Business method patents in Australia
Invention Pathways Pty Ltd  APO 10
According to the Australian Patent Office, mere use of a computer system may not be enough to secure allowance of business method claims. In Invention Pathways1, a patent application was refused because the use of a computer was considered merely incidental or peripheral.
Acceptable patentable subject matter in Australia has evolved considerably, driven by the changing nature of the technology sought to be protected and the flexibility afforded by the Australian High Court’s decision in NRDC2. However, in the absence of legislative change, any test must be confined by the principles of the long line of authority since NRDC.
The background section of the patent specification identified a problem that patent applicants fail to commercialise inventions because they are unfamiliar with the commercialisation steps which need to be completed and the importance of timing of these steps with the events that occur during the lifecycle of a patent application. As a solution to this problem, the specification disclosed an:
invention specific commercialisation programme (ISCP) [which] aligns a series of steps in the commercialisation process to the timelines provided by the relevant intellectual property treaties and conventions leading up to the filing of an application for intellectual property protection in one or more countries (Page 5, Lines 9 to 12).
The ISCP was said to ensure that all commercialisation activities are completed in time to maximise the opportunities for the invention within the time constraints placed by the lifecycle of a patent application. The specification provided a table said to reflect an illustrative ISCP that includes check lists and related information for sixteen separate commercialisation steps. The specification said this may be embodied in a planning software package using a computer implemented commercial entry strategy (CES) checklist and which may have a number of other features including reminder and reporting functions. No specific technical details were disclosed.
In the decision, a Delegate of the Commissioner of Patents confirmed a patentable method must produce a “artificial state of affairs, in the sense of a concrete, tangible, physical, or observable effect”, and that “a physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation is required”. Yet the Delegate went further and said:
I … consider that the “concrete effect or phenomenon or manifestation or transformation” referred to must be one that is significant both in that it is concrete but also that it is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way.3
The Delegate concluded:
… the physical effect identified is in my view peripheral and subordinate to the substance of the claimed method which is a scheme … There is no substantive effect produced through the operation of the computer … and such an effect does not arise from a synergistic interaction in the operation of the method on the computer or other physical elements.4
The Delegate held that the invention, a method of commercialising inventions using a computer implemented “electronically fillable checklist”, was not patentable subject matter.
The Delegate also considered whether the invention involved an inventive step in light of the common general knowledge in combination with two US patent specifications, and concluded again in the negative. This would have been enough to dispose of the matter, but he clearly wanted to explore the issues associated with patent subject matter. In doing so, the Delegate has imported considerations of the level of contribution (i.e. peripheral or incidental), which are normally reserved for novelty or inventive step, into determining whether a claim recites patentable subject matter.
The Path after Invention Pathways
The decision requires that a physical phenomenon or effect be more than incidental to the invention being claimed. What is “incidental” or “peripheral” and what is not, will have to be clarified in one or more further Patent Office decisions, or dealt with by the Australian Federal Court.
In the meantime, the Australian Patent Manual of Practice and Procedure has been updated to include the following guidelines for Examiners:
The concept of technology being “directly involved” was further clarified in Invention Pathways …where it was said at  that “…the “concrete effect or phenomenon or manifestation or transformation” referred to must be one that is significant both in that it is concrete but also that it is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way…. In other words, it is not enough for the technology to simply carry out the steps of the method.
At  and  of the Invention Pathways decision, it was said that “Computers and the internet are now as ubiquitous as paper and the postal service as means of collecting, displaying and disseminating information and their use as elements in a business scheme without something more, some substantial physical effect produced in the operation of the method, does not in my view and within the terms of NRDC result in an “artificial state of affairs” any more than were those actions to be taken on paper…”. Clearly (as noted at ) using a machine merely as a matter of convenience (and which does not result in a substantive effect) does not result in an application being patentable.
Whilst this may ultimately prove to be an incorrect statement of the law in Australia, the Patent Office currently considers a claim to a scheme cannot be saved by merely adding a reference to computer implementation. It needs to borne in mind that the Delegate also concluded “the authorities make it clear that in many circumstances a method including the processing of information and the production of a substantive effect in or through a computer or peripheral, if novel and not obvious, will result in patentable subject matter”.5
- Invention Pathways Pty Ltd  APO 10 (21 July 2010)
- National Research and Development Corporation v Commissioner of Patents  HCA 67;  102 CLR 252
- Supra n 1, paragraph 38.
- Ibid, Paragraph 41.
- Ibid, Paragraph 43