Welcome to the new version of the Patents Manual. Please note there are changes to the numbering and sequence of the chapters and pages in the manual. You are encouraged to take the time to explore and familiarise yourself with this new structure. Computer Implemented Inventions, Mere Schemes, and Business Methods

Date Published

"A Matter of Substance"

Under Australian law, there are no specific exclusions for software or methods that are implemented as computer software or a related product. However, such inventions are only patentable if what is claimed “as a matter of substance” meets the requirements for a manner of manufacture and in particular is not a mere scheme, abstract idea, or mere information (see Discoveries, Ideas, Scientific Theories, Schemes and Plans).

Merely “putting” software into a computer would not, by itself, meet the requirements for manner of manufacture. Consideration should be had of the questions asked in Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177 (RPL) to determine whether the computer is merely a tool to put the method into practice, or for example whether: the computer is integral to the invention in that a method embodied in the software solves a technical problem within the computer; whether the invention solves a technical problem outside the computer (possibly in different fields of technology that have their own technical problems); or the invention results in an improvement or adaptation   (see Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCA 29 (Aristocrat ‘22) at [75]-[78]) to the functioning of the computer in its implementation.

In Research Affiliates LLC v Commissioner of Patents (2014) FCAFC 150 (Research Affiliates), RPLEncompass Corporation Pty Ltd v InfoTrack Pty Ltd (2019) FCAFC 161 (Encompass), Commissioner of Patents v Rokt Pty Ltd (2020) FCAFC 86 (Rokt), and Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd (2021) FCAFC 202, the Full Federal Court considered computer implemented business methods and schemes and found that the presence of computing hardware, standard gaming machine elements, or processing steps within a claimed method or system was insufficient to confer patentability.  The Court identified a distinction “between the employment of an abstract idea or law of nature and the idea or law itself” and “between technological innovation which is patentable and a business innovation which is not”. As was noted in Repipe Pty Ltd v Commissioner of Patents (2021) FCAFC 223 (Repipe), if the invention was "not directed to any technological problem and the method of implementation does not involve any improvement in computer technology or any unusual or unconventional technical method or effect", the invention was not patentable subject matter. From those decisions and other relevant authorities, examiners should determine the substance as discussed in General Principles.

The patentability of computer implemented inventions was most recently considered by the High Court in Aristocrat ’22.  While the appeal was ultimately dismissed, the full bench was split 3:3 meaning there was no majority decision of the Court. In such instances no binding precedent results, however there were areas of agreement between their Honours.  Their Honours reenforced the long-standing principle that mere schemes, plans or discoveries, mere abstract ideas or information is not patentable subject matter. They also confirmed that a mere set of rules whether devised for the conduct of a business or the playing of a game is not proper subject matter for letters patent.  Their Honours also agreed that the decisions of the Full Federal Court in RPL, Research Affiliates, Encompass and Rokt were correct (See Aristocrat ’22 at [22], [24], [25], [26]-[29], [116], [118], [121]-[124], [151], [153])

For an invention to be patentable, there must be more than an abstract idea, mere scheme or mere intellectual information.  From the decision of the Full Federal Court read in light of the decision in Aristocrat ’22, there are a number of considerations that may be relevant to whether a computer implemented invention is in substance a manner of manufacture. Such considerations were summarised in Aristocrat Technologies Australia Pty Limited [2016] APO 49 at [35]. They include:

  • whether the contribution of the claimed invention is technical in nature;
  • whether the invention solves a technical problem within the computer or outside the computer;
  • whether the invention results in improvement in the functioning of the computer, irrespective of the data being processed;
  • whether the application of the method produces a practical and useful result;
  • whether it can be broadly described as an improvement in or adaptation to computer technology;
  • whether the method requires generic computer implementation;
  • whether the computer is merely an intermediary or tool for performing the method while adding nothing of substance to the idea;
  • whether there is ingenuity in the way in which the computer is utilised;
  • whether the invention involves steps that are foreign to the normal use of computers; and
  • whether the invention lies in the generation, presentation, or arrangement of intellectual information.

When determining the substance of a computer implemented invention, it is not legitimate to only consider whether the individual integers of the computer system are part of the state of the art. The entire computer system must also be considered. Another way of approaching this issue is to ask whether, objectively considered, ingenuity lies in technical features of the invention in order to elevate an otherwise unpatentable invention to a patentable invention. See for example:

“The specification makes it apparent that any inventive step arises in the [scheme].: Research Affiliates at paragraph 118.

“…simply putting a [scheme] into a computer is not patentable unless there is an invention in the way in which the computer carries out the [scheme]”. RPL at paragraph 107.

The fact that a claimed method can only be implemented in a computing environment, does not mean it is for a manner of manufacture. For example, a scheme is not a manner of manufacture simply because the application and utility of the scheme is limited to the internet. Similarly, the limitation of the claims to other technological environments may not alter the fact that what is claimed is a scheme or abstract idea. For example, a method of extracting oil from a well, characterised by a computer implemented algorithm to allocate pumping resources according to customer demand is in substance a scheme, even if notionally tied to a technical activity. Conversely, a method of extracting oil from a well, characterised by a computer implemented algorithm that uses historical values of density, flow rates, and the like to adjust the pump’s operation so that it operates more efficiently would likely be, in substance, a method of extracting oil and not a scheme.

When the invention in substance lies in an improvement in a technical field outside of a computer (for example a technical solution to a technical problem), in an improvement in, or adaptation to computer technology, it will generally be considered patent eligible, subject to other requirements. For example, a claim directed to computer processing apparatus for assembling text in Chinese language characters using a non-Chinese keyboard (CCOM v Jiejing (1994) 28 IPR 481; (1994) AIPC 91-079) and the production of an improved curve image by computer (International Business Machines Corporation v Commissioner of Patents (1991) 33 FCR 218) have been held to be patentable.

