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Computer implemented business methods not patentable

The full Federal Court has handed down the long anticipated decision of Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 which answers the fundamental question “are business methods patentable”?”

This article looks at the implications of the decision and most importantly, strategies for effectively protecting software related inventions in light of this decision.

The background

This full Federal Court case was an appeal against the earlier single judge Research Affiliates Federal Court decision ([2013] FCA 71) in which Research Affiliate’s methods relating to the construction and use of passive portfolios and indexes for securities trading were held not to be patentable.

The question decided in this Full Federal court case essentially was “does something that is not patentable become patentable if simply implemented by a computer?” In the words of the court “whether computer implementation of an otherwise unpatentable business scheme is sufficient to make the claimed method properly the subject of letters patent.

Let’s now look at the implications of this court case:

Computer implementation does not confer patentability

Not surprisingly, no: the court affirmed that business methods, human activity, abstract concepts and the like do not become patentable simply when implemented by a computer.

The court referred to the UK and the US for support, these being foreign jurisdictions having similar patent eligibility considerations for software related inventions. Indeed, the recent US Alice Corporation case considered substantially the same questions.

However, this decision changes little. Patentec has always been advising clients that business methods simply implemented by computers are in jeopardy of being considered not patentable. Our advice is that something more is required, some technical interoperability between the software and the hardware so as to be able to make a case to the examiner that the steps of the computer implemented method could not be performed without the use of computer implementation.

Business methods simply implemented by computers are in jeopardy of being considered not patentable

As such, when protecting commercially valuable software related inventions, it is imperative that the language of the claims, and that of the detailed description substantiate that the invention could not be performed without the computer implementation.

Substance over form

Unfortunately the case took the “substance over form” approach when considering the patentability of a claim.

Specifically, the court held that “The [claimed] invention is to be understood as a matter of substance and not merely as a matter of form.

The court continued that “It is apparent from the description in the specification that the computer is simply the means whereby the analyst accesses data to generate an index.

Indeed Research Affiliates apparently shot themselves in the foot by acknowledging in the detailed description that the invention need not necessarily be implemented by a computer. In this regard, the court said that “Indeed, while the specification states that the invention may be used for investment management or investment portfolio benchmarking, the exemplary embodiment makes it clear that it may be, but is not necessarily, implemented on a computer.” Oops.

This “substance over form” approach is unfortunate.

Specifically, great care goes into drafting a patent claim to define the scope of legal monopoly. Indeed, section 40 of the Patents Act says that it is the claims that define the invention.

By preferring the substance over form approach, patent examiners now have leeway to ignore the plain language of the claim and refer rather to the substance, essence or, as Dennis Denuto from the Castle puts it, the “vibe” of the specification to determine patentability. It raised the question of the value of having claims at all.

As such, it is imperative that the software related patent specification focus on the technical considerations of implementing the steps of the method. Any language directed to abstract concepts and the like will certainly cloud the issue and expose the patent applicant to adverse opinions from examiners considering the “substance” of the invention.

Confirmation that software is patentable as long as it is “inextricably or integrally linked” to the computer

On the upside, the court did confirm that software is patentable, as long as the software is “intrinsically linked” with the computing device.

The court did confirm that software is patentable

Indeed, the judges complained that the present specification, while reciting computer implementation in the claims was devoid of technical description either in the title, the background or the detailed description of the patent specification.

As such, it is important that any patent specification directed to software related inventions describe the underlying technical hardware and intrinsically link the steps of the computer implemented method to the underlying hardware.

The judges further confirmed patent eligibility of software related inventions by approving of the earlier RPL Central Court case. As you will recall, this single judge court case upheld the patentability of a claimed invention relating to enabling the retrieval of relevant data from a remotely located server via the internet and the generation of questions for, and presentation of questions to, the user based on this data.

The judges stated unequivocally that in this case, the steps of the method where intrinsically linked with the underlying computer architecture in the server being in operable communication with a client computing device and being adapted to send and receive data across a data network.

It was said that “the involvement of the computer in the invention is described in these claims in such a manner that it is inextricably linked with the invention itself”.

As such, for software related inventions, it is imperative that the patent specification focus on the interaction of the steps of the method and the underlying technical architecture showing the inextricable linkage between the two.

Guidance for patenting software related inventions

As such, patent protection for software related inventions is definitely still on the cards provided that:

  • The computer implemented method is not simply something that is not patentable simply being done by a computer; and
  • The steps of the method of computer implemented method are “inextricably or integrally linked” to the underlying technical architecture in that, in other words, the invention could not be performed without the use of the computer hardware.

Patentec Patent attorneys specialise in the protection of software related inventions. As such, if you have a commercially viable software related invention, it is imperative that you contact us to prepare patent specifications that comply with the Research Affiliate’s decision so as to maximise the patentability of your software.

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