On 13 September 2019, the Full Court of the Federal Court dismissed an appeal in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd  FCAFC 161, ruling unanimously that the appellants' computer-implemented invention was not eligible for patent protection.
It was generally anticipated that the Full Court, which on this occasion comprised an expanded bench of five judges instead of the regular three, would clarify and possibly reconsider the case law developed in recent years governing the patent-eligibility of software inventions. The Court, however, simply reaffirmed pre-existing principles and declined to address issues other than those directly involved with the case. It appears for now that the checks on software patents remain unchanged.
The patents: Information displaying method and apparatus
The appeal considered the validity of two Australian innovation patents (numbered 2014101164 and 2014101413). Both patents were owned by Encompass Corporation Pty Ltd (Encompass) and defined similar inventions.
The patents described a method for aggregating data from disparate databases (e.g. a motor vehicle registry database, a land titles database, and a database of companies) and displaying such data in a network of interconnected entities, for example, as shown in Figure 1 below.
The task of accessing information on different databases can be a challenge because records may be stored using different data formats, names might be misspelled or differ slightly even when they relate to the same entity, and access to information may be restricted, for example, behind a paywall.
The solution provided by the patents comprised a series of steps, beginning with the generation of a network of entities (e.g. business names, directors' names, addresses) with links between the entities describing their relationships to one another. This network representation was displayed to a user, who was able to select one or more of the entities for which searches were to be carried out across remote data sources, in order to determine additional information.
Claim 1 of patent number 2014101413 is reproduced below:
A method of displaying information relating to one or more entities, the method including, in an electronic processing device:
a) generating a network representation by querying remote data sources, the representation including:
i) a number of nodes, each node being indicative of a corresponding entity; and
ii) a number of connections between nodes, the connections being indicative of relationships between the entities; and,
b) causing the network representation to be displayed to a user;
c) in response to user input commands, determining at least one user selected node corresponding to a user selected entity;
d) determining at least one search to be performed in respective of the corresponding entity associated with the at least one user selected node;
e) performing at least one search to thereby determine additional information regarding the entity from at least one of a number of remote data sources by purchasing a report from the remote data source; and,
f) causing any additional information to be presented to the user.
The appeal was from an infringement suit by Encompass and SAI Global Division Pty Ltd (SAI Global) against InfoTrack Pty Ltd (InfoTrack). InfoTrack admitted to infringing both of Encompass' patents, but cross-claimed that the patents were invalid on various grounds, including novelty, innovative step, disclosure, support, manner of manufacture, and secret use.
The primary judge found the patents to be valid on all grounds other than manner of manufacture. In his Honour's view, the invention could not be considered a manner of manufacture because it was not an improvement in the functionality of a computer. The primary judge reached this conclusion after determining that the invention's method involved a concatenation of three steps, none of which were new when considered individually (although his Honour did indeed consider the concatenation of all three steps to be new). Our earlier article covering the primary judge's decision may be found here.
Encompass and SAI Global consequently appealed the primary judge's finding to the Full Court of the Federal Court.
The Full Court's statements on patent-eligibility
The Full Court, comprising Allsop CJ, Kenny, Besanko, Nicholas and Yates JJ, issued a single, unanimous reasoning.
One of the arguments presented by Encompass in this appeal was that Research Affiliates LLC v Commissioner of Patents  FCAFC 150 (Research Affiliates) and Commissioner of Patents v RPL Central Pty Ltd  FCAFC 177 (RPL Central), two key decisions on the patent-eligibility of software in Australia, were inconsistent or unsupported by higher authorities.
In response, the Court listed the following fundamental propositions which, their Honours said, were not and could not be disputed:
- Assessing whether an invention is patent-eligible requires determining whether the invention is a "manner of manufacture" in accordance with the principles developed by the courts.
- The invention claimed must be characterised based on its substance, rather than its form.
- The notion of "vendible product", which the High Court in National Research Development Corporation v Commissioner of Patents  HCA 67 (NRDC) interpreted broadly and which led to certain methods being considered patent-eligible, was used by the High Court because of the qualities of the particular invention in NRDC.
- The notion of "artificially created state of affairs of economic significance" expressed by the High Court in NRDC is not an exhaustive formulation of the concept of "manner of manufacture", nor is it a sufficient attribute for an invention to be patent-eligible.
