The Federal Court has handed down a keenly awaited decision on the patentability of business methods and computer programs. In Research Affiliates LLC v Commissioner of Patents, the court ruled that a computer-implemented method of generating an index for weighting an investment portfolio was not patentable. This decision has immediate implications for the patentability of computer-implemented methods and computer programs.
Implications of the decision
The implications of the decision are that:
- Mere generation and storage of data in a computer will not be enough to create an 'artificially created state of affairs' or a 'physical effect' and create patentable subject matter
- Computer-implemented methods thath only involve the processing and storage of data or information, which could have also been done manually (albeit far more inefficiently) are unlikely to be patentable
- For a computer-based method to be patentable, it should result in a specific effect being produced by a computer (as opposed to the mere writing of data, which is inherent in the use of a computer), or the improved use of a computer.
Details of the decision
Research Affiliates had two patent applications for its index-generation method refused by the Patent Office on the basis that the claimed invention did not contain patentable subject matter (or it was not a 'manner of manufacture'). Research Affiliates appealed the decisions of the Patent Office to the Federal Court.
The claimed invention was a computer-implemented method of generating an index for weighting an investment portfolio, using measures other than share price weighting or market capitalisation weighting. It involved the steps of:
- Accessing data relating to assets
- Processing the data to identify assets for inclusion in the index (based on measures other than share price or market capitalisation)
- Accessing a weighting function to weight the assets
- Applying the weighting function to assign a weighting to each asset (based on measures other than share price or market capitalisation) to generate an index.
Justice Emmett gave consideration to whether the invention satisfied the two well-established requirements for a claimed invention to be a 'manner of manufacture'. These are whether:
- The method results in an artificially created state of affairs; and
- That state of affairs has application in a field of economic endeavour.
His Honour held that the creation of the index did not result in an 'artificially created state of affairs'. This is because the index produced was nothing more than a collection of data or information. Mere schemes or information have always been held not to be patentable. Although the index could be stored in a computer's memory, the same could be said of any data generated by a computer. Therefore the mere writing of data to a computer's memory could not, by itself, create an 'artificially created state of affairs'.
In previous cases, courts in Australia had found the following computer-implemented methods to include the required effect and be patentable:
- A method of representing a curve on a computer screen
- A method of representing Chinese characters in a word processor
- A method of writing information to a smart card as part of a customer loyalty program.
Justice Emmett distinguished these methods from the generation of the index in Research Affiliate's method. The methods that had previously been found to be patentable were all said to involve a specific effect being generated by a computer, or a practical application for the improved use of the computer. On the other hand, the generation of an index by computer was found to be no more than the modern equivalent of writing down the index on pieces of paper. The steps could readily have been carried out manually, and the implementation of a computer was nothing more than the use of a computer for a purpose for which it was known to be suitable.
His Honour concluded by noting that the modern availability of computers as a method of implementing processes that could have been carried out manually in the past did not bring with it any broadening of the concept of a patentable invention.
Further decision expected
At least one further decision is expected to be handed down by the Federal Court this year regarding the patentability of business methods. R P L Central Pty Ltd v Myall Australia Pty Ltd relates to a method of gathering and assessing information to assess a grant of recognition of prior learning. This case was heard by the Federal Court in December 2012, and a decision is currently pending.
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