Journal of Law, Information and Science
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DAVID J BRENNAN[*]
This essay discusses the characterisation in Australian patent law of business methods (which generally involve information technology) as ‘manners of new manufacture’. It will examine whether this characterisation is consistent with the historical scope of the ‘manner of new manufacture’ concept, and whether it is desirable as a matter of economic policy.
By rejecting the existence of a business method patent exclusion in US patent law the State Street Bank & Trust v Signature Financial Group[1] decision has attracted considerable scrutiny from US academics.[2]
Since that decision, there has been growth in the number of business method patents applications in the US[3]
and much mainstream discourse on the desirability of such patents, particularly the Priceline.com Internet ‘reverse-auction’ patent and the Amazon.com ‘one-click’ Internet ordering method patent.[4] In 2001, the Australian Federal Court declined to revoke a business method patent in the decision of Welcome Real-Time v Catuity.[5] Following on from this decision and developments abroad, a Working Group on Business Method Patents has been formed in Australia within the Advisory Council on Industrial Property (ACIP) and an issues paper produced.[6]
The Working Group’s final report is expected to be published in 2004.
The example of business methods[7] provides an opportunity to consider some of the more fundamental aspects of Australian patent law, in particular the inherent patentability, and its related concepts of ‘general inconvenience’ and threshold minimum inventiveness. In so doing, business methods may be used as a prism through which these may be considered. The objective here is to argue the case that subject matter like business methods is best dealt with through the principled development of existing, objective criteria for validity in patent law.[8] Key to the argument is that business methods should be, and can be, approached from a point of reference which assesses them no differently from any other alleged invention, and without the presumption of their ad hoc or sui generis exclusion.
That which follows broadly ranges across a variety of topics in making out the essay’s argument. ‘General inconvenience’ in Anglo-Australian patent law is considered both from both a historical and an economic perspective. Then the requirement of a ‘technical’ or other like effect for patent eligibility is a matter looked at under Australian and European patent law, and related to the position in Europe, under TRIPs. Next, the appropriateness under Australian law for a threshold inventiveness requirement to play a role in this area is considered. Finally, some concluding observations are made as to desirable patent policy settings in a time when the short-term demands of the information technology industry appear to have fixated the attention of many.
Networked computers were not conceived of in 1624. But the provision that underpins Australia’s current requirement for patentability was. Section 18 of the Patents Act 1990 requires conformity with section 6 of the 1624 Statute of Monopolies, which confined the recipients of the patent privilege to the ‘true and first inventors’ of ‘any manner of new manufacture’, so long as they ‘be not contrary to the law or mischievous to the State, by raising prices of commodities at home, or hurt of trade, or generally inconvenient’.[9] The effect of such drafting has been explained by the High Court as defining the scope of patentable subject matter
by reference to the established ambit of s. 6 of that Statute… It is an inquiry… into the breadth of the concept which the law has developed by its consideration of the text and purpose of the Statute of Monopolies.[10]
In Welcome Real-Time, Justice Heerey of the Federal Court was faced with an argument – albeit not a primary plank of the attack on the patent – that a claim to a method of using stored value ‘smart cards’ in retail consumer loyalty programs was inherently unpatentable. One reason for this was that it was said to fall outside the scope of the 1624 provision, on grounds which included that the claim was ‘generally inconvenient’ as provided by section 6. That inconvenience was said to be that if the patent was not revoked, it would place an undue restraint upon other traders.[11] In his decision, Justice Heerey gave short shrift to the argument on general inconvenience, stating that if an invention otherwise satisfies the requirements of patentability – such as novelty, inventive step and utility:
It can hardly be a complaint that others in the relevant field will be restricted in their trade because they cannot lawfully infringe the patent. The whole purpose of patent law is the granting of monopoly.[12]
This was seemingly put more as a matter of logic than strict legal reasoning. However, as will be argued below, it is a logic well supported by both the history of the section 6 text and principles of economic efficiency.
Modern patent law texts recognise the possibility of a patent claim being found to be invalid on the ground of general inconvenience alone.[13] However, such outcomes in practice appear to be very rare. Even taking account of the exclusion of claims to methods of medical treatment, now discredited in Australia[14], there appears few (if any) cases in Anglo-Australian patent law that have relied solely on ‘general inconvenience’ to invalidate an otherwise valid patent claim. General inconvenience has been sometimes used to provide collateral support for outcomes decided on some other ground. For example, in Roll’s Royce’s Application[15] it was put as an additional reason for the finding that a noise-reducing method of operating a jet engine was unpatentable. Justice Lloyd-Jacob, sitting as the UK Patent Appeal Tribunal, considered the invalid claim also was generally inconvenient because pilots of jumbo jets had enough on their minds without the added the worry of patent infringement.[16] Here the assumption seems to be − reflected by the argument made in Welcome Real-Time − that the term ‘general inconvenience’ in section 6 of the Statute of Monopolies creates an independent ground for courts to deny the validity of claims on ad hoc policy grounds alone. But did the drafters of section 6 ever intend that the term ‘general inconvenience’ be given this role? It is useful to consider afresh this expression within section 6 in the context of the provision’s enactment.