Their Honours noted that they did not see inconsistencies between the above propositions and Research Affiliates and RPL Central, as well as other landmark decisions on the patentability of software in Australia and including decisions in which courts found computer-implemented inventions to be patentable: e.g. International Business Machines Corporation v Commissioner of Patents  FCA 625, CCOM Pty Ltd v Jiejing Pty Ltd  FCA 1168, and Welcome Real-Time SA v Catuity Inc  FCA 445.
The Court seems to have found that all of these historical decisions are consistent with NRDC's requirement that a patentable method produce a physical phenomenon in which an effect, be it creation or merely alteration, is observed. Referring to the decision in Grant v Commissioner of Patents  FCAFC 120, their Honours made clear that the required "physical effect" was in no way different to NRDC's "physical phenomenon".
Essentially, the Full Court reaffirmed the principles that the courts have applied in recent years to both grant and refuse patents for computer-implemented inventions.
Decision: Abstract idea using generic computer technology
The appeal's decision seems to have turned on the central proposition that an unpatentable method does not become patentable once it is implemented by the instrumentality of a computer. In this sense, the Court may have framed the key issue quite narrowly.
Starting from this proposition, the Court gave various reasons why Encompass's invention was not a manner of manufacture.
The main reason appears to have been that the claimed invention was "no more than an instruction to apply an abstract idea (the steps of the method) using generic computer technology". Their Honours accepted that the claims were couched in terms of the functionality of the computer (e.g. the computer searches remote data sources, the computer generates a network representation), but disputed that the computer amounted to anything more than an intermediary to carry out the method steps.
Regarding to the appellants' submission that the invention could not be implemented using "generic software", their Honours found that the patent claims "[did] not secure, as an essential feature of the invention, any particular software or programming that would carry out the method". This finding may have been related to their Honours' observation, earlier in the reasoning, that the patent specification was "agnostic" and "not prescriptive" of how the method should be implemented in a computer.
Finally, the Court rejected the appellants' submission that the claimed invention was "a high-level description of a computer program". Rather, the Court held the view that the method "[was] really an idea for a computer program" which relied on a user's discretion for its implementation.
IPTA's submissions: The role of prior art
The Institute of Patent and Trade Mark Attorneys of Australia (IPTA), though not a party to the proceedings, was granted leave to intervene in the appeal to voice its concern regarding the treatment of computer-implemented methods by the Australian Patent Office.
The practice adopted by the Patent Office when examining patent applications for computer-implemented methods is to first identify the "ingenuity" of the invention, and to then decide whether the invention is patent-eligible by reference solely to this so-called ingenuity.
IPTA's (and the appellants') issue with the Patent Office's practice was that identifying the ingenuity of the invention necessitates comparing the invention to prior art, which IPTA said was a misconception because it intruded questions of novelty and inventive step into the question of whether the invention is a manner of manufacture. In principle, these questions should be kept separate.
It is important to note that the Patent Office's practice has not been explicitly endorsed by any Australian court authority to date, which explains IPTA's concerns.
The Full Court, however, did not address IPTA's submissions, simply stating that the case in question did not raise significant questions of principle.
Interestingly, the Full Court did not employ the Patent Office's "ingenuity approach" when reasoning that the invention was not a manner of manufacture. Furthermore, when reviewing the primary judge's reasoning, the Full Court clearly pointed out that they did not believe that the primary judge had focused on individual features of the claimed method while neglecting the effect of their combination (which is a common criticism of the "ingenuity approach"). These reflections, however, by no means represent emphatic refutations of the Patent Office's examination practice.
This case seems confined to its facts, and does not appear to have altered the eligibility of software inventions for patent protection in Australia. In the Court's words, the appeal "[did] not provide the occasion for this Court to set out the metes and bounds of patentable computer-implemented inventions".
Nor did this decision clarify the role, if any, of the prior art in answering questions of patent-eligibility. It seems likely, therefore, that the Patent Office's approach to examining software inventions will remain unchanged for now, despite a lack of judicial endorsement.
However, there is still the possibility that the "metes and bounds" of software patentability will be clarified in the near future as a number of relevant Federal Court decisions are pending, including an appeal from the decision of Rokt Pte Ltd v Commissioner of Patents  FCA 1988 discussed here.
Encompass Corporation Pty Ltd is a client of DCC.
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