September 13, 2013

The Current State of Software Patents in Australia

Throughout this article, references to “para” refer to paragraph numbers in the judgements that we have linked to.

Software is patentable under Australian law.  Australian courts have struggled to draw a clear line between patentable software and unpatentable software, however.  So far in 2013, two major judgments have helped clarify the law.  This article will briefly outline salient points from both.

Software Patents and the “Manner of Manufacture” Test

In IBM v Commissioner of Patents (1991) (1991) 33 FCR 218 (IBM), the Federal Court found that software was patentable.  The invention ruled upon was software that produced an image of a curve.  The invention was found to be patentable since it was a new application of a particular mathematical method using a computer.

A central principle informing court opinions on software patents is the requirement for a computer implemented invention to qualify as a “manner of manufacture” under section 18(1) of the Patents Act 1990 (Cth).

Australian courts have held that, for software to cross the “manner of manufacture” threshold, a patent applicant must demonstrate that there is a change in a component of or information in a computer.  What exactly “change” means in this principle is unclear.  The following inventions have been held to be patentable:

  • a method for writing information to a card with a computer; and
  • a system for representing Chinese characters on a computer.

The Decision against a Software Patent

In Research Affiliates LLC v Commissioner of Patents [2013] FCA 71 (Research Affiliates), a software system that constructed and weighted an index of assets for fund managers was found to be unpatentable.

The court found that the index did not satisfy the “manner of manufacture” test. Some of the reasons for the court’s decision included:

  • the fact that the actual patent documentation did not contain information about how the data was processed and weighted by the system – there was very little information on the specifics of the software’s operation (para 68);
  • in the court’s opinion, the “manner of manufacture” could be carried out without the use of a computer (para 72); and
  • in order for the “manner of manufacture” test to be satisfied, the court opined that the method in question must produce a “concrete, tangible, physical or observable effect” (para 22), as distinct from the index, which was “nothing more than a set of data” or “simply information” (para 67).

The Decision for a Software Patent

In RPL Central Pty Ltd v Commissioner of Patents [2013] FCA 871 (RPL Central), the Federal court ruled in favour of software patents, and arguably increased the scope of software patentability.

The case concerned a software system that calculated the competency of a user against a certain skill set.  The system obtained data by asking questions of the user, and then asking different questions depending on the initial answers provided by the user.  Ultimately, the software system provided a quantitative analysis as to the suitability of the user in relation to the desired competency.

In contrast to Research Affiliates:

  • the court found the technical information provided in the patent documentation to be detailed and persuasive (para 172);
  • in the court’s opinion, the computer was integral to the invention as described in the patent application, so the Research Affiliates question of whether or not the process in question could be carried out without a computer was not applicable (para 158); and
  • the court seemed to disagree with the Research Affiliates decision by clearly stating that software patents do not require “physical effect” to be patentable (para 147).

Conclusion

The difference between the case outcomes seems to be largely informed by the differing views of the judges on what software actually is.  If the cases seem inconsistent, it is likely because the subject of software is an esoteric one to those tasked with applying the law.

In the final analysis, the second decision is regarded as the authoritative decision, and one that unambiguously expands the scope of software patentability to inventions that are software implemented by an ordinary computer.