Business methods and systems to remain patentable

Business methods and systems to remain patentable

The Australian Government has released a report that recommends that business systems remain patentable in Australia. The report by the Advisory Council on Intellectual Property (ACIP) considered Australia's international obligations, and similar reviews conducted in the US, Europe, Japan and New Zealand. ACIP found that Australia had benefited from its current flexible test for patentable subject matter, and elected to remain in harmony with the US, Japan and New Zealand, where business systems are considered patentable, rather than adopt the restrictive practice in Europe.

ACIP was provided with evidence of patents stimulating greater investment in the research, development and commercialisation of business systems, and there was a lack of evidence demonstrating either that business systems were unsuitable for patenting or that they would stifle competition in new areas of commercial activity. The report noted that any significant changes to Australian patent law, such as to foreclose patenting in certain areas, can involve higher transaction costs and create high levels of uncertainty. It was considered that much of the controversy surrounding business systems patents has primarily been a consequence of the relative inexperience of patent offices around the world in this new field. Whilst the Australian Patent Office has developed and improved its skills in assessing business systems patents, ACIP did recommend the introduction of a number of measures to help ensure the validity of granted patents.

The report is to be commended. There is no logical argument that can be sustained for treating business system patents different from patents for any other technologies. Controversy has always surrounded patent protection for new emerging technologies, but over time this controversy has always subsided1. The primary reason why the Australian legislation refers to s.6 of the 1623 Statute of Monopolies is to adopt the principles established in the widely respected decision of the Australian High Court in NRDC2. The court made it clear that any attempt to circumscribe or define what constitutes patentable subject matter was foolish:

"To attempt to place upon the idea the fetters of an exact verbal formula could never have been sound. It would be unsound to the point of folly to attempt to do so now3."

The soundness of this judgement is highlighted by the difficulties the express exclusions in the European Patent Convention have caused in Europe4. These restrictions have lead to a situation where a unique process operating on data representing a seismic or atmospheric condition may be patentable, but the same process operating on data representing financial or management information is not.


  1. Poynder R, "The Battle Over E-commerce Patents Heats Up", IP Magazine, November 1999.
  2. National Research Development Corporation and Commissioner of Patents (1959) 102 CLR 252.
  3. Ibid, at 271.
  4. Laakkonen & Whaite, "The EPO Leads the Way but Where To?" [2001] EIPR 244; Beresford K, "Patenting Software Under the European Patent Convention", Sweet & Maxwell, 2000, ISBN 0 752 006339.