Computer related inventions may be claimed in different forms. For example:

  • a processing apparatus characterised by its method of operation;
  • software or programs in a machine-readable form causing a computer to operate in a particular way;
  • a computer, when programmed with code (source or executable), to operate in a particular way; and
  • a computer implemented method.

Often computer-implemented inventions are defined by functional features; that is, by the action that is being carried out by a piece of computer equipment. Just because functional terminology is used in defining an invention does not mean the claimed invention is not a manner of manufacture. It is important to remember that the invention needs to be assessed as a matter of substance and the form of the claims does not influence this assessment. A claim which functionally defines an invention may be for a manner of manufacture where the functions create a technical effect.

See also - Games and Gaming Machines.

Example: Performing Business Interactions Using Computing Devices

Often a claim is directed towards aspects of business interactions and transactions performed with the use of standard or well-known computing devices. An example of a claim is provided below. It relates to the sharing of information between a customer and a merchant essentially using mobile phone technology.

  1. A method of performing financial transactions, comprising:

receiving, by a processor, location information of a user from a user device;

determining, by the processor, a location of the user based on the location information;

determining, by the processor, whether one or more sellers are within a predetermined distance of the location of the user; and

communicating payment information of a selected seller from the one or more sellers to the user device if the selected seller is within the predetermined distance of the location of the user.

Performing electronic financial transactions on electronic devices and performing these transactions on devices which could determine user locations is common general knowledge. Here, the “processor” and “user device” are merely performing their usual independent function, there being no improved operation of the relevant technology.

In considering and weighing up what is claimed, what the specification describes as the alleged invention, and what the common general knowledge is, the substance of the claim can be considered to be a determination of whether a seller is within a predetermined distance of a user and subsequently communicating payment information to the user if the seller is within a certain distance of the user. As a result, the substance of the claim is directed to a mere computer implemented rule, or scheme for determining when to share information.

However, if the substance of the invention determined from the specification as a whole related to the way that the position was determined in that there was an improvement in the technology used to carry out the method, a claim directed to this subject matter would likely be patentable. As the claim above does not include this improvement, a support objection might be more appropriate in the circumstances.

Early Case Law Examples

International Business Machines Corporation v Commissioner of Patents (1991) 22 IPR 417

The use of a mathematical formula in a computer to produce an improved curve image was held to be patentable since the production of the improved curve image is a commercially useful effect in computer graphics. Specifically, Burchett J found:

“Although there was nothing new about the mathematics of the invention what was new was the application of the selected mathematical methods to computer, and, in particular, to the production of the desired curve by the computer. This involved steps which were foreign to the normal use of computers and, for that reason, were inventive. A method of producing that by computer, which is novel and inventive, is entitled to the protection of the patent laws.”

The use of floating-point arithmetic was common for processing such algorithms for generating curves (having problems of lack of speed and inaccuracy). This invention however, claimed that calculations were performed without the use of floating-point arithmetic. At the time of the invention it was new and non-obvious to perform such mathematical algorithms in a computer, using something other than floating-point arithmetic (more specifically, integer arithmetic). This integer arithmetic, as described in the specification, comprised a particular way of performing calculations using components of a computer that changed the way a computer normally worked. It followed that the claim was directed to a process containing steps that was foreign to the normal use of computers.  

CCOM Pty Ltd v Jiejing Pty Ltd (1994) FCA 1168

The described apparatus, in a broad sense, consisted of conventional computer equipment including a database, a visual display, and a keyboard. Generally, CCOM claimed an interface with a database that contained a data structure of Chinese language characters which encoded strokes by stroke type and in an order in which the strokes are written (if writing by hand). The claim also defined software that presented the strokes on the display for the user. The interface also provided a retrieval program and graphic representation of each character that enabled the user to select the character using the keyboard. The overall outcome was an efficient way of retrieving Chinese characters. Cooper J found that:

“The NRDC Case (102 CLR at 275-277) requires a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the field of economic endeavour. In the present case, a relevant field of economic endeavour is the use of word processing to assemble text in Chinese language characters. The end result achieved is the retrieval of graphic representations of desired characters, for assembly of text. The mode or manner of obtaining this, which provides particular utility in achieving the end result, is the storage of data as to Chinese characters analysed by stroke-type categories, for search including ‘flagging’ (and ‘unflagging’) and selection by reference thereto.”

While the decision did not say it, an improved data structure that facilities the easier or improved finding of items in a computer implemented searching device has a material advantage. It is not business administration nor merely information.   

This decision makes it apparent that software-related inventions can be patentable in Australia.

Other Examples

Bio-rad Laboratories, Inc. (2018) APO 24

In this decision it was confirmed that in circumstances where the technical problem solved lies outside of a computer, decisions involving computer-implemented schemes may not be particularly instructive in determining patentability. Research Affiliates and RPL are examples of inventions directed to computer-implemented business methods and in those cases, there is a need for the substance of the invention to lie in the computerisation for patentability to be present. Bio-Rad clarifies that in the circumstances where the material effect of an invention lies outside the computer, it is not necessary to separately consider any technical improvement to computer technology.

In Bio-Rad, the substance of the invention was not merely a scheme for a quality control strategy. The substance of the invention was a method that determined an optimal quality control strategy that reduced the number of tests that needed to be carried out and thereby reduced the number of reference samples that were used. The claimed substance was considered to provide a material/technical effect of reduced material use.

Amended Reasons

Amended Reason Date Amended

Published for testing

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