Up until the early seventeenth century, English monarchs practiced the granting of patents to favourites of the Crown which bestowed the right to control existing, well-established industries and trades. In his history of the British patent system, Gomme explains that this was done ‘on the persuasion of the patentees, only too anxious to line their own pockets, and partly no doubt as a source of revenue [for the Crown]’.[17] The effect of the practice was to create monopoly suppliers in well-established industries such as the supply of playing cards, ale-houses, woollen socks, and fortified wines.[18] These so-called ‘odious’ monopolies in turn met with popular dissatisfaction. They were widely regarded as the consequence of the Crown’s abuse of the power to grant patents. The extent of that dissatisfaction was reflected in Queen Elizabeth’s 1601 ‘Golden Speech’ to the Parliament. In it, Elizabeth professed to have made such grants based on the false suggestions of patentees, who were denounced by her as ‘lewd persons, abusers of my bounty’.[19] Importantly, Elizabeth opened the door to judicial review of those grants in the common law courts, by persons who found themselves ‘aggrieved, injured or wronged by reason of the said grants’.[20] The following year such review was sought by a London trader Thomas Allen in defending an infringement action brought against him by the holder of the playing card patent, Edward Darcy.[21]
The case of Darcy v Allen – also known as the Case of Monopolies – has been the subject of considerable legal history scholarship over the years.[22] In 1996 a legal historian made clear that the political sensitivities surrounding the first common law judicial review of a royal patent led the judges of the Kings Bench to issue no reasons for the unanimous decision that the patent was void.[23] It was left to the case reporters to cobble together an estimation of those unstated reasons, largely from the submissions of counsel.[24] It was this reporting which was then understood to reflect the common law. From the submissions of counsel for Allen, it appeared that the playing card patent was found to be void as a monopoly in respect of a known commodity, and therefore against the common law. This was because such a monopoly was seen as embodying three evils:
• The inflation of the price of playing cards, because ‘he who has the sole selling of any commodity will make the price as he pleases’;
• A lessening in the quality of playing cards, through lack of competition; and
• The exclusion from the playing card industry of other artisans, causing unemployment and poverty.[25]
All three evils substantiated the general proposition that ‘every grant made in grievance or prejudice of the subjects is void’.[26] Also apparent from the submissions was the distinction drawn between the playing card patent and patents for inventions. Thus, counsel for Darcy, who tried unsuccessfully to justify the grant not as an invention but as a legitimate exercise of royal authority in the regulation of idle card playing, argued such regulation was as valid an exercise of royal authority as the grant of patents for inventions. From this submission, it appeared that monopoly patents were permissible where ‘any man … by his own wit and invention’ brings about a new trade or ‘engine tending to the furtherance of a trade that never was used before’.[27] In such cases, the Crown may grant a monopoly patent ‘in consideration for the good that he doth bring by his invention ... for some reasonable time, until the subjects may learn [the new trade]’.[28]
Notwithstanding the outcome in Darcy v Allen, Elizabeth’s successor, King James, continued to grant odious monopolies. In the face of further political pressure arising from this exercise of the royal prerogative, James issued in 1610 a ‘Declaration of His Majesty’s Pleasure’ which became known as the Book of Bounty.[29] The inferred common law position derived from the reports in Darcy v Allen, had clearly impacted upon the drafting of the Book of Bounty. The book provided a statement of what was understood to be the common law position on monopolies arising from that decision.[30] It declared monopolies in general to be things ‘contrary to our laws’ and commanded that no suitor ‘presume to move’ the King to grant any of them. However, the Book of Bounty then made a proviso in respect of a list of certain meritorious things for which the King was content to be petitioned by a subject to grant the subject a monopoly right. Item nine on that list was:
Projects of new invention, so they not be contrary to the Law, nor mischievous to the State, by raising prices of commodities at home, or hurt of trade, or otherwise inconvenient.
Sir Edward Coke appeared as the Attorney-General before the Kings Bench in Darcy v Allen, he was also one of the reporters of the case, and he was also the drafter of the terms of the Statute of Monopolies.[31] The royal patent grants were a hugely contentious political issue throughout this period, and no-one would have been more aware of this than Coke. The publication of the Book of Bounty created a political opportunity for Coke, an opponent of the unfettered exercise of the Royal prerogative, to introduce legislation in 1621 which merely accorded with the King’s earlier declaration.[32] Coke’s bill was defeated in the House of Lords. However, when in 1624 the Statute of Monopolies passed both the Lords and the Commons, the King had little choice but to grant (begrudgingly) his Royal Assent to a Bill that did no more than codify the expression of the common law contained in the King’s 1610 declaration.[33] Section 1 of the statute corresponded with the King’s general declaration that monopoly grants were and are void; section 6 of the statute corresponded with the King’s ninth proviso to his general declaration, adding the temporal limitation of 14 years.[34] The proviso in the statute in part read:
letters patent and grants of privilege ... to be made of the sole working or making of any manner of new manufactures ... to the true and first inventor and inventors of such manufactures ... so as ... they be not contrary to the law or mischievous to the State, by raising prices of commodities at home, or hurt of trade, or generally inconvenient.
