The short answer is that the Australian Patents Office will grant patents for software that has a technical purpose which is connected with hardware, but not for pure software for a purely business purpose (that is, an app). This is because business schemes are not patentable per se.
The long answer is as follows:
NRDC v Commissioner of Patents
The threshold test for an invention to be patentable was explained by the High Court in National Research Development Corporation v Commissioner of Patents [1959] HCA 67 (a.k.a. ‘NRDC’). This case basically defined an invention as being ‘an artificially created state of affairs’ whose value lies ‘in the field of economic endeavour’.
Software should technically fulfil this criteria. However, the application of this rule to software inventions has some subtle sub-criteria which the Patent Office uses to dismiss applications for inventions which it deems to have little merit.
Patent Examiner's Manual
The Patent Examiner's manual states that "the limitation of the claims to a technological environment 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 scheme to allocate pumping resources according to customer demand is still a scheme, even if notionally tied to a technical activity."
The Patent Examiner's manual also provides the following examples of patentable software:
a computer processing apparatus for assembling text in Chinese language characters using a non Chinese keyboard (CCOM v Jiejing 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.
Grant v Commissioner of Patents
In Grant v Commissioner of Patents [2006] FCAFC 120, the Full Bench of the Federal Court refused a patent for a scheme for asset protection via specified legal and financial transactions. It confirmed that ‘pure’ business methods are not patentable.
The Research Affiliates case
The Patent Office rejected a patent application for software that involves the creation of an index for trading securities, which resulted in the case Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150.
However, the claims of that patent application were completely obscure. Reading the patent specification gives on the impression that you are being sold 'snake-oil'. The Patents Office should have just rejected on the ground of lack of clarity and lack of utility. However, The Patents Office threw every objection at the patent application, including that the invention wasn't an invention at all. Ultimately, the court upheld the decision of the Patents Office to reject this application on the grounds of lack of patentable subject matter.
The Invention Pathways case
The invention in Invention Pathways Pty Ltd [2010] APO 10 involved a claim to a software package which automatically calculated a timeline for commercialising an invention. However, the timeline was essentially implemented via an Excel spreadsheet. The Patent Office was losing the battle on the inventive step front, so it decided to claim that the alleged invention wasn't an invention at all.
The RPL Central case
The case of Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177 involved a patent application for a computer-implemented method for use in assessing the competency or qualifications of individuals with respect to recognised standards.
The inventor essentially claimed a website that allowed applicants to upload a copy of their resume in an application for recognition of prior learning. This website was not particularly inventive.
The Full Court ultimately upheld the decision of the Patents Office to reject the application on the grounds of lack of patentable subject matter.
It characterised the alleged invention as a mere scheme or idea implemented on a generic computer, using standard software and hardware.
In summary, the Full Court held that:
Where the claimed invention is to a computerised business method, the invention must lie in that computerisation and not in the business method.
An invention does not become patentable merely by the extensive use of technical elements in the claims, or by a detailed disclosure of how those technical elements perform the invention in the specification.
An invention must provide a “technical contribution”.
A computer acting merely as an “intermediary”, namely configured to carry out the method but adding nothing to the substance of the idea, is not a patentable invention.
Artificial intelligence software may be patentable.
The Rokt case
In the case of Rokt Pte Ltd v Commissioner of Patents [2018] FCA 1988 Justice Alan Robertson of the Federal Court of Australia reversed a decision of the Patent Office to reject a software invention for the presentation of online advertising.
The judge rejected the Patent Office's approach of identifying ‘the substance of the invention’ based upon comparing discrete elements within the claim, rather than the overall combination of features in the claim. It is easy to dismiss a claim if you don't look at as a whole. It is the net effect of the combination of features that confers the advantage of the invention.
The judge said:
"In my opinion, the [Commissioner’s] focus tended to be on issues of separate or indeed discrete differences or distinctions rather than on the claim or claims as a whole and as a matter of substance. This thread also ran through the respondent’s cross-examination of Professor Verspoor. For example, there were, as one would expect, undoubted similarities between what computers could do or what computers were used for in December 2012 and the claimed invention. This focus on similarities does not of itself gainsay that the claimed invention solved a technical problem or involved steps foreign to the normal use of computers as at December 2012. A focus on elements known as at December 2012 in isolation tends to lose sight of the combination of techniques or components in an innovative and previously unknown way."
