Welcome News for Computer-Implemented Inventions!

… and perhaps finally a change in practice at the Australian patent office?!!

Following hot on the heels of a judgement of the Full Court of the Federal Court of Australia we reported on just a few short weeks ago, the Federal Court handed down another much-anticipated decision about a week ago in Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778. Although this was a decision by a single judge, rather than the Full Court, the writer believes it will herald a fundamental change in the way the Australian Patent Office (APO) handles computer-implemented inventions (CIIs) in the future.

As we have explained in earlier articles on this topic, the delegates of the Commissioner of Patents at the APO have adopted a problematic practice in assessing whether the subject of a patent application is ‘eligible’ or suitable for a patent (i.e. as a ‘manner of manufacture’ under Australian patent law). The practice involves referring widely to prior art documents and then simply ignoring individual features of the invention claimed in the patent application if those features happened to be separately known before the patent application was filed. The Commissioner’s delegates thus focus solely on what they allege to be ‘ingenuity’ when assessing what may be patent-eligible subject matter. The result of this approach has been a refusal by the APO in recent years to grant patents for many inventions relating to systems or apparatus that are combinations of both hardware and software – on the basis that the hardware components would often be simply ‘ignored’ as known or commonplace if the Commissioner’s delegates deemed the ‘ingenuity’ or ‘inventiveness’ to lie in functional aspects of the software. According to their logic, this fact rendered the whole system or apparatus “unsuitable” subject-matter for a patent. This most recent judgement of the Federal Court very clearly rejects this APO approach – and it’s about time, too!

Aristocrat Technologies Australia Pty Limited (Aristocrat) is one of the world’s leading manufacturers of electronic gaming machines (EGMs) and typically endeavours to protect innovations and improvements it makes in its EGMs. As will be appreciated, EGMs are physical devices that are usually sold to licenced venues such as casinos, hotels and clubs. Until the 1980s, EGMs used mechanical or electro-mechanical technologies and included mechanical reels presenting different symbols in a specified order on their circumference. The reels would spin and stop in a side-by-side relationship and the player would win or lose depending on the appearance of predefined symbol combinations and/or particular types of symbols.

In the 1980s, EGMs started using electronics, including computer processors, electronic circuitry and electronic display screens, such as video displays. In these devices, the different symbols appear on the electronic display in the same way as traditional spinning reels although they are, in fact, virtual reels or video reels. The number and distribution of the symbols on the virtual reel strips is part of the design of the game that is ultimately reflected in the game software. EGMs function by a player inserting credits, in the form of money or some other form of payment, which allows play to start. A player is able to select the value of each bet he or she is prepared to make, and a win is evaluated by having regard to the amount wagered and to the occurrences of a winning symbol combination on predefined reel lines (also known as pay lines or win lines).

The operative components of a typical EGM include a game controller containing a processor mounted on a circuit board. Instructions and data to control the operation of the processor are stored in a memory (volatile or non-volatile), which is in data communication with the processor. The game controller has an input/output interface for communicating with peripheral devices such as displays, a touch screen, credit input/output means and a printer. The EGM may also include a communications interface such as a network card for sending status information, accounting information, or other information to a bonus controller, central controller, server or database and for receiving data or commands from one or more of these.

The delegates of the Commissioner had rejected some of Aristocrat’s patents relating to an EGM on the basis that they were, ‘in substance’, directed to no more than a ‘mere scheme’ or ‘rules of a game’. Aristocrat appealed to the Federal Court in this case. During the appeal, the Commissioner argued that there is ‘no technical contribution in the way that the machine carries out the scheme’ and ‘no improvement in the operation or functionality of the machine’. Rather, the Commissioner argued that the ‘ingenuity’ lies in the scheme or rules for carrying out the game and that EGMs are computers that consist of a number of hardware and software components which were commonplace before the priority date. In the Commissioner’s view, the only features that distinguished the invention from other EGMs related to a scheme or rules of a game that the EGM was configured to implement.