What does this history offer in answering whether business method patents (or indeed any other subject matter) are ‘generally inconvenient’ under section 6 of the Statute of Monopolies? Section 6 reflected at the time of its enactment an understood distinction at common law between monopolies for invention and odious monopolies. To this end, section 6 strove to make clear that a monopoly for a new invention was a monopoly which possessed none of the evils that a monopoly for a known product did. Hence the choice of language (derived from the Book of Bounty) of any manner of new manufacture ‘so as’ they be not contrary to the public interest. In this way, section 6 does not spell out a patentability requirement that demands there be both a manner of new manufacture, and, as a separate requirement, a grant exhibiting none of the negative consequences associated with odious monopolies.[35] Rather, the closing words of section 6 seem to have been intended make explicit the corollary of limiting the patent grant to ‘new manufactures’; patents could no longer be granted to create exclusive franchises for the production of known items, such grants being against the public interest. The listing of general inconvenience, together with the other ‘negative’ attributes of odious monopolies, merely specified that the result of limiting patent grants to new inventions was the absence of those attributes. This was a result which was mutually coextensive with any grants so limited.[36]
Justice Heerey’s logic in Welcome Real-Time − that a patent grant for new and useful invention could not be invalid on general inconvenience grounds − appears, as a matter of textual history, basically to reflect the law that was codified in section 6. When a grant of a monopoly has been made to the inventor of a manner of new manufacture, such a monopoly will never exhibit in the way meant by section 6, the negative characteristics associated with the grant of odious monopolies; raising prices, hurting trade, or being generally inconvenient. This does not mean that modern Australian patent law should not imbue the term ‘not generally inconvenient’ with an ad hoc public policy operation. All it is to say is that it is wrong to characterise so doing as an application of the term’s understood and intended operation in 1624. No such operation was ever contemplated in 1624. Then, the expression ‘not ... generally inconvenient’ simply highlighted the consequence that grants for well-known products or well-known trades wrongly restrained those already engaged in hitherto lawful activities. There is nothing in the Welcome Real-Time that indicated the business method claim there had such an effect. If the business method claim there did have such an effect that claim would have been as invalid as the playing card patent in Darcy v Allen and for the same essential reason: failure to be a new invention.
Putting to one side the etymology of the term ‘general inconvenience’ in the context of section 6, under an economic analysis Justice Heerey’s approach also has much to commend it. A system of property rights is critical in providing individuals in a market economy with a means of appropriating some return from productive activity.[37] An effective system of property rights requires that those rights can be clearly established, enforceable and that there can be exchange in respect of those rights with minimal transaction cost.[38] The issue of whether or not Australian patent law creates a statutory business methods exclusion, or gives to Courts the roving commission to knock out such claims on “general inconvenience” grounds, raises concerns under the first of these attributes: the clear establishment of property rights.
Any express statutory exclusion for business methods in Australian patent law gives rise to the immediate question: what would be its definitional scope? This is by no means a trivial matter for there appears to be no, one, widely accepted definition of a ‘business method’ for patent law purposes.[39] For its Issues Paper, Patenting of Business Systems the ACIP Working Group described itself as requiring a ‘clear definition’ to clarify the scope of its activities.[40] It adopted a ‘business system’ definition devised by the Intellectual Property Research Institute of Australia (‘IPRIA’) purportedly to meet this requirement.[41] This definition included a ‘method of administering, managing, or otherwise operating an enterprise or organisation, including a technique used in doing or conducting business … in a field of economic endeavour’.[42] Contrary to the assertion of the ACIP Working Group, it is far from clear what methods would fall outside the scope of this definition. Does not the expression ‘a technique used in doing … business’ describe virtually all methods for which patent protection is likely to be sought? Consider, for example, the method claim in the celebrated Australian patent decision of National Research Development Corporation v Commissioner of Patents[43] (‘NRDC’). In NRDC an invention resided in the application of known chemicals to crop fields (such as celery and parsnip) so that the chemicals (‘which formerly were supposed not to be useful for this kind of purpose at all’[44]) acted as a selective herbicide.[45] In Australia agribusiness is big business. As such, the IPRIA definition could be argued to apply directly, without resort to elastic linguistics, to encompass the claim in NRDC, the NRDC claim being to a technique used in doing agribusiness.[46] Thus an exclusion from patentability which was based upon this definition could exclude the claim the subject of consideration in NRDC itself. It can only be presumed that this was neither the intention of IPRIA in drafting the definition, nor the understanding of the ACIP Working Group in adopting it.[47] However the potential for application of the IPRIA definition to the claim in NRDC illustrates the genuine difficulty in conceiving of, and drafting for, a broad genre of new invention which should be denied patent protection. It may well be that any exclusion drafted will necessarily reflect that difficulty and will invite systemic uncertainty, giving Courts a licence to engage in exclusion dictated by visceral reaction rather than objective criteria. If patent rules are informed by the imperative to provide an efficient means by which resources are allocated to valuable and inventive activities, those rules should not specify invalidity on any criteria other than those which are clear and predictable. The effect of doing otherwise has been well observed in the case of the now-discredited medical methods exclusion in patent law. Grounds for that exclusion had been couched inter alia in terms of morality, founded in turn on the ‘general inconvenience’ text of section 6. Justine Pila convincingly reveals that this exclusion created ‘rudderless’ jurisprudence which was ‘at best unclear, and at worst unconvincing’.[48]
Similarly, if the closing words of section 6 of the Statute of Monopolies are to be imbued with a modern operative meaning for the purpose of excluding business methods, Courts must indulge in the murky matter of determining what ‘general inconvenience’ is and what it is not. This tends towards unpredictability and judicial subjectivism. Once Courts start down this course, they risk importing obscure concepts into patent law whereby the validity of claims to new subject matter such as business methods, are not based upon readily ascertainable rules, but judicial whim.[49]
In the establishment of property rights, unclear establishment rules for patent rights create two related inefficiencies. The first is that the allocative incentive of the patent system is diminished to the extent the establishment of property rights becomes unclear. The promise of the patent system is that inventors may appropriate some share of the economic value others derive from what they invent. If that promise becomes subject to the caveat, ‘so long as it is not considered by a judge to be a technique used in doing business or generally inconvenient’, the promise loses its power to allocate resources to those inventive areas and industries which the market may regard as valuable. The second harm is that unclear establishment rules involve costly and wasteful disputation. If patent right establishment rules are vague, they invite parties to expend resources to influence whether the initial property right is indeed established. Thus, in the paper that first set out what is known today as the Coase Theorem (which underlies much mainstream economic thought) Ronald Coase identified that ‘the delimitation of rights is an essential prelude to market transactions; but the ultimate result (which maximizes the value of production) is independent of the legal position’.[50] Coase then identified several impediments (what he later termed ‘social costs’[51]) that impact in reality upon the efficiency of the resulting resource allocation under his Theorem. The most important of these in general was the burden of transaction costs. But particularly relevant in the case of business methods is the following factor: ‘a waste of resources may occur when the criteria used by the courts to delimit rights result in resources being employed solely to establish a claim’.[52] The existence of this factor was regarded by Coase as being in and of itself sufficient to invalidate the efficiency claim of his Theorem.
