Principles
104 The Statute of Monopolies 1624 (21 Jac I c 3) declared that all grants of monopoly were void at common law except for letters patent and grants of privilege in respect of "any manner of new manufactures". Section 18 of the Act relevantly provides that for an invention to be patentable the invention, so far as claimed in any claim, it must be a manner of manufacture within the meaning of s 6 of the Statute of Monopolies.
105 There are a number of well-settled categories of invention that are not patentable because they do not constitute a manner of manufacture as that concept has been developed in the case law. For example, claims to a mere discovery, or to mere abstract ideas or information, are not patentable: Reynolds v Herbert Smith & Co Ltd (1903) 20 RPC 123 at 126 per Buckley J. Most relevant for present purposes, however, is the exclusion of mere schemes or plans from the concept of manner of manufacture. These have been found to include a scheme for the indexing or coding of information, a scheme for musical notation, a scheme for maritime navigation, a scheme for speech instruction, and a scheme for the management of aircraft during take-off so as to reduce noise: see TA Blanco White, Patents for Inventions, 5th ed. Stevens & Sons, London, 1983 at 4-903. In Grant v Commissioner of Patents [2006] FCAFC 120; 154 FCR 62 ("Grant") it was held that a scheme for protecting assets from creditors was not patentable. None of these inventions, or alleged inventions, as described and claimed, utilised computer technology in their implementation.
106 More recently it was held by the Full Court in Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150; 227 FCR 378 ("Research Affiliates") that a computer implemented business scheme was not patentable. That case concerned a scheme for compiling a weighted index of securities implemented using generic computer technology to produce an electronic file (in the well-known Excel format) containing a record of the compiled index which could then be used to determine how capital should be allocated. The Full Court emphasised that for the purpose of determining whether an invention was a manner of manufacture, the invention was to be understood as a matter of substance and not merely as a matter of form: see also D'Arcy v Myriad Genetics Inc [2015] HCA 35; 258 CLR 334 ("Myriad") at [145] per Gageler and Nettle JJ citing with approval Research Affiliates at [107].
107 The Full Court in Research Affiliates drew heavily on the reasoning of the High Court in National Research Development Corporation v Commissioner of Patents [1959] HCA 67; 102 CLR 252 ("NRDC") and the need to find an "artificial effect" resulting from the use of the method the subject of the relevant claims in that case. The Full Court also used the terms "technical effect" and "technical contribution". As previously mentioned, these terms were also used by the Delegate in this case. It is useful to recall how they came to be used in this field of discourse.
108 The Full Court in Research Affiliates referred to various decisions of the English Courts and the Board of Appeal and the Enlarged Board of Appeal of the European Patent Office ("the Board") concerned with Art 52(2) of the European Patent Convention ("the EPC") which relevantly provides that schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers are not to be regarded as an invention. However, Art 52(3) of the EPC provides that Art 52(2) only applies to the extent to which the patent or patent application relates to such subject matter "as such". Article 52 is also reproduced (using slightly different language) in s 1(2) of the Patents Act 1977 (UK).
109 Differences of opinion emerged between the English Courts and the Board in relation to the scope and operation of Art 52(3) of the EPC which are referred to in greater detail in Research Affiliates. The relevance of that controversy lay in the requirement that a computer program that would otherwise be captured by Art 52(2) and excluded from patent protection could be protected if the invention was not to a "computer program as such" and that therefore a computer program that has a technical effect, including by making some technical contribution to the functioning of the computer, would be patentable.
110 The Full Court in Research Affiliates broadly equated the terms "technical effect" and "technical contribution" with the NRDC requirement that the invention results in some artificial effect. As the Full Court said at [23] "… the UK decisions are of assistance in understanding the distinction to be drawn in the Australian context between an unpatentable business method and a claimed invention which may be patentable if the invention results in an 'artificial effect', within the understanding of that concept as explained in NRDC." Against that background, the Full Court later went on to say at [115]-[119]:
[115] The invention set out in the specification is directed to the index itself. The method of the invention is not one that has any artificial or patentable effect other than the implementation of a scheme, which happens to use a computer to effect that implementation. There is no technical contribution to the invention or artificial effect of the invention by reason of the intervention of the inventors. To take the words of NRDC at 268, the process does not produce "either immediately or ultimately, a useful physical result in relation to a material or tangible entity." The claimed method, the result of the ingenuity of the inventors, does not produce such a result; the ingenuity is in the scheme. Again, drawing from NRDC at 270, there is a useful result of the claimed process but there is no physical thing "brought into existence or so affected as the better to serve man's purposes". There is no "physical phenomenon in which the effect, be it creation or merely alteration, may be observed" (NRDC at 276).
