Court ruling adds to IP uncertainty

James Riley

Tech innovators will continue to face legal uncertainty when claiming intellectual property rights over their endeavors after the Federal Court handed down a long-awaited ruling concerning the patentability computer-implemented inventions.

It was hoped in legal circles that the case, which closely examined the validity of two computer-related patents held by Encompass Corporation and licensed to SAI Global Property Division in Australia, would provide legal guidance on a contentious area of IP law that has frustrated some technology developers.

However, after nearly five years of litigation and consideration by a special expanded bench of five judges in the Federal Court of Appeal, specialists IP law firm Ashurst says the case has not delivered to industry the long-awaited legal clarity.

Ashurst said that it was hoped the Full Court of the Federal Court of Appeal would clarify “the boundary between patentable computer-implemented inventions and abstract ideas” but said that it declined to do so.

The lengthy legal battle was first triggered in 2015 when Encompass alleged legal search service provider InfoTrak online portal called Reveal infringed the two patents. InfoTrak successfully argued that the two patents couldn’t pass a key legal test requiring them to be a “manner of new manufacture” and were invalid.

Ashurst said that the court found “[in] particular, the invention did not result in any improvement in the functionality of the computer nor the computer itself”.
Encompass appealed the matter in the FCFCA last November but late September the court upheld the original ruling.

Ashurst partner Nina Fitzgerald said that the “manner of new manufacture” test had proved more problematic for computer-implemented inventions than other kinds of inventions.

She said that IP Australia and the Commissioner of Patents had frequently found that computer-implemented inventions were merely applying generic computing power to broadly defined schemes, business methods and abstract ideas that were not themselves patentable.

For that reason, she said, the Institute of Patent and Trademark Attorneys of Australia (IPTA) sought to intervene in the case to have the manner in which IP Australia approached patents for computer-implemented inventions clarified.

In a submission, IPTA argued that the commissioner’s approach involved misconceptions regarding the manner of manufacture test resulting in confusion in the examination of patents for computer implemented inventions.

Ms Fitzgerald said that the five-judge bench hearing for the appeal (Federal Court appeals are usually only heard by three judges) and IPTA’s intervention raised the prospect that the court might enter into a more substantial discussion about the patentability of computer-implemented inventions.

However, the FCFCA found that the case did not provide an occasion to test those principles allowing current legal uncertainty around computer-implemented inventions to persist.

“It’s clear that the court didn’t state that the commissioner’s approach was incorrect even though IPTA put a number of cases to them where they argued the authorities had been wrongly applied, so I think the commissioner may continue to adopt the same approach making obtaining a patent for a computer-implemented invention challenging,” Ms Fitzgerald said.

“However, IP Australia has stated that the commissioner will review the manual in light of the decision, so whether there are changes as a result remains to be seen. Provided that inventors get the right legal advice and the patents are drafted well obtaining a patent for a computer implemented invention might be possible.

“It’s important at the beginning of the process to pinpoint what the substance of the invention is so as to consider whether the proposed invention is patentable,” she said.

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