This is not to say that all claims to business methods need to be deemed valid for patent law to be economically efficient. However, what economics does say is that if property rights and private markets are to work together to achieve efficiently their allocative goals, those property rights must be established according to known criteria, rather than left ill-defined by impressionistic whim. In Welcome Real-Time, Justice Heerey should be commended for rejecting the latter in favour of the former.
Business method patent claims may also be considered in the context of what is sometimes termed ‘inherent patentability’.[53] This essentially resolves to the distinction between subject matter that is inside and subject matter that is outside the patent system. Only the former are said to be ‘inherently patentable’. In Welcome Real-Time, the primary claim was attacked on the basis that for it to be inherently patentable the claim must involve a ‘physically observable effect’.[54] At the time of the case, the Australian Patent Office Manual of Practice and Procedure offered some support for this attack. It suggested that a business method claim will only be more than an unpatentable ‘scheme or plan’ if it produces a technical solution or technical advantage.[55] In this respect the Practice Manual bore more than a passing resemblance to the European approach to dealing with claims in respect of business methods.
Article 52 of the European Patent Convention (‘EPC’) excludes from patentability a list of subject matter, including methods of doing business and programs for computers.[56] However, the exclusion is limited to claims for the listed subject matter ‘as such’.[57] The jurisprudence under the EPC has placed a heavy burden upon the words ‘as such’. The words are generally understood to limit the exclusions claims which do not posses a so-called ‘technical effect’ or ‘technical character’. This requirement of a technical nature for patentability is reflected in article 27(1) of the TRIPs Agreement which requires that;
patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application.[58]
The genesis of the expression “in all fields of technology” in article 27 appears to be in a Swiss drafting proposal from 1989.[59] During a TRIPs Agreement negotiating meeting at that time the Swiss were questioned as to the absence of any provision for express exclusions in their proposal. The response from the Swiss representative is telling: ‘no field of technology should be excluded per se from patentability; what determined whether a subject matter was patentable was its technical character’. [60] Thus, under the European conception if there is no ‘technical effect’, the claim is not in a ‘field of technology’ and can therefore be excluded from patent protection. This conception can be applied to methods of doing business. Only a ‘pure’ or ‘abstract’ business method is considered a ‘method of doing business as such’. Such subject matter is excluded by article 52 of the EPC for lack ‘technical character’ and is also not considered, under this conception, to be in a ‘field of technology’ under TRIPs article 27.
But precisely when does a claim possess a ‘technical character’? It seems that this is an extremely obscure European concept. In 2000 the European Patent Office (‘EPO’) prepared a paper which explained its approach to examining business method claims.[61] Excluded from patentability are claims to abstract business method which offered no specific means of implementation. This is because they are said to be merely methods of doing business ‘as such’, and thereby fell within the exclusion. However, the EPO considered that where a business method claim relied on the use of a computer, it should be examined by asking: ‘What is the technical problem solved by the invention when compared to the closest prior art?’ If the invention solves a technical problem, it contains the requisite technical effect. But the question remains unanswered by the EPO paper: what does ‘technical’ mean in this context? Shortly after the publication of the paper, a 2000 EPO Board of Appeal had before it the Pension Benefit System patent.[62] This contained a claim for a method of controlling a pension benefits fund, which involved providing to a computer information which had an administrative, actuarial and financial character. The claim was rejected on the basis that no solution to any particular ‘technical’ problem was discernable from the specification. The reference to a computer in the claim was not, in itself, sufficient. However, in the course of its reasoning, the Board could offer no definition of the term ‘technical’. Instead it conceded that it was applying a term with a ‘not particularly clear’ meaning:
In the Board's view the fact that the exact meaning of a term may be disputed does in itself not necessarily constitute a good reason for not using that term as a criterion, certainly not in the absence of a better term.[63]
At this point, all the earlier observations on the economic harm of this type of vague approach to the establishment of property rights could be repeated.
The current state of article 52 jurisprudence has sparked a debate within Europe as to the role of ‘technical’ as an exclusionary patent criterion. In 2002 the European Commission relied in part upon the Pension Benefits Decision to propose patent law harmonisation by requiring EU Member States to ‘ensure that it is a condition of involving an inventive step that a computer-implemented invention must make a technical contribution’.[64] The term ‘technical contribution’ was circularly defined to mean ‘a contribution to the state of the art in a technical field which is not obvious to a person skilled in the art’.[65] In 2003 this Commission proposal, and the EPO Board of Appeals jurisprudence it reflected, was the subject of a broadside from the Economic and Social Committee of the European Parliament. The Committee described the distinction between subject matter ‘as such’ and subject matter which produced a ‘technical’ result was the product of ‘legal casuistry’ that was ‘indefinable in practice’.[66] Moreover the Committee was concerned to reverse what it saw as a drift towards patentability (through this casuistry) of subject matter apparently excluded by article 52; in particular methods for doing business and computer software.[67] It proposed that a ‘technical effect’ could only be ‘a creation or an effect of a material nature, that is an action in the physical world’.[68] Following the Committee’s report, the European Parliament radically amended the Commission’s proposal.[69]
Under draft article 4a the Parliament proposed that:
A computer-implemented invention shall not be regarded as making a technical contribution merely because it involves the use of a computer, network or other programmable apparatus. Accordingly, inventions involving computer programs which implement business, mathematical or other methods and do not produce any technical effects beyond the normal physical interactions between a program and the computer, network or other programmable apparatus in which it is run shall not be patentable.