[116] The High Court (in NRDC at 277) spoke in terms of a separate result achieved by the claimed method that has its own economic utility consisting in the improvement. By this reasoning, the High Court directed attention to the subject matter to which the claimed method was directed, which needed to exhibit the required characteristics of a manner of manufacture to be patentable. Here, that subject matter is truly the scheme, the idea, the index. As set out in the specification it may be, and in the claimed method it is, implemented in a computer, but the ingenuity of the inventors, the end result of which is the invention, is directed to the idea, which is not patentable. That method does not have an artificial effect falling squarely within the true concept of what must be produced by a process if it is to be held patentable (NRDC at 277).
[117] The approach to be taken to deciding whether a claimed method or product is properly the subject of letters patent must be flexible and must allow for new technologies presently unknown. The principles should be applied irrespective of the area of human endeavour and invention under consideration. However, that is not to say that any and every claimed method or process is properly the subject of a patent. Examples of exceptions have been identified, such as abstract ideas and mere schemes. There is no formula to be mechanically applied. It is a question of understanding what has been the work of, the output of, and the result of, human ingenuity, and to apply the principles that have been developed and explained so well in NRDC.
[118] In the context of the claim, the significance lies in the content of the data rather than any specific effect generated by the computer. The computer-implementation is an essential integer of the claimed process. That is, of course, important. It is of particular importance in the assessment of, for example, novelty and infringement. However, in examining whether a claimed invention is properly the subject of letters patent, it is necessary to look not only at the integers of that claimed invention but also at the substance of that invention.
[119] The claimed method in this case clearly involves what may well be an inventive idea, but it is an abstract idea. The specification makes it apparent that any inventive step arises in the creation of the index as information and as a scheme. There is no suggestion in the specification or the claims that any part of the inventive step lies in the computer implementation. Rather, it is apparent that the scheme is merely implemented in a computer and a standard computer at that. It is no part of the claimed method that there is an improvement in what might broadly be called "computer technology".
111 The scheme in Research Affiliates provided a new and innovative investment portfolio management tool. Use of a generic computer to implement the scheme enabled the relevant calculations and indexing to be performed efficiently but did not result in any improvement to either the hardware or software components of the computer. The computer was no more than the means by which the relevant data was processed. Similarly, even though the scheme was new and innovative, there was nothing new or innovative about the way in which the computer managed or processed the data.
112 It is desirable at this point to say something more about terminology that has featured in this field of discourse. The Court in Research Affiliates used the term "generic" to describe conventional computer technology (in that case a computer running the well-known Excel program). It will often be useful to distinguish between general purpose computers which involve a separate and distinct field of technology that is different from the field from which the computer implemented invention may have emerged (eg. business or financial management) and special purpose computers (eg. those used to control aircraft or drilling rigs) which may raise more complex issues as to the proper characterisation of the relevant invention. The recent Full Court decisions concerned with computer implemented schemes have drawn on this language. The same language was also used by the United States Supreme Court in Alice Corporation Pty Ltd v CLS Bank Int'l 573 US 208 (2014), where the Court held that merely requiring generic computer implementation does not transform a patent-ineligible abstract idea into a patent-eligible invention. The fact that the computer technology is generic, in the sense of purely conventional, and is utilised for its well-known and well-understood effects, provides a useful signpost when deciding whether, what began as an abstract scheme or idea, has been transformed into something that is sufficiently different to constitute an artificially created state of affairs. There are also other signposts identified in the relevant authorities which may assist in deciding this question including whether the computer implemented invention solves a "technical problem" or makes some "technical contribution" in a field of technology. However, as the Full Court said in Encompass Corp Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161; 372 ALR 646 at [94]:
In considering whether the mere implementation by a computer of an abstract idea or scheme is enough to transform unpatentable subject matter into patentable subject matter, the Full Court in Research Affıliates (at [115]) resorted to the language of "artificial" or "physical" effects, "technical contribution" and suchlike expressions, as used by the High Court in NRDC. By resorting to this language, the Full Court was doing no more than explaining that the claimed method in that case did not transcend, as a matter of substance, what remained an abstract idea or mere information of a kind that has never been considered to be patentable subject matter under Australian law.
113 In Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177; 238 FCR 27 ("RPL Central") the Full Court held that a computer implemented method for assessing the competency and qualification of individuals was unpatentable. In that case the Commissioner had submitted that the invention was a method for the collection of evidence of a person's skill and knowledge and was, in substance, a mere scheme or idea that used a computer (equipped with standard software) as the tool with which to collect that evidence. She also submitted that, contrary to the findings of the primary judge in that case, the invention did not involve a new use of a computer, and that the computer was merely being used to compile the relevant information by performing its well-known and well-understood functions. She further submitted that the existence of a mere artificial effect achieved through storing instructions or data in random access memory was insufficient to meet the requirement that there be an "artificial effect".
114 In upholding the Commissioner's submissions the Full Court said at [96]-[98]:
[96] 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 or 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.
[97] Is the mere implementation of an abstract idea in a well-known machine sufficient to render patentable subject matter? Is the artificial effect that arises, because information is stored in RAM and there is communication over the internet or wifi, sufficient? Does any physical effect give rise to a manner of manufacture? Are the mere presence of an artificial effect and economic utility, without more, sufficient to determine manner of manufacture?