The Federal Court judge (Burley J.) in this case roundly rejected this analysis of the EGM, however, noting at [95]:

I do not consider that, properly understood, the invention described and claimed when understood as a matter of substance, is to a mere scheme or plan. It is to a mechanism of a particular construction, the operation of which involves a combination of physical parts and software to produce a particular outcome in the form of an EGM that functions in a particular way.

The Federal Court made the point that the approach taken by the Commissioner’s delegates of selectively ignoring components of the hardware as not forming part of the ‘substance’ of the invention (i.e. simply because those components may have been separately known) was not the correct approach. In this regard, Burley J. noted at [101]-[102]:

… Aristocrat aptly identifies the danger of denuding an invention of patentability by prematurely discounting elements of the claim. Any claim can be stripped back to remove all specific limitations so that at its core an abstract idea emerges. But where the abstract idea is incorporated into a means for carrying it out, it may result in a manner of manufacture …

 …. as the Commissioner accepts, were the EGM of claim 1 to have been implemented mechanically, the oldfashioned way, without using software but instead using cogs, physical reels and motors to create the gameplay, there is no doubt that it would be a manner of manufacture. There would be no occasion to disaggregate the game features from the combination of physical parts. It is difficult to see why the development of an implementation of an EGM that utilises the efficiencies of electronics technology would be disqualified from patent eligibility when the oldfashioned mechanical technology was not. Such an approach would be antithetical to the encouragement of invention and innovation. To adapt the analogy used in CCOM, a ballpoint pen that used computerised components to enable it to function more efficiently would be no less a manner of manufacture now than the original ballpoint pen was when it was first invented. Whether or not it is novel or involves an inventive step is, of course, for separate enquiry.

Furthermore, in paragraph [103] of his judgement, Burley J. referred to another recent decision of the Federal Court in which his colleague, Nicholas J. similarly found that patent claims directed to an EGM also related to a ‘manner of manufacture’ (i.e. patent-eligible subject matter). In that other case, Nicholas J. concluded that the inventions in the suit were not ‘mere ideas’ but were ‘new and useful gaming machines and new and useful methods of operation producing new and improved results’.

Interestingly, both the judge, in this case, Burley J., and the judge referenced in [103] from the other recent case, Nicholas J., both presided in the Full Bench of the Federal Court in the recently decided case of the Commissioner of Patents v. Rokt Pte Ltd [2020] FCAFC 86. The judge distinguished the Rokt case on the basis that the invention, in that case, concerned mere computer automation of an otherwise unpatentable method, whereas the ‘substance’ of the invention in the present case was not at all in that category. While the writer is not convinced that the judge’s reasoning in the earlier case was correct, the fact that the patents in the present case concerned a gaming machine, i.e. a piece of equipment with physical elements (display etc.) for sale and delivery as a product to a casino, surely made a decision in favour of patentable subject-matter easier in this case. In the Rokt case, by contrast, the judges were considering a method performed within a processor for creating an interaction of a user with advertising; i.e. less tangible with more of a sense of a ‘business operation’. Nevertheless, the Court could have agreed with the technical expert at first instance, who considered the invention in that case to be a technical solution to a technical problem. In any case, the Court has clearly rejected the APO practice of ‘prematurely discounting elements of the claim’ when assessing the ‘substance’ of the invention.

While it is possible that the Commissioner may yet appeal this decision of the Federal Court, the writer considers that an appeal would present considerable difficulties. As noted above, both the judge in this case (Burley J.) and his colleague in the other case referenced in [103] (Nicholas J.) also presided in the Rokt case most recently decided by the Full Federal Court on this very topic. As such, it is difficult to imagine that the Full Court of the Federal Court would overturn the decision of Burley J. in this case. The Commissioner may, therefore, prefer to spare the expense of another appeal and simply bring the APO practice into line with the Federal Court’s direction of how patent-eligible subject matter should be assessed for CIIs.

We shall watch developments with interest, but the writer now expects a clear shift in APO practice in favour of protection for innovations in the area of combined hardware/software systems. That would be good news for innovators indeed!

The Engineering and ICT team at Wrays helps market leaders protect their innovations in this technology area.

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