The term ‘technical’ was defined to mean ‘belonging to a technical field’, in turn defined to mean ‘an industrial application domain requiring the use of controllable forces of nature to achieve predictable results’.[70] The definition amplified the article 4a exclusion by further providing that ‘the use of forces of nature to control physical effects beyond the digital representation of information belongs to a technical domain’.[71]
While the ultimate fate of the directive awaits resolution within the Council of European Union, it is clear that at present the EPO and the European Commission on one side, and the European Parliament on the other, are completely at odds as to what the ‘technical effect’ criterion currently plays in European patent law, and what role it should play in the future. It may be that those involved might be provided with useful guidance from a conclusion of a recent Australian doctoral thesis. Pila argues that rather than bolster the role of the criterion, European patent law would be well-served by reform which would obviate ‘the need for creative decision-making by the EPO in reliance on the concept of “technical character”, which in addition to its obscurity, has no clear basis in either the text or history of the EPC’.[72]
With an eye to the European position, the ACIP Working Group asks in its Issues Paper ‘should Australia include technical implementation as a requirement for patentability?’[73] The paper then poses the related question ‘should business systems be considered within a “field of technology” as referred to in s 27 [sic] of the TRIPS agreement?’[74] Given the aspect of the drafting history of TRIPs earlier described, it might be thought there exists a degree of latitude for a WTO member such as Australia to create a broad exclusion from the patent system on the basis of an absence of a ‘technical’ requirement. However, neither the drafting history of TRIPs article 27, nor the cosy feeling of perceived TRIPs compliance, answers the critical question: what is meant by the term ‘technical’ in this context? The ACIP Working Group failed to define what it meant by the expression ‘technical implementation’. The difficulty in justifying or creating an exclusion for business methods on the basis of an absence of ‘technical implementation’ is illustrated by the definition of ‘business system’ adopted by the ACIP Working Group. It will be recalled that it included a ‘technique used in doing ... business’. The terms ‘technique’, ‘technical’ and ‘technology’ share the same Greek root tékhnē which denoted ‘skill, art, craft, trade’.[75] It is difficult to conceive of how a technique used in doing business could be not technical, and therefore outside a ‘field of technology’, unless a new definitional framework is constructed which divorces these words from their common origin.
Returning to Welcome Real-Time, Justice Heerey rejected the argument that a patent claim must exhibit a ‘physically observable effect’ through an application of the High Court’s decision in NRDC.[76] NRDC liberates Australian patent law from having to get bogged down in terms with obscure meanings such as ‘technical effect’ by characterising broadly the concept of ‘invention’ under section six of the Statute of Monopolies as requiring ‘a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the field of economic endeavour’.[77] There has been a criticism of the breadth of NRDC’s central proposition, described as so generalising ‘the concept of and test for inherent patentability that in practice the requirement has been annihilated’.[78] There are three responses to this. The first is that rather than the breadth of the NRDC concept of inherent patentability being a problem, its breadth permits the focus of any validity inquiry to rest upon more concrete criteria – such as novelty, inventive step and utility. The second is that NRDC’s central concept remains sound. Under it, a manner of manufacture requires human intelligence stipulating integers with a synergistic relationship to each other, such that the functional value of the claim is more than the sum of its integers. Properly applied the concept does usefully serve to deny patentability. Discoveries in nature, where there is the use of intelligence merely to describe, rather than stipulate integers appear to be outside the concept. As does what the NRDC High Court described as abstract information without suggestion of a practical application to a useful end.[79] The third response is that it is incumbent upon those pressing for a tightening of NRDC’s avowedly liberal test for inherent patentability to offer a logical alternative which conveys a clear meaning. This is because the current breadth of the NRDC central concept offers a clarity that aids the efficient establishment of rights and thereby the efficient allocation of resources under the patent system. Thus, Justice Heerey had no difficulty in concluding that ‘the patent does produce an artificial state of affairs in that cards can be issued making available to consumers many different loyalty programs of different traders … [and] this result is beneficial in a field of economic endeavour – namely retail trading’.[80] This is a straightforward application of the NRDC principle to business methods, and it is one which for the time being has saved Australian law on inherent patentability from the meaningless terms such as ‘technical character’.[81] Witness the recent decision of the Australian Patent Office, in light of the Welcome Real-Time decision, to remove references to the requirement of ‘a technical solution or technical advantage’ from the pages of its Practice Manual which relate to the patentability of business methods.[82]
This is not to say that there should be some sort of ‘free-for-all’ for business method patents in Australia. Rather, existing Australian patent law can achieve sensible outcomes without resort to vague criteria. To illustrate this, consider the position of business method patents granted in respect of new technology platforms. From the decision of the High Court in Philips v Mirabella[83] under the 1990 Patents Act, it is clear that the manner of manufacture concept of section 6 of the Statute of Monopolies requires a minimal threshold level of inventiveness.[84] The origins of this can be traced to the 1838 decision of Losh v Hague,[85] a case decided under section 6 itself, and involved (somewhat topically[86]) a patent for a type of wheel. The wheel was claimed for use in rail carriages, but it had been used previously for horse-drawn carriages. In his charge to the jury, the judge said:
It would be a very extraordinary thing to say, that because all mankind have been accustomed to eat soup with a spoon, that a man could take out a patent because he says you might eat peas with a spoon. The law on this subject is this: that you cannot have a patent for applying to a well-known thing, which might be applied to 50,000 different purposes, for applying it to an operation which is exactly analogous to what was done before.[87]