[98] It is not a question of stating precise guidelines but of deciding, in each case, whether the claimed invention, as a matter of substance not form, is properly the subject of a patent.
115 The Full Court noted at [100] the distinction drawn in Research Affiliates at [94] between a technological innovation which is patentable and a business innovation which is not. The use of the expression "technological innovation" emphasises the need to identify a technological contribution in a field of technology. The desirability of providing patent protection to technological innovations is reflected in Art 27(1) of the Agreement on Trade Related Aspects of Intellectual Property Rights which relevantly provides that "… patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application …". The language of "technological innovation" has now been adopted in s 2A of the Act which refers to the promotion of economic wellbeing through technological innovation as an object of the Act.
116 The statements at [98] in RPL Central and at [117] in Research Affiliates are important because they recognise that it is not appropriate to adopt an excessively rigid or formulaic approach to the question whether a computer implemented scheme is a manner of manufacture. This is especially true in situations where there may be no clear distinction between the field to which the invention belongs, and the field of computer technology. There may well be a technological innovation in the field of technology to which the invention belongs even though it cannot be said that there has been some technological innovation in the field of computers. The field of the invention may encompass different fields of technology that have their own technical problems that lie "outside the computer". Moreover, the solutions to these problems may necessarily rely upon generic computing technology for their implementation. That does not necessarily render such solutions unpatentable.
117 For the purpose of determining whether the invention produces the artificially created state of affairs referred to in NRDC and considered in Research Affiliates at [115]-[119], it will be often be useful to ask whether the invention solves a technical problem or makes some other technical contribution to the field of the invention. In particular, it may be useful to consider whether the invention solves a technical problem including one that exists "outside the computer", whether the computer is utilised to produce "an unusual technical effect" or whether there is some ingenuity in the way in which the computer is utilised (RPL Central at [99], [104] and [109]).
118 Mere business schemes, and abstract ideas or information, have never been regarded as sufficiently tangible in character to constitute patentable subject matter. Implementing the scheme, idea or information in a generic computer utilising its well-known and well-understood functionality does not change its fundamental character. But once a scheme is given practical effect and transformed into a new product or process which solves a technical problem, or makes some other technical contribution in the field of the invention, it may no longer be considered a mere scheme.
119 Ultimately, the question is whether what may have begun as a mere scheme, an abstract idea or mere information, has been transformed in some definite and tangible way so as to result in a product or method providing the required artificial effect. There must be some technical contribution either in the field of computer technology (eg. an improvement in processor, memory or display technology) or in some other field of technology to which the invention belongs. As the authorities to which I have referred to make clear, that transformation is unlikely to be achieved by taking an inherently unpatentable scheme and implementing it utilising generic computer technology for its well-known and well-understood functionality that does not involve any ingenuity in the way in which the computer is utilised.
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. Similarly, in the case of EGMs, patentable subject matter may be found to exist in the way in which a gaming system or machine functions even though a computer engineer may not consider that there has been any advance in the field of computer technology.
121 This brings me to my own decision in Aristocrat Technologies Australia Pty Limited v Konami Australia Pty Limited [2015] FCA 735; 114 IPR 28 ("Konami") upon which both Mr Shavin QC for the respondent in his submissions and the primary judge in his reasons placed reliance. There are a number of points to make about Konami.
122 Drawing on some observations of Emmett J in Dynamite Games Pty Ltd v Aruze Gaming Australia Pty Ltd [2013] FCA 163; 100 IPR 86, it was argued by the respondent in Konami that the invention was not a manner of manufacture because it was to "no more than a mere idea as to the rules of a game". The submission was not developed by reference to any other authority. In particular there was no consideration given in submissions to any of the signposts referred to in RPL Central (which was decided after Konami) including that the invention, even if computer-implemented, solved a technical problem in the field of gaming technology that justified the finding that it was a manner of manufacture.
123 There were findings made in Konami that the invention solved a number of well-known problems associated with progressive jackpots: Konami at [35]-[39], [212]-[213]. These included the problem of "swamping" which involved players, particularly professional gamblers, timing their play on EGMs operating across a network so as to maximise their prospects of winning a progressive jackpot. It was found that the invention solved the problem of "swamping" by using a random number generator to ensure that each player had the same chance of winning the progressive jackpot relative to the amount he or she wagered on each game: Konami at [214]. This finding was made in the context of an inventive step analysis but in light of the principles discussed in RPL Central it is also relevant to manner of manufacture. Neither the problem nor the solution was abstract, and the solution could not be properly characterised as a mere scheme or rule of a game. The invention provided a technical solution (using a random number generator) to a practical, real-world problem confronting gaming machine operators.
124 The Commissioner did not make any submission to the effect that Konami was wrongly decided. Had Konami been argued differently, the reasons for decision might have been more fully or differently expressed. But Konami should be understood as a case in which a gaming machine or gaming system that provided a technical solution to a practical problem in the field of gaming technology was proper subject matter of a patent.