14 September 2010

Protecting and Commercialisating an Invention not Patent-Eligible in Australia (Invention Pathways Pty Ltd)

In the ex parte decision Invention Pathways Pty Ltd of 21 July 2010, the Australian IPO held that a business method related to a commercialising invention does not represent patent-eligible subject matter. The applicant, a compamy named Invention Pathways, is an IP consulting firm operating in Australia and New Zealand and offering to assist inventors in protecting and commercializing inventions.
Claim 1 of patent application AU 2009 201212 reads:

1.  An invention specific commercialization system to facilitate success of inventions, the system including the steps of:
  1. applying for patent protection for the invention [...],
  2. conducting a review of specific commercialization process required by the invention,
  3. preparing a research and development plan, testing the business dynamics of the invention,
  4. conducting prototype testing, developing a prototype cost/benefit analysis,
  5. determining product positioning and packaging,
  6. conducting a manufacturing checklist,
  7. entry of the information collected in steps a) to f) into an electronically fillable checklist having a prescribed time limit for each step to form a commercial entry strategy (CES) with a number of sub-steps, the CES prepared on the basis that each of the sub-steps in the CES are to be completed by a corresponding deadline, all deadlines falling within 30 months from the earliest priority date of the patent application, the checklist being computer-implemented and stored in computer or human readable format in data storage means and associated with processing means to allow updating of the checklist; and
  8. policing compliance with the deadlines for the completion of the sub-steps through the production of reminders based on the prescribed time limits in the checklist to ensure that all sub-steps are completed within the deadlines.
The essence of the claimed "invention commercialisation [business] method" appears to lie in automatically observing (through the "checklist" under item g) a number of patent-related legal terms (e.g. priority, publication, national PCT entry) and to ensure that sufficient funds are available at that crucial dates so that commercialisation issues can be realised within the 30-months term for national entry of a PCT application claiming priority of a national application.  

The most relevant case law for assessing the business method, Grant v Commissioner of Patents of 2006, stated that "it is necessary that there be some 'useful product', some physical phenomenon or effect resulting from the working of a method for it to be properly the subject of letters patent” and that a change in the state or memory of a computer may represent such a “physical effect”. It was further held in that case that a product or result of a method must produce “a concrete, tangible, physical, or observable effect.” 

Based on this ruling, the IPO found that the claimed subject matter was directed to a mere scheme, without any physical phenomenon or effect, whereas the applicant took the position that the "entry of information [...] into an electronically fillable checklist" and the fact that the checklist is stored in a data storage means and the information is updated, would satisfied the “physical effect” requirement of Grant.

However, the Australian IPO rejected the applicants arguments, since "the patentability of a business method cannot arise merely from being implemented by a computer or related device in an incidental way" and that, with reference to the recent Bilski v Kappos decision of the US Supreme Court (which must be the first Australian decision citing this prominent US case, as assumed on the Patentology blog), "the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of the formula to a particular technological environment”:
[§ 38] In applying the decision in Grant I therefore consider that the “concrete effect or phenomenon or manifestation or transformation” referred to must be one that is significant both in that it is concrete but also that it is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way.

[§ 40] It is however clear that the substance of the claimed method is a scheme to encourage the completion of certain commercialisation assessments within a specified period that relates to time limits present in the patent system. To the extent that this is facilitated by a computer implemented updateable checklist, its utility lies in the information it holds and conveys to a commercialisation agent about the commercialisation steps a) – g) and particularly whether they have been completed within the specified timeframe of 30 months from the earliest priority date.
Consequently, the decision Invention Pathways Pty Ltd clarified that a claimed teaching's "physical effect" according to Grant v Commissioner of Patents additionally requires to be “central to the purpose or operation of the claimed process or otherwise arises [...] in a substantial way” such that the claim may represent statutory subject matter.

Conclusion: This finding was considered important enough for updating the sections on software-related inventions (section and business methods (section of the Australian Patent Office Manual of Practice and Procedure (examination guidelines) on 1 September 2010. After the decision, computer-implemented inventions and even business methods remain patentable under well defined patentability criteria, according to which a tangible or physical effect must arise which is central to the purpose of the claimed process. For further reading, please als refer to the coverage of this case on BAZPAT, Patentology, and Australian Patent Law.

By the way, just around the publication of this decision, the Melbourne free software interest group initiated an open petition asking the Australian government to end software patents at all. The petition was signed by more than 500 people, among them many well-known players of Australian (open source) software industry, as affirmed in this posting of the OSS gazette OStatic, not forgetting to once again point to the OSS community's familiar enemies and their alleged outrages (e.g. Microsoft and IBM).