Furthermore, the judge rejected the argument of the Patent Office that the invention only concerned a business problem, and not a technical problem:
"…there was a business problem of attracting the attention of the user and having the user choose to interact with the advertiser, but this problem was translated into the technical problem of how to utilise computer technology to address the business problem. The invention aimed to solve this technical problem through the introduction of the engagement offer and identifying what steps the software needed to execute in order to modify dynamically the website that the user was browsing while they were browsing it to, first, implement in the web browser or device the concept of the engagement offer, second, to implement in the computer system the necessary software for selecting engagement offers and advertisements for the given user based on the previous interactions with the system and the interactions of other similar users and, third, to have that system interact with the widget in the web browser in real time."
The judge held:
"Taken in isolation, a database, a client-server architecture, the running of the Javascript program on a publisher’s website and the creation of a ranking engine to rank abstract data to achieve an ordered list were each known as at December 2012 but, in combination, the distinction between engagement offers and general advertising, coupled with the algorithms making use of background data for personalisation and ranking was a new combination of new and previously existing components and a new use of computer technology."
The Encompass case
The case of Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2018] FCA 421 concerned two innovation patents owned by Encompass.
The software enables a user to conduct searches across multiple separate databases such as the motor vehicle registry, the land titles, and company registers.
The software generates a graphical ‘network’ representation of related entities (e.g. directors, addresses and companies) and enables a user to select one or more entities from the network, automatically identify the relevant databases, conduct the required searches and make payments that are required to access the databases. InfoTrack successfully challenged the Encompass patents on the grounds that the alleged invention wasn't patentable.
The prior art disclosed all elements of the claimed invention except for the ability to search multiple remote data sources, and the ‘payment’ element. These modifications were obvious, but obviousness isn't a requirement for innovation patents. All that is required is that the modification makes a substantial contribution to the working of the invention. The judge said: "I would not describe the payment step as being weighty I do accept that it makes a substantial contribution to the working of the invention as claimed’."
The judge reasoned that, according to authorities such as the Research Affiliates case and the RPL Central case, a computer-implemented invention, in order to be eligible for patent protection, must result in ‘an improvement in the computer’, or not, on the contrary, merely require ‘generic computer implementation’. Applying these principles, the judge found that the inventions claimed in the Encompass patents were not eligible subject matter.
Encompass filed an appeal from the decision to the Full Federal Court. The decision issued on 13 September 2019 in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161). The Full Court has unanimously dismissed Encompass’ appeal, finding that there was ‘no error’ in the primary judge’s ‘ultimate conclusion that no manner of manufacture is involved in the method and apparatus as claimed’ (at paragraph [112] of the judgement).
In that case, the panel of 5 judges stated (at paragraph 91 of the judgement):
"In each case, the Full Court was seeking to describe the conceptual distinction between a manner of manufacture and an unpatentable abstraction. In each case, the Full Court was explaining that a claimed method that is unpatentable does not change its legal character merely because the method is implemented by the instrumentality of a computer."
According to the Full Court, Encompass failed in its appeal because it failed to describe and claim any invention more specific than a general recipe or scheme suitable for computer-implementation. The Court stated at paragraphs [22]-[23] of their judgment:
"We observe that this description is largely agnostic as to how the method should be implemented. Thus, the entities and relationships may be of 'any appropriate form'; the network representation may be generated 'in any appropriate manner'; information can be determined 'in a number of ways depending on the preferred implementation'; for step 110, the representation displayed to the user by the electronic processing device 'can be achieved in any one of a number of manners'; for step 120, the user-selected node 'may be selected in any appropriate manner'; for step 130, the process of determining a search 'can be achieved using any suitable mechanism' or (in respect of an example given) 'achieved using any other suitable technique'; for step 140, the search performed by the electronic processing device 'may be achieved in any suitable manner'; and, for step 150, the display of additional information 'may be achieved in any suitable manner'.
