Federal Court fails to "encompass" new guidelines for patentability

Those with inventions in information and communications technology (ICT) were hoping that the Australian Full Federal Court would provide some much-needed guidance for how to assess whether computer-related inventions are patentable in Australia.

Why is guidance needed?

As readers may know, to be patentable both New Zealand and Australia, an invention must be a "manner-of-manufacture", this requirement coming from the British Statute of Monopolies of 1623.

In most fields of technology, products and processes have no trouble fulfilling this requirement. However, the concept of manner-of-manufacture has proven difficult to apply in new fields of technology. The statute was written at a time when prominent inventions included knitting machines and the pendulum clock.

In recent years, a number of Australian Federal and High Court Decisions have considered the concept of manner-of-manufacture. The Judges in these decisions have considered principles from U.S. and European patent law, providing sometimes contradictory commentary which IP Australia has been required to interpret. IP Australia's resulting current practice in this difficult area has been characterized as "a mess". It was widely anticipated that the Encompass decision would clarify how patentability should be assessed in Australia.

What concepts had the Australian courts adopted from U.S. and European patent law?

In recent years, the U.S. Supreme Court has created "judicial exceptions" to what is patentable, effectively carving out some technologies from being patentable. European/UK patent law has four categories of "exclusions" to what is patentable.

The Australian courts have adopted some principles of the "judicial exceptions" from U.S. patent law, and some principles of "exclusions" from European/UK patent law. These principles have been listed as a range of matters for Australian decision makers to consider. Despite a lack of judicial authority, IP Australia has also adopted a version of the European/UK Aerotel test a bone of contention for patent applicants.

How was the Encompass decision expected to help?

The panel of five judges in the Encompass appeal were expected to either affirm, or reject, particular aspects of the approach of the lower court, including the extent to which the prior art should be considered in the assessment of manner-of-manufacture. Sadly, the Court's decision did not deliver the hoped-for guidance.

Encompass' appeal was in respect of the earlier judgement in which Encompass' two innovation patents, challenged by InfoTrack, had been found invalid for not being a manner-of-manufacture. The patents related to a computer-implemented method and apparatus for displaying information relating to business entities, in order to provide business intelligence.

The appeal focused on two points: that the inquiry into patentability should be distinct from the inquiry into novelty and inventive step (the primary Judge had referred to known methods in his assessment of patentability); and that it was not proper to require an "improvement in the computer" for patentability, as the primary Judge appeared to have done.

What did the Full Court find?

The Full Court found that Encompass' reading of the earlier judgement was incorrect: the primary Judge's choice of words suggested that, in his consideration of manner-of-manufacture he had considered "other, conceptually distinct elements of patentability"; but whether or not he had done so, his conclusion that the claims were not for a manner-of-manufacture was correct.

The Full Court also found the primary Judge had not required an improvement in the computer's functionality, but that his comments in that respect were part of his inquiry into whether the subject matter was patentable.

What next?

An upcoming decision which may shed further light on these issues will be the appeal of the Commissioner of Patents of the Federal Court's finding that Rokt Pte Ltd's invention of a "dynamic, context-based advertising system" is patentable - stay tuned.

November 2019

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