In the spoon example lies a good indication of what might fall outside the scope of a section 6 manner of manufacture for want of the minimal level of threshold inventiveness. It is the use of a known thing for a purpose which the thing’s well-known uses indicate its exact suitability. We see the same notion appear in the 1940 submission of the chief patents examiner to the UK Patents Appeal Tribunal in Re L & G’s Application where he observed that at the time stainless steel was invented, there was a flood of applications for the manufacture in stainless steel of all sorts of items.[88] The chief examiner considered that it could not be a manner of new manufacture for someone to merely come along and say: ‘Because no one else has mentioned such and such an article, I am going to make it out of stainless steel and get a patent for it’.[89] Referring to this submission, the Australian High Court in Commissioner of Patents v Microcell commented: ‘If stainless steel and its properties were known, and many kinds of articles had been made of it, it would not be possible for a man to claim a monopoly for making kitchen sinks of stainless steel merely because he was the first man who ever thought of doing this’.[90] The Court in Microcell then expressed the generalised legal rule as:
It is not an inventive idea for which a monopoly can be claimed to take a substance which is known and used for the making of various articles, and to make out of it an article for which its known properties make it suitable, although it has not been used to make that article before.[91]
The Philips v Mirabella High Court found that this requirement operates in the opening words of section 18 of the Patents Act 1990.[92] In light of the Court’s subsequent decision in Advanced Building Systems v Ramset Fasteners[93], the requirement appears to operate in the following way. If on reading the matter disclosed on the face of the patent specification, a person in the field of the patent would regard the claim as a use of a known thing, for which that thing’s known uses are entirely analogous to the claimed use, the necessary threshold inventiveness is absent.
Today, the Internet is like stainless steel once was. The former is, as the latter was, a disruptive technology. Such technologies impact upon a multiplicity of industries and economic activities by altering the platform upon which they all operate.[94] As such, it is useful to consider whether the Priceline.com patent claim[95] to a use of the Internet in a business method might be analogous to the Internet’s well-known uses prior to the priority date of the claim; 4 September 1996.[96] With minimal Internet history research one may ascertain that a massive array of one to many, many to one, and one to one, communications and transactions were well-known to be associated with the Internet at the time of the priority date of the claim. A dictionary published in 1995 defined the term “Internet” as:
A system of linked computer networks, world wide in scope, that facilitates data communication services such as remote login, file transfer, electronic mail and newsgroups … With more than 2 million host computers serving an estimated 20 million users, the Internet is exploding at a rate of one million new users each month.[97]
This general comprehension of the scope of the Internet before the priority date does not mean that Priceline.com’s claim is necessarily devoid of the threshold level of invention required under Australian law. But one might be forgiven for suspecting that, as read through the eyes of a skilled addressee in 1996, a claim to the use of the Internet to conduct what is essentially a “Dutch auction” may well be a claim to a use for which the Internet’s then known properties indicated exact suitability. Such a claim in September 1996 might well be quite similar to a claim to eating peas with a spoon, or making sinks out of stainless steel.[98]
In a Panel on Business Method Patents conducted by the US Internet Society, panellist Lawrence Lessig (a prominent US legal academic) made this contribution:
So, we've got to be figuring out now [whether business methods are patentable], but instead of figuring it out now, we're seeing the same debate occurring between lawyers and the rest of the world. We have our systems, we've been doing it for 150 years, we've always been doing it just like this and we should continue to do it like this for the rest of time and I say bullshit ... [W]e should be asking now, prove it to me that [the effect of the State Street decision] will improve innovation. Prove it to me first and if you can't prove it to me then you haven't the justification for changing a system of innovation which has produced the Internet.[99]
Such rhetoric is unhelpful and misleading. It is unhelpful because it fails to answer meaningfully the critical issue: if the current system is failing, how then does one go about defining logical exclusions for those activities regarded as not deserving the consideration of the patent system? And if the answer to this is put on the basis of some type of cost-benefit analysis, then it is incumbent upon those seeking change to identify clearly what is said to be the disparity between ‘costs’ and ‘benefits’ which justify such reform.[100] The rhetoric is misleading to the extent it suggests that the Internet was produced by a system of innovation brought about in part by the broad exclusions from patentability abolished in State Street. The absence of intellectual property protection in respect of the Internet’s basic technologies was referable to its publicly funded origins. Thus the source of the funding for ARPANET (forerunner to the Internet) was the US Department of Defence. The Defence Department did not want its contractors to rely upon any form of intellectual property protection which would fetter the work of its future contractors.[101] So that while it is true to say that the inception of the Internet was not the product of research driven by the promise of patent system, it is incorrect to infer that this was because of the existence of any broad exclusions from patentability. Rather, it was because the source of the funds for the research was public and not private capital. The promise of intellectual property rights was not required to allocate resources.[102]
While Lessig argues that the inclusion of business methods as patentable subject matter is prima facie undesirable, this essay concludes by asserting that any patent system is brought into disrepute by the creation of exclusions from patentability for want of an undefined ‘technical effect’, or because of some subjectively ascertained ‘general inconvenience’. With such vague standards, clear establishment rules are not achievable, and the efficacy of the patent system is diminished. There already exist criteria in Australian patent law that permit the relatively predictable establishment of rights. Australian patent law can find a way forward with respect to business methods through the principled development of those criteria.
