Australian Patent Office in favour of Blockchain…for the moment

E-commerce giant Alibaba has had a win before the Australian Patent Office in relation to an application for their technology which improves privacy on the blockchain. In a recent decision, the Delegate found that Alibaba’s patent application satisfies the manner of manufacture requirement, and that amendments made to address an objection were valid and supported by the specification as filed.

The Invention

Broadly speaking, the invention related to a solution to the consensus problem by way of blockchain. In blockchain technology, transaction data needs to be broadcast to consensus nodes for the blockchain to work effectively. However, broadcasting transaction data can create privacy issues since transaction data can contain identifying information, such as the subject matter of a transaction, an account address, ID information and other data, as well as timestamps, and dates.

The invention was directed to a method involving generation of a transaction abstract derived from the transaction data, but which obfuscates transaction details related to privacy. As part of the method, the consensus nodes accept the transaction abstract as being authentic, meaning there would be no need for all the consensus nodes to perform consensus verification on the transaction data per se


During prosecution of the application, the Examiner maintained an objection based on manner of manufacture, asserting that the invention was directed to the application of abstract rules associated with the implementation of a mere scheme for the management of transaction data.

Inventive step was initially raised before being overcome by argument and amendment by the Applicant. The examiner then raised objections on the ground that the specification didn’t disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in the relevant art and that the claims were not supported by specification. The Applicant requested to be heard in the matter.

The Decision

The Delegate agreed with the Applicant’s arguments that the specification clearly discloses that the transaction abstract can be achieved by way of a hash function, and that obtaining digital signatures is known in the art. They were satisfied that there was no deficiency in the disclosure of the specification which would prevent a person skilled in the art performing the steps of the invention, without difficulty or exercise of invention. The Delegate was also satisfied that the specification provided a clear enough and complete enough disclosure to perform the invention across its full scope and that the claims were supported by the body of the specification.

Manner of Manufacture

Applying the guidelines in Research Affiliates LLC v Commissioner of Patents, as summarised in Aristocrat Technologies, the Delegate found that the ‘substance’ of the invention “lies in a method of processing a transaction request within a blockchain wherein the transaction data is irreversibly converted into a non-recognisable form (data abstract) and using this data abstract to first get approval for the transaction only from transaction nodes and then use this approved data abstract to then get consensus validation from all of the consensus nodes”.

However, the Delegate was not persuaded that the invention solved a technical problem as opposed to a business problem relating to the content of the transaction data and the administrative rules for consensus validation within a blockchain. Further, the Delegate was of the view that the claimed method required only generic computer implementation and was at pains to distance the invention from the subject of Aristocrat Technologies v Commissioner of Patents.

Nevertheless, the Delegate was persuaded that the invention provided a technical solution to the problem in that each of the steps of the claimed invention related to the conversion of transaction data into an indecipherable form, or how this converted information is then sent to transaction nodes and consensus nodes for digitally approving the transaction, and for gaining consensus validation.

The Delegate noted that a data abstract from which transaction data cannot be reversely obtained can be achieved using a one-way hash function, which although well-known, is none the less technical. Further, obtaining digital signatures of all of the transaction nodes as approval of the transaction and then generating a transaction abstract involves the application of encryption techniques ­– which satisfied the Delegate that there was a technical element to that step of the claim.

Finally, the Delegate found that the invention provided a practical and useful result on the basis that a breach of privacy is prevented by converting the transaction data into a transaction abstract, in which privacy information is obfuscated.

The Delegate noted that “the present invention relates to blockchains, a computer implemented technology that, in my view, is not inherently unpatentable” and “I can see no reason why technical improvements to fundamental mechanisms related to consensus within a blockchain should not be patentable, even though these improvements might not necessarily be addressing technical problems. In my view, the balance of considerations weigh in favour of finding that the claimed invention is a manner of manufacture.”

It may however be a pyrrhic victory for the Applicant as the Delegate, in researching the operation of blockchain, cryptography and hash functions, formed the view that the claims lack an inventive step and pushed the issue back down to examination to be resolved. 


This case illustrates some of the issues that Examiners and Applicants face in applying the manner of manufacture test as it pertains to computer implemented inventions. 

Quite often, prosecution of an application starts with a fundamental disagreement between the Examiner and the Applicant on what the ‘substance’ of the invention is, whether it solves a technical problem, as well as inventive step objections. The latter are usually overcome by argument or amendment, but the manner of manufacture objection remains. Substantive claim amendments are then proposed to positively recite technical features to address the manner of manufacture objection which can result in disclosure or support issues. 

While this decision is a good result for those in the blockchain space – it also highlights another issue with how the manner of manufacture test is applied to computer implemented inventions. The manner of manufacture test has become a moving feast as many features of computer implemented inventions become “well known or ordinary functions of a computer” in the eyes of the Australian Patent Office. For example, over the last ten years, features like gyroscopes and manometer sensors in smartphones anecdotally have become “well known or ordinary functions of a computer”, as have machine learning and AI more recently. It is perhaps only a matter of time before blockchain technology suffers the same fate. 

More than ever, a patent specification which describes in great detail the technical problem being solved as well as detailed examples of how that technical problem is solved will go a long way to support an argument for patent eligibility and ensure that claim amendments, if required, are valid.


Mark’s academic background is in computer science and electrical engineering. He assists clients in obtaining and enforcing their intellectual property rights in the areas of software, electronics and engineering. Prior to joining Phillips Ormonde Fitzpatrick, Mark worked for a leading automotive manufacturer.