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Business Method Patents

For tonights class, in addition to the reading listed below, the following recent Australian Patent Office decisions are relevant:


David Litfin said...

The APO in the absence of Australian authority, has been narrowing the concept of patentability in line with Bilski such that Business Methods even with computerised implementation are being rejected. Iowa Lottery [2010] APO 25, Discovery Holdings Limited [2010] APO 56.

The real issue appears to be what constitutes an "artificially created stated affairs". It is clear from (the still authoritative) National Research Development Centre v Commissioner of Patents (1959) 102 CLR 252 that the concept is to be considered broadly and that the conveniences created by applying simple tests unnecessarily limit patentabilty.

However since Grant, The APO has heretically extrapolated that case beyond its facts, and is maintaining a fiction that Business Methods even when implemented in computerised devices (unless hardwired) are not an artificially created state of affairs.

The overly cautious approach the APO has adopted is prima facie appropriate given the international developments and the current distinction we have between a process implemented by hardware (Catuity) and that implemented by software (Iowa Lotteries) will remain (with unpersuasive authority), until a better approach is handed down.

David Litfin said...

The citation for Grant: [2006] FCAFC 120

Monotti [2006] FedLawRw 17 has a detailed history of that case.

Ray Marshall said...

The Grant patent basically covered an asset protection method by means of incorporating a trust, transferring assets into the trust, then re-granting them to the trustor/beneficiary under a charge.

Branson J in Grant v Commissioner of Patents [2005] FCA 1100 declined to accept the patent application in that case partly on the grounds that granting the patent was not in the public interest:

A court of law must assume that the performance of the invention will not advance the public interest but merely advance private interests. The social cost of conferring on the invention the protection of a patent would therefore not be counterbalanced by any resultant benefit to the public. (at 22)

The Full Court (citation per David), being Heerey, Kiefel and Bennett JJ, said that this was incorrect, but found against Grant again. However, their approach implied a "physicality" requirement:

A physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation is required. In NRDC, an artificial effect was physically created on the land. In Catuity and CCOM as in State Street and AT&T, there was a component that was physically affected or a change in state or information in a part of a machine. These can all be regarded as physical effects. By contrast, the alleged invention is a mere scheme, an abstract idea, mere intellectual information, which has never been held to be patentable, despite the existence of such schemes over many years of the development of the principles that apply to manner of manufacture. There is no physical consequence at all. (at 32)

This has been criticised (by Ben McEniery... at enormous length) as their is no explicit physicality requirement in NRDC, Welcome Real Time v Catuity, or indeed most of the case law prior to Grant. Indeed, in some cases where it may have been material, the bench declined to specify such a requirement.

P.M. Spann, Deputy Commissioner for Patents, also appears to be trending towards a physicality requirement (Iowa Lottery as above, also Invention Pathways [2010] APO 10. This approach has not (as far as I'm aware) been challenged in court yet.

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