[*] B Comm LLB (Hons) PhD (Melb). Lecturer, University of Melbourne Law School. This article has as its basis a paper delivered at the Australian Centre for Intellectual Property in Agriculture on 28 May 2002. I thank Justine Pila, Sam Ricketson, David Lindsay, Jonathan Carter, Peter Eckersley and Paul Clarke for their much valued input. Responsibility for the analysis and any errors rests entirely with me.
[1] [1998] USCAFED 107; 149 F 3d 1368 (Fed Cir, 1998).
[2] Robert P. Merges, ‘As Many as Six Impossible Patents Before Breakfast: Property Rights for Business Concepts and Patent System Reform’ (1999) 14 Berkeley Technology Law Journal 577; Rochelle Cooper Dreyfuss, ‘Are Business Method Patents Bad for Business?’ (2000) 16 Santa Clara Computer and High Technology Law Journal 263; and Brian Kahin ‘The Expansion of the Patent System: Politics and the Political Economy’ First Monday volume 6, number 1, January 2001, http://firstmonday.org/ issues/issue6_1/kahin/index.html .
[3] USPTO White Paper, Automated Financial or Management Data Processing Methods (Business Methods), 29 March 2000, http://www.uspto.gov/ web/menu/busmethp/index.html : ‘Class 705 [which encompasses machines and their corresponding methods for performing data processing or calculation operations, where the machine or method is utilized in the 1) practice, administration, or management of an enterprise, or 2) processing of financial data, or 3) determination of the charge for goods or services] has seen strong filing growth in FY 1998 and FY 1999’. The USPTO White Paper qualifies this observation with the caveat that ‘it represented only about 1% of the total patent applications filed at the USPTO in FY 1999. The 2658 applications filed in Class 705 did not even place it among the top five Communication and Information Processing technologies.’
[4] The two US patents are Walker Asset Management Limited, Method and Apparatus for a Cryptographically Assisted Commercial Network System Designed to Facilitate Buyer-Driven Conditional Purchase Offers, US Patent No. 5,794,207, granted 11 August 1998 (the Priceline.com patent) and Amazon.com Inc, Method and System for Placing a Purchase Order Via a Communications Network, US Patent No. 5,960,411, granted 28 September 1999 (the Amazon.com patent). These patents (and their ilk) have been the subject of considerable comment: ‘The Knowledge Monopolies’, The Economist, 8 April 2000 and ‘Patently Absurd?’, The Economist, 23 June 2001.
[5] [2001] FCA 445; (2001) 51 IPR 327.
[6] ACIP Issues Paper, Patenting of Business Systems, July 2002, available at http://www.acip.gov.au/
[7] It is useful at the outset to provide a particular illustration of the subject matter of what is said to be a ‘business method patent’. The features of the Priceline.com Internet ‘reverse-auction’ invention are:
• The use of a computer network to link sellers and prospective purchasers;
• A prospective purchaser communicating a purchase offer and associated credit card security to many sellers;
• A seller communicating acceptance of that offer to the purchaser, and
• Payment being effected by use of the credit card security: ibid n 4.
The central utility of the invention is that it permits a prospective consumer to set a public price for the acquisition of a type of commodity that he or she may be contractually bound to. As such, the business method in issue here has as its subject matter an invention that resides in the novel combination of communications technologies, commerce and contract law.
[8] In particular, section 18(1) of the Patents Act 1990 (Cth).
[9] Section 18(1)(a) provides that ‘an invention is a patentable invention for the purposes of a standard patent if the invention, so far as claimed in any claim is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies’. The Statute of Monopolies is the short title for ‘An Act Concerning Monopolies and Dispensations With Penal Laws and the Forfeiture Thereof’, 21 James 1 c 3, 1624.
[10] National Research Development Corporation v Commissioner of Patents [1959] HCA 67; (1959) 102 CLR 252, 269.
[11] [2001] FCA 445; (2001) 51 IPR 327, 354. Before the Full Federal Court – in an appeal that was argued but then settled prior to judgment – the attack on the patent was couched in terms of the ‘sound public policy objection … found in the final words of section six of the Statute of Monopolies’, which required a Court to consider the ‘general inconvenience that may follow from the upholding of the present patent so far as the field of electronic commerce is generally concerned’: Outline of Appellants’ Submissions, Catuity v Welcome Real-Time, Federal Court of Australia Victoria District Registry, 15 February 2002.
[12] [2001] FCA 445; (2001) 51 IPR 327, 354.
[13] See for example James Lahore et al, Patents, Trade Marks & Related Rights (2001), [12,155].
[14] See generally Bristol-Myers Squibb v FH Faulding [2000] FCA 316; (2000) 97 FCR 524 and Justine Pila, ‘Methods of Medical Treatment within Australian and United Kingdom Patents Law’ [2001] UNSWLawJl 30; (2001) 24 University of New South Wales Law Journal 420.
[16] Ibid 255.
[17] Allan Gomme, Patents of Invention - Origin and Growth of the Patent System in Britain (1946), 14.
[18] Merges above n 2, 585.
[19] Gomme above n 17, 14.
[20] Ibid.
[21] [1572] EngR 398; (1603) 11 Co Rep 84b, 77 ER 1260; Moore 671[1688] EngR 271; , 72 ER 830; Noy 173[1669] EngR 186; , 74 ER 1131. Edward Darcy happened to be a groom of Elizabeth’s Privy Chamber: Jacob I Corre, ‘The Argument, Decision and Reports of Darcy v Allen’ (1996) 45 Emory Law Journal 1261.
