Law on computer-implemented inventions unclear after Australian patent ruling

Anna Harley of Pinsent Masons was commenting after a rare split decision of the High Court of Australia (67-page / 675KB PDF) in a case where the patentability of a computer-implemented invention relevant to electronic gaming machines was under review.

“The decision will have broad implications for the patentability of other computer-implemented inventions in Australia, including but not limited to inventions derived from artificial intelligence (AI) systems,” Harley said.

The dispute before the High Court of Australia concerned four innovation patents filed by Aristocrat Technologies Australia, an electronic gaming machine manufacturer, in 2015, for a system and method for providing a feature game – a secondary game that users of the machine can access after the occurrence of a defined "trigger event" in the base game. Electronic gaming machines are commonly found in venues such as casinos, hotels and clubs and are a modern form of a poker or slot machine.

After the patents were granted, Australia’s commissioner of patents was asked to re-examine the patent. The commissioner subsequently revoked the patents on the basis that the claims of each patent was “not for a manner of manufacture”.

In Australia, innovation patents must meet the criteria for patentability set out in Section 18(1A) of the Patents Act 1990 (Cth). As well as requiring that the invention as claimed is novel, involves an inventive step and is useful, the criteria further stipulates, among other things, that it must be “a manner of manufacture”.

In examining Aristocrat’s patent, the commissioner determined that “the substance of the invention was nothing beyond the games and the game rules of gaming machines”, according to the High Court’s judgment. It also found the claimed invention made “no technical contribution to the art”.

Aristocrat successfully appealed the commissioner’s decision before a single judge at the Federal Court of Australia. However, a subsequent appeal before the Full Court of the Federal Court by the commissioner reinstated its original decision on revocation. Aristocrat appealed to the High Court of Australia pursuant to a grant of special leave. The appeal was heard in June 2022 and the High Court of Australia has now ruled on the matter. It was agreed that the specification of one of the patents was sufficiently similar to the others so that it could be used to assess all four.

A panel of six judges heard the case before the High Court. There was unanimous agreement from the judges that section 18 of the Patents Act imposes a threshold requirement that there be an invention and that the only question in assessing whether a manner of manufacture exists for claimed innovation patents under section 18(1A), or section 18(1) in respect of standard patents, is whether there is ‘a manner of manufacture’ within the meaning of section 6 of the Statute of Monopolies. The court stated that the terminology of "manner of manufacture" is to be treated as "a concept for case-by-case development" applied in accordance with common law methodology.

In considering whether the claimed inventions were patentable subject matter, the panel was split three-three on the proper characterisation of the invention.

Chief Justice Kiefel and Justices Gageler and Keane considered that, in view of the patent specifications and the common general knowledge at the time of the priority date in 2014, the invention should be characterised as nothing other than a claim for a new system or method of gaming. They considered that the only thing differentiating the invention from the common general knowledge at the priority date was the unpatentable idea of the feature game.

However, the three other judges, Justices Gordon, Edelman and Steward, disagreed. They did so after outlining how they considered the question of whether there is a manner of manufacture in an invention should be approached, in particular for computer-implemented inventions.

Justices Gordon, Edelman and Steward said the focus on the question of manner of manufacture “commonly leads to enquiries such as: whether the process or product is part of the useful arts rather than the fine or intellectual arts; whether there is an artificially created state of affairs with a useful result including a result of economic significance; and whether the subject matter of a claim is no more than a mere intellectual idea, scheme, or game”. However, the judges said it was important not to place too narrow limitations on those enquiries when assessing whether there is a manner of manufacture.

They said: “The question of whether a claim, as properly characterised, is the proper subject matter of a patent should not be deconstructed to require, separately from the general principles of patentability, consideration of whether the subject matter is ‘computer-implemented’.”

“It suffices to say that, although modern computers could not have been in the mind of anyone in the Jacobean era of the Statute of Monopolies, the implementation of a scheme or idea on a computer to create an artificial digital state of affairs should not be treated any differently from the implementation of a scheme or idea by any other machine to create an artificial physical state of affairs. In both cases, however, the implementation must do more than merely manipulate an abstract idea… it must create an artificial state of affairs and a useful result”.

The term ‘artificial state of affairs’ is founded in Australian case law and means the invention can broadly be described as an "improvement in computer technology", in circumstances where the computer is integral to the invention, rather than a mere tool by which the invention is performed.

Justices Gordon, Edelman and Steward characterised Aristocrat’s invention as an electronic gaming machine that incorporates an interdependent player interface and a game controller which included feature games and configurable symbols. They said that operating the patent involved an artificial state of affairs and also provided a useful result. Together, this meant the invention amounted to a manner of manufacture in their eyes.

By virtue of the Australian Judiciary Act 1903 (Cth), the split ruling means the decision of the earlier decision of the Full Court of the Federal Court of Australia stands and Aristocrat’s appeal was dismissed. Therefore, the patents were found not to comprise patentable subject matter.

Harley said: “The evenly split decision means that this decision does not provide the level of clarity hoped for in relation to the patentability of computer-implemented inventions in Australia. However, it does highlight the importance of identifying the technical contribution to the art when drafting and prosecuting a patent specification for computer-based inventions, as this will be central to how the invention is characterised and ultimately to whether it is considered patentable.”