The appeal against Research Affiliates LLC v Commissioner of Patents  FCA 71 has been dismissed. The Full Federal Court has confirmed that Research Affiliates’ invention relating to a computer implemented method for the construction and use of passive portfolios and indexes for securities trading is not patentable subject matter. Please click here to read the full judgment.
This judgment has confirmed that unpatentable abstract ideas or business schemes – in this case, portfolios and indexes – do not become patentable merely by being implemented on a computer.
Nonetheless, the judgment provided that computer implemented inventions can still be patentable if the computer is “integral” to the invention. Therefore the judgment is a reminder that information about how an invention is implemented by means of computers should be provided in the description and in the claims to support an argument for patent eligibility.
The invention in this case related to a method of constructing data indicative of a non-capitalisation weighted portfolio of assets implemented on a computer, that had a series of steps starting with receipt of data gathered with regard to a plurality of assets. The computer was used to receive the data and to provide “weighting means” for weighting each of the plurality of assets.
The Court conceded that there is no formula that can be mechanically applied to determine if claimed methods are properly the subject of a patent – instead, it is necessary to understand the claimed invention itself. The claimed invention is considered to be a matter of substance, not merely a matter of form, and is the result of human ingenuity. Therefore it is the claimed invention itself that is to be assessed according to the principles of National Research Development Corporation v Commissioner of Patents  HCA 67 (NRDC)
The Court at  took a broader view of the question of patentability than the primary Judge saying “we do not see that the question of patentability can be answered by the observation that the method is simply the writing down of the information – a modern equivalent of writing the schemes on a piece of paper.” The Court was of the view that this would ignore the “utilisation of the power of a computer to generate information … [and] would also render unpatentable many methods that are inventive uses of a computer that utilise previously unknown abilities of software and hardware”.
Nonetheless, in the claims of the Research Affiliates invention, the significance in the method claim of the invention was in the content of the data rather than any specific effect generated by the computer and that, in determining whether a claimed invention is patentable subject matter, it is necessary to look also to the substance of the invention. The Court held that, in this case, the claimed method clearly involved an abstract idea (albeit an inventive idea).
The Court also noted that there was no suggestion in the specification or the claims that any part of the inventive step lies in the computer implementation of the invention. The Court held that the scheme is merely implemented in a computer, and a standard computer at that.
Interestingly, the Court noted that since the first instance decision in the present case, Middleton J has also considered patentability of computer implemented inventions in RPL Central Pty Ltd v Commissioner of Patents  FCA 871) “RPL Central”. The Court in the present case noted at  that Middleton J – in contrast to the claimed invention of the present case – “aligned that invention with a new use of a computer… in contrast to mere implementation of the invention by a computer”.
RPL Central is also currently under appeal and a judgment from the Full Federal Court is due soon.
The Court referred to relevant European, UK and US case law , and noted at  that while decisions in other jurisdictions are not binding, the Australian approach to patentability in respect of inventions such as Research Affiliates, is consistent with that taken in the United States and the UK. Indeed, the Court stated at  that the claims “would not be found to claim patentable subject matter in the UK or the United States either”. In particular, the Court referred to the recent US Supreme Court decision in Alice Corporation Pty Ltd v CLS Bank International 134 S Ct 2347 (2014) as also providing “a distinction … between mere implementation of an abstract idea in a computer and implementation of an abstract idea in a computer that creates an improvement in the computer”. Further, the Court referred to Lourie J in Bancorp Services LLC v Sun Life Assurance Co of Canada (US) 687 F. 3d 1266 (2012): “a computer must be integral to the claimed invention”.
What this means for you
Australian patent examiners are likely to continue their practice of objecting to claims directed to non-patentable abstract ideas or business schemes which are implemented on a conventional computer.
The judgment provides that analysis of the “ingenuity of the inventors, the end result of which is the invention”, and its implementation in a computer, must be considered to ascertain whether an invention forms patentable subject matter. Thus, the judgment clarifies that “dressing up” non-patentable abstract ideas with computer implemented steps is not possible.
Computer implemented inventions may be patent eligible subject matter provided the computer is “integral” to the invention. However, as the present decision shows, it is critical that detailed information about how the invention is implemented the computer is provided to support an argument for patent eligibility. Ideally, patent specifications should extensively embed computer and hardware elements in the claims and highlight in the description and drawings the central role of these computer and hardware elements in the performance of the invention.
It may also be useful to point, where possible, to a new use of a computer or programed apparatus, in contrast to mere implementation of the invention by a conventional computer.
If you have any questions about how the outcome of this case affects your current or future patent applications, please contact Raffaele Calabrese at email@example.com or Mark Williams at firstname.lastname@example.org
 International Business Machines Corporation’s Application  FSR 564
Symbian Ltd v Comptroller General of Patents  RPC 1
Aerotel Ltd v Telco Holdings Ltd; Re Macrossan’s Application  1 All ER 225
HTC Europe Co Ltd v Apple Inc  RPC 30
Bilski v Kappos 130 S Ct 3218 (2010)
Alice Corporation Pty Ltd v CLS Bank International 134 S Ct 2347 (2014)