[22] D Seaborne Davies, ‘Further Light on the Case of the Monopolies’ (1932) 48 Law Quarterly Review 394; E Wyndham Hulme, ‘The History of the Patent System Under the Prerogative and at Common Law’ (1896) 12 Law Quarterly Review 141, 151-152; Harold G Fox, Patents: A Study in the History and Future of the Patents Monopolies (1947), chapter 7.
[23] Corre above n 21.
[24] One reporter was Sir Edward Coke who, as Attorney-General, argued the case on behalf of the patentee and was largely responsible for the drafting and introduction of the Statute of Monopolies itself. It appeared that he also spoke with some of the judges informally as to their reasons, prior to publishing his report: Corre above n 21, 1269-1272.
[25] [1572] EngR 398; (1603) 11 Co Rep 84b, 86b[1572] EngR 398; , 77 ER 1260, 1263.
[26] Ibid.
[27] (1603) Noy 173, 182[1669] EngR 186; , 74 ER 1131, 1139. While this broad concept included the first importation of a new machine or trade, the Exchequer Chamber had declared void patent grants for an ‘invention’ which could be shown to have been made on a false premise.
[28] Ibid.
[29] The Book of Bounty is reproduced in John W Gordon, Monopolies by Patents and the Suitable Remedies Available to the Public (1897), Appendix 1.
[30] Chris R Kyle, ‘“But a New Button to an Old Coat”: The Enactment of the Statute of Monopolies, 21 James I cap. 3’ (1998) 19 Journal of Legal History 203, 207 and Harold G Fox above n 22, 96-97.
[31] Kyle above n 30, 206.
[32] Fox above n 22, 115-116. Clause 1 of the Statute of Monopolies referred expressly to The Book of Bounty, adding, ‘nevertheless upon misinformation and untrue pretenses of public good, many such grants have been unduly obtained and unlawfully executed’.
[33] Fox above n 22, 115-6. See also Kyle above n 30, 216-217.
[34] Fox notes that this temporal limitation, and transferral of jurisdiction from the Exchequer to the Common Law courts, ‘were the only changes made by the statute in the common law’: Fox above n 22, 118.
[35] While the word ‘also’ does appear immediately before the words ‘they be not contrary to the law’, this should be understood as a reference to the similar qualification inserted in section 5 in relation to existing patents. Thus, the text of section 5 created a proviso from section 1 in respect of current patents for manners of new manufacture ‘so they not be contrary to the law ...’ Section 6, in light of this earlier provision, merely acknowledges the repetition of the proviso when it states: ‘so as also they not be contrary to the law ...’
[36] See also Justine Pila, ‘The Common Law Invention in Its Original Form’ [2001] Intellectual Property Quarterly 208 in which an extensive historical analysis revealed an absence of mutual exclusivity between the various aspects of invention derived from common law and codified in section 6.
[37] Joshua S. Gans, Philip L. Williams and David Briggs, ‘Intellectual Property: a Grant of Monopoly or an Aid to Competition’, Intellectual Property Research Institute of Australia Working Paper 7/02, December 2002, 6-7.
[38] Ibid 5-6.
[39] Michal Likhovski, Michael Spence and Michael Molineaux, The First Mover Monopoly – A Study on Patenting Business Methods in Europe by Olswang and Oxford Intellectual Property Research Centre, Oxford University (2000), 9: ‘The concept of a “business method” is notoriously difficult to define’. In re Schrader[1994] USCAFED 373; , 22 F 3d 290 (Fed Cir, 1994) Newman J at 297 described as ‘fuzzy’ the concept of a method of doing business exclusion for patent law purposes. The ACIP Issues Paper above n 6, 5 observes: ‘The term “business system” (or business method or scheme) is a generic one and not precisely defined in any jurisdiction.’
[40] ACIP Issues Paper above n 6, 5.
[41] The definition in full reads: ‘A “business system” is: (a) a scheme, plan or method of:
(i) administering, managing, or otherwise operating an enterprise or organisation, including a technique used in doing or conducting business; or
(ii) producing, analysing or processing financial or management data;
in a field of economic endeavour; and
(b) any computer assisted implementation of a systematic means described in (a)’. The European Patent Office has put forward that the term ‘methods of doing business’ applies ‘to a wide range of subject-matters which, while not literally methods of doing business, share the same quality of being concerned more with interpersonal, societal and financial relationships, than with the stuff of engineering – thus for example, valuation of assets, advertising, teaching, choosing among candidates for a job etc’: Japanese Patent Office, Report on Comparative Study Carried Out Under Trilateral project B3b, 14-16 June 2000, Appendix 6 - EPO Paper on Examination of ‘business method’ applications.
[42] ACIP Issues Paper above n 6, 5.
[43] [1959] HCA 67; (1959) 102 CLR 252. The significance of the decision has been widely acknowledged: Justine Pila, ‘Inherent Patentability in Anglo-Australian Law: A history’ (2003) 14 Australian Intellectual Property Journal 109, 148.
[44] Ibid 265.
[45] Claim 1 provided: ‘A method for eradicating weeds from crop areas containing a growing crop selected from leguminous fodder crops of the genera Trifolium and Medicago, celery and parsnip, which comprises applying to the crop areas a herbicide of the class consisting of the Ω-(2:4-dichlorophenoxy) -butyric and -caproic acids, their salts, esters, nitriles and amides’: ibid 261.
[46] The invention was said to achieve ‘an important improvement in the conditions in which the crop is to grow, whereby it is afforded a better opportunity to flourish and yield a good harvest’: ibid 277.
[47] The ACIP Working Group notes, however, that the definition of the term ‘business system’ was intended to include ‘methods which are not computer implemented’: ACIP Issues Paper above n 6, 5.
[48] Justine Pila, ‘Methods of Medical Treatment within Australian and