At [0054] – [0063], the specification describes further 'features' of the exemplified method but, apart from disclosing other ways in which the user might choose to implement the method, is not prescriptive. Indeed, it adopts similarly permissive language to the description given at [0045] – [0053]. It is fair to say that, having identified the cardinal steps of the exemplified method, the specification leaves it to the user to implement the method in the way he or she might choose to do so, assisted by broadly-expressed and non-limiting suggestions or possibilities."
The Repipe case
On 22 November 2019 Justice McKerracher in the Federal Court of Australia revoked innovation patents numbers 2017100560 and 2017100943 owned by RePipe Pty Ltd on the ground that neither invention was a patent-eligible ‘manner of manufacture’ under Australian law (Repipe Pty Ltd v Commissioner of Patents [2019] FCA 1956). This decision confirms the decision issued on 28 June 2018 by a Hearing Officer at the Australian Patents Office (Repipe Pty Ltd [2018] APO 42).
RePipe is a plumbing business that made software system called rerisk® for workplace health and safety. The system comprises a server and an app that can be installed on worker's smartphones. Relevant safety information for specific locations is downloaded to the app. The system provides prompts and checklists to ensure that workers comply with procedures. It generates alerts when problems or risks are identified; and it enables information provided by the workers to be uploaded back to the server and distributed to other workers on site.
Justice McKarracher affirmed that software inventions are in principle still patentable (at paragraph 33 of his judgement):
"A mere scheme or plan is not patentable. However, an improvement in computer technology, including one that implements a method used in the conduct of business, is patentable. The business criterion for patentable subject matter is an artificially created state of affairs that has economic significance or utility, although this may not be sufficient in all circumstances. No special rules or exclusions apply to claims for functions performed by software."
Justice McKarracher said that an assessment of whether an invention is patentable does not involve a consideration of the prior art (at paragraph 35 of his judgement):
"Consideration of whether there is an improvement in this context, or of matters of invention or ingenuity, directs attention to the subject-matter of the invention as a matter of substance. It does not import into the manner of manufacture ground, considerations of novelty or of the inventive or innovative step …. The approach is not to compare the claim against the common general knowledge in the field of computer technology or against prior art in that field."
Justice McKarracher tried to provide the following summary of the law (at paragraph at paragraph 38 of his judgement):
"An invention will be patentable where ‘part of the invention is the application and operation of the method in a physical device’: RPL (at [101], citing Research Affiliates (at [104])). It will also be patentable where the invention involves the creation of an artificial state of affairs where the computer is integral to the invention or where the invention involves the use of a computer in a way that is itself claimed to be inventive, so that the invention lies in the computerisation or where there is some ingenuity in the way in which computer is utilised: RPL (at [104])."
The court found at [93]-[94]:
"I am not persuaded the Patents in this case are readily distinguishable. No specific application software has been claimed or even identified in any claim of the Patents. No computing programming logic or code is disclosed anywhere in the Patents. The substance of both inventions is a mere scheme that can be implemented using some unidentified software application to cause a server computer and smartphone to perform the steps identified in the claim. To implement the scheme, a reader must use his/her own skill and knowledge to write an appropriate software application. No such application is disclosed in the Patents.
…The language used by patent attorneys when drafting and amending claims cannot convert what is, in substance, an unpatentable business method or scheme into a patentable invention by merely asserting that the invention is in the field of computer technology or by using words in the claim or specification that refer to computer technology …. As a matter of substance, there is no meaningful technical content in the description in the body of the claims or specification."
The Aristocrat Case
On 19 November 2021 Justices Middleton, Perram and Nicholas of the Full Federal Court ruled that a feature game on an electronic gaming machine was not patentable subject matter in the case of Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd [2021] FCAFC 202. A feature game is just a bonus game on a slot machine.
Judges Middleton and Perram said that the test for the patentability of a computer-implemented invention is whether the invention is an advance in computer technology as opposed to only pertaining to the use of a computer. The feature game failed this test.
Judge Nicholas found that the substance of the invention was in the game program code which embodied a computer implemented scheme or set of rules for the playing of a game’ and the game code did not solve any technological problem, nor did it have any unusual technical effect due to the way in which the computer is utilised. He concluded that there was nothing about the way in which the game code caused the electronic gaming machine to operate which can be regarded as having transformed what might otherwise be regarded as purely abstract information encoded in memory into something possessing the required artificial effect.
