More than a scheme? Blockchain invention deemed patent eligible by the Australian Patent Office

A recent decision of the Australian Patent Office, Advanced New Technologies Co., Ltd. [2021] APO 29, has provided some much needed clarity for the patent eligibility of software inventions, finding that a system for processing transaction requests in a blockchain network constitutes eligible subject matter.

The decision confirms that inventions directed to solving business problems using computer technology are not excluded from patenting. It explains how factors for determining patent eligibility should be considered, and weighed on the balance of probabilities. Importantly, it establishes that a technical feature does not become less technical just because it may be well-known, or can be implemented on a conventional computer system. This decision follows a series of recent decisions confirming that an invention can still be patentable, even if it requires only generic computer implementation.

The decision also highlights that requesting a Hearing can be a viable strategy for breaking an impasse during examination.

The Invention

The patent application, titled ‘Method and apparatus for processing transaction request’, relates to a method for processing transactions using a blockchain network. A blockchain is a form of distributed ledger characterised by decentralisation, openness, and transparency. This means that, unlike networks involving a centralised database, any changes are replicated in all nodes of the network. Each node of the network can initiate and validate transaction requests.[1] The specification states there are privacy security issues due to the decentralised nature of blockchains, and the invention is directed to solving this problem .[2]

The solution proposed by the invention can be summarised as requiring the following steps:[3]

  1. Acquiring transaction data of a target transaction.
  2. Determining a transaction abstract according to the transaction data.
  3. Generating a transaction request that comprises the transaction abstract.
  4. Broadcasting the transaction request to one or more consensus nodes.

The transaction abstract is generated in a way that prevents plaintext transaction data from being obtained from the abstract, and replaces the role that the transaction data normally plays in financial transactions. This means that as transaction requests between nodes no longer include the transaction data, and the transaction data is no longer stored on the blockchain, there will be no privacy risk associated with a leak at the transaction nodes.[4]

Rising Above the Technical Threshold

Prior to the hearing, the Examiner characterised the substance of the invention as an abstract scheme on the basis that the invention was not technical in character and required only generic computer implementation.[5]

Taking a more nuanced approach, the Delegate began by reviewing the state of the art at the priority date with respect to blockchain technology to better understand, and distinguish, the invention.[6] Armed with this understanding, the Delegate opined:[7]

…it would appear that this new method of processing a transaction request within what is otherwise a standard blockchain infrastructure includes elements that may be considered technical such as the conversion of the data using cryptographic techniques and elements that may be considered as an abstract scheme such as the modified procedural rules for obtaining consensus validation.

Although the Delegate was not satisfied that preserving the privacy of blockchain nodes was a technical problem,[8] the Delegate considered the invention nevertheless provided a technical solution as ‘the critical steps of converting the transaction data into an indecipherable data abstract and then generating a transaction abstract based on digitally signed approvals from the transaction nodes involves the application of information technology techniques.’[9]

Importantly, the Delegate clarified the ‘fact that [a] technique may be well-known does not make it any less technical.’[10]

The Delegate noted the invention used a general-purpose computing device requiring only generic computer implementation.[11]

Briefly addressing the remaining issues, the Delegate acknowledged that preventing breach of privacy data was a practical and useful result,[12] and that ‘[i]t is not fair to say that the invention lies merely in the generation and arrangement of intellectual information.’[13]

Are Blockchains Patentable?

The Delegate confirmed that blockchains, whilst being a computer implemented technology, are not inherently unpatentable.[14]

After balancing the above considerations, the Delegate concluded there is no reason why ‘technical improvements to fundamental mechanisms’ within a blockchain should not be patentable, indicating that there is no need for these improvements to ‘necessarily be addressing technical problems’.[15]

Although the case was remitted back to examination to reconsider potential issues of inventive step, this decision demonstrates the clear demarcation between questions of patentable subject matter, and those of novelty and inventive step.

 

If you have any questions about patents for blockchains or software, or would like to understand more about the Hearings process, please contact us.

 

[1] Advanced New Technologies Co., Ltd. [2021] APO 29, [17]-[19].
[2] Ibid [20]-[22].
[3] Ibid [24]-[34].
[4] Ibid [34].
[5] Ibid [37].
[6] Ibid [44]-[47].
[7] Ibid [54].
[8] Ibid [55].
[9] Ibid [63].
[10] Ibid [60].
[11] Ibid [64]-[66].
[12] Ibid [67].
[13] Ibid [68].
[14] Ibid [69].
[15] Ibid [72].