in Alice Corporation Pty Ltd v CLS Bank International[vii] claims for a patent for a system to facilitate the exchange of financial obligations between two parties using a computer system as a third‑party intermediary were held not to constitute patentable subject matter and the Court observed that “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention”.

In Research Affiliates the Court found a computer-implemented system for investing based on indexes built with metrics other than metrics consisting of market capitalisation weighting, share price weighting or equal weighting was not a patentable invention.  The Court set out principles which it said were derived from the High Court of Australia in the NRDC Case [viii]  and affirmed in Grant and D’Arcy and other cases, and which it has again affirmed in RPL Central.  These principles are:

  • The right question is: “Is this a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies?
  • There is a ‘manufacture’ such as might properly have been the subject of letters patent and grant of privilege under s 6 of the Statute of Monopolies whenever a process produces, either immediately or ultimately, a useful physical result in relation to material or tangible entities.
  • The method the subject of the relevant claim must have as its end result an artificial effect falling squarely within the true concept of what must be produced by a process if it is to be held to be patentable.
  • There may be a discovery without invention, either because the discovery gives some piece of abstract information without any suggestion of a practical application of it to a useful end, or because its application lies outside the realm of ‘manufacture’.
  • To fall within the limits of patentability, the process must be one that offers some advantage which is material in the sense that the process belongs to a useful art as distinct from a fine art and that its value to the country is in the field of economic endeavour.

RPL Central

In RPL Central, application was made for a patent for a system which it was said, and accepted by Courts hearing the matter, that the process could not be performed other than by use of a computer.  The field of the invention related to assessing competency or qualifications of individuals with respect to recognised standards, particularly recognition of prior learning (RPL) conducted with the Australian Vocational Education and Training (VET) sector.  The patent application pointed out that there was no single point of access to RPL in Australia and that there were currently in excess of 3,500 qualifications and 34,000 units in the Australian VET sector.  The system was devised to enable individuals to access the system on-line and to enable information and evidence gathering through automatically-generated questions by use of a wizard.  The application for patent was not accepted by IP Australia, and Middleton J in the Federal Court upheld an appeal and distinguished Research Affiliates, finding that there was an invention which was the proper subject of letters patent, placing particular emphasis on the fact “that the magnitude of the task performed by the invention (as previously described) and the express terms of the claims themselves mean that the computer is an essential part of the invention claimed, as it enables the method to be performed”.

The Full Federal Court in RPL Central has, however, reversed the decision of Middleton J and has concluded “That the claimed invention is to a scheme or a business method that is not properly the subject of letters patent”.  As well as reiterating the principles stated in Research Affiliates as noted above, the Full Court said:

A claimed invention must be examined to ascertain whether it is in substance a scheme or plan or whether it can broadly be described as an improvement in computer technology.  The basis for the analysis starts with the fact that a business method, or mere scheme, is not, per se, patentable.  The fact that it is a scheme for 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.  Where the claimed invention is to a computerised business method, the invention must lie in that computerisation.  It is not a patentable invention simply to ‘put’ a business method ‘into’ a computer to implement the business method using the computer for its well-known and understood functions.

The Court noted, as accepted by Middleton J, that the method could not be carried out without the use of a computer but said, “This alone cannot render the claimed invention patentable if it involves simply the speed of processing and the creation of information for which computers are routinely used”.  The Court went on to say, “The problem may be one of confronting the ‘maze’ of available information concerning the RPL of different Units of Competency in different institutions, but the solution to that problem, to be patentable, must involve more than the utilisation of the well-known search and processing functions of a computer, for example an invention in the way in which the computer is utilised.

The trend of authorities in Australia, the USA and elsewhere is, accordingly, very much against the prospects of patentability for software, or computer-related inventions.  The Courts, however, do leave the door open to the possibility where some more tangible result, other than the ability of computers to perform complex and rapid functions, is apparent.  This is probably not the end of the story.


[i] DW Report Spring 2014, Further Down the Rabbit Hole, Computer-related Inventions and Alice Corporation.

[ii] D’Arcy v Myriad Genetics Inc [2015] HCA 35

[iii] See DW Fox Tucker news release High Court Rules on Gene Patents 9 October 2015.

[iv] Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177 (11 December 2015).

[v] Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 (10 November 2014).

[vi] Grant v Commissioner of Patents [2006] FCAFC 120.

[vii] Alice Corporation Pty Ltd v CLS Bank International et al United States Court of Appeals for the Federal Circuit, 19 June 2014.

[viii] National Research Development Corporation v Commissioner of Patents [1959] HCA 67.

For more information, please contact:
Sandy Donaldson

Sandy Donaldson
Director
p.  +61 8 8124 1954
e.  Email me

This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.

Legal Enquiry

Need assistance?
Describe the matter and we’ll be in touch asap.

Legal Enquiry Form

News Subscription

Stay up to date.
Key legal developments, firm news and events.

Subscribe Now

footer_logo

Level 14, 100 King William Street
Adelaide SA 5000

CALL +61 8 8124 1811

Connect with us

© Copyright - DW Fox Tucker Lawyers - Commercial Lawyers Adelaide