In August 2022, the High Court of Australia handed down a decision on this case. However, three judges decided that the invention was patentable and three decided that it was not patentable. So the adverse decision of the Full Federal Court was technically affirmed under section 23(2)(a) of the Judiciary Act 1903. The High Court merely advised that the ‘advance in computer technology’ test proposed by the Full Court is not a useful test for patentability.
The Troy Andison case
On 12 September 2022 the Patent Office rejected a patent application for a "Location-based Collection of Recyclable or Reusable Items" (see Troy Andison [2022] APO 63). The invention was an app for picking up recyclables and depositing them at a suitable recycling depot.
The Hearing Officer stated (at [29]-[30]) that the invention uses only ‘generic or standard technology’ which involves ‘no steps that are foreign to computer function, each of the steps performed by the devices being merely non-descript technologically based manipulation of particular data’. The Hearing Officer also stated that ‘there is no ingenuity in the way the individual devices are utilised, and here the technology is simply the means of automation’. He said that it was clear that the ‘substance of the invention is a method for arranging and facilitating pickup and drop-off of recyclable items involving a customer/user and a collector who picks up recyclable items from a customer/user and takes them to a relocatable recycling depot that is merely implemented using computing devices that are held by the customer/user and roving collector’. He thought that the substance of the invention is clearly a 'scheme.’ He deemed the invention not to be patentable subject matter.
The Amadeus case
On 28 November 2022, the Patents Office handed down a decision in Amadeus S.A.S. [2022] APO 76 which concerned an ‘Undo/redo of database files for modifying re-accommodation’. This invention enables modifying databases of travel itineraries for flight changes.
The Hearing Officer referred to the High Court’s Aristocrat opinions and mentioned that because ‘the six judges were evenly divided as to the outcome, there was no majority and no usual binding precedent’, but that the Full Court decisions in Research Affiliates, RPL Central, Encompass and Rokt were not criticised.
He stated that ‘the problem solved by the instant invention is of non-technical, administrative nature’ and that claimed solution ‘is also administrative and non-technical, and the working of the invention does not produce a technical effect’... ‘[t]he Specification also does not suggest the presence of any ingenuity in the computer implementation, hence all potential ingenuity is directed to the administrative arrangement, including its abstract data structures’ ... ‘the claimed invention cannot be characterised as a patentable technological innovation’ but rather ‘could be described as an administrative business scheme’ and therefore not a patent-eligible ‘manner of manufacture’.
The University of California case
On 29 November 2022, the Australian Patents Office handed down a decision in The Regents of The University of California [2022] APO 77. This invention relates to a method of arresting or reversing cognitive decline using a computer-implemented cognitive training.
For example, a task could be to drive a virtual car along a virtual road at constant virtual speed with distracting visual signs. The system tests how the user performs when distracted as compared with when no distractions are present.
The applicant argued that the claims are directed to methods of medical diagnosis and treatment (which are patentable subject matter according to the High Court in Apotex Pty Ltd v Sanofi-Aventis Australia Pty Ltd [2013] HCA 50). The applicant also argued that the use of computer technology to implement the invention also makes it patentable.
The Hearing Officer stated: "there is no particular medical or physical condition targeted by the present invention, instead the invention seeks to determine and improve cognitive ability in the most general of senses. Alternatively worded, the invention improves the “intelligence” of an individual through focus on a particularly arranged challenge."
The Hearing Officer concluded that ‘the proper characterisation of the present invention is to a mere scheme for enhancing cognition/mental capability of an individual using a difference between an individual’s performance of a task with and without interference and using that difference to adjust the difficulty level of the task before presenting the task with the adjusted difficulty level back to the individual’ ... the invention as a matter of substance does not provide for a material advantage in the useful arts … and clearly does not address any identifiable technical problem’ but ‘instead addresses a general problem of cognitive/intellectual decline in an abstract and intangible way.’ It was therefore not a patent-eligible ‘manner of manufacture’.