“Chilling effect” of method of innovation leads to a revoked patent.

In the recent case of Watson v Commissioner of Patents[1] the Federal Court upheld a decision of the Commissioner that a method of innovation is not a patentable invention under the Patents Act s 18(1A)
(i.e. not a manner of manufacture within meaning of Statute of Monopolies 1623 (UK) s 6).

The patent in question was an innovation patent on which certification was requested by the applicant.  A number of examination reports were issued, and despite the novelty and innovative step objections being overcome, a “Manner of Manufacture” objection was maintained through the examination reports.  The Patent Office hearing and subsequent Federal Court appeal dealt with the issue of Manner of Manufacture. 

The method as claimed was directed to:

“a method of innovation comprising the steps of an organisation engaging with an innovation services provider to innovate, said organisation disclosing aspects of the organisation to said innovation services provider and specifying a financial return to said innovation services provider for said innovation, wherein said innovation services provider describes or defines or describes and defines said innovation as a corresponding IP right prior to its disclosure to said organisation and the amount of said financial return is determined, at least partially, from the value or benefit or advantage of any sort or any other consideration or value of any kind to said organisation of said IP right.”

The subject matter of the patent bore similarities to that considered in the Full Federal Court judgment in Grant v Commissioner of Patents[2] in that the invention related to a business method with no detail around the technical implementation of the invention – by way of computers or otherwise. 

However, Justice Rares relied upon the recent reasoning in the High Court’s judgment in D’Arcy v Myriad Genetics Inc[3], and in particular at [29], where the High Court noted that the purpose of the Act would not be served by according patentability to a class of claims which by their very nature lack well-defined boundaries or have negative or chilling effects on innovation.

In dismissing the appeal, Justice Rares noted at [34]:

“….if the patent as claimed were granted, that would produce a chilling effect on those involved in providing innovation services and those seeking out those services on a fee-based reward or on a result or other contingency basis. That is because all of those persons would infringe the patent if the innovator succeeded in producing an IP right that the organisation wanted and agreed to pay for, but they would not infringe if that outcome did not occur, even if the innovator actually created an IP right but it was of no value or use to the organisation or the two could not agree on the reward.”

Inventions that are directed to abstract ideas for business schemes are not patentable subject matter. 

If you have any questions about patentability of subject matter and suitability for filing before the Australian Patent Office please contact Mark Williams.


[1] Watson v Commissioner of Patents [2019] FCA 1015 (28 June 2019)

[2] Grant v Commissioner of Patents (2006) 154 FCR 62

[3] D’Arcy v Myriad Genetics Inc (2015) 258 CLR 334

BCSE(Hons) MIP FIPTA

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 with a major Australian car manufacturer within their Current and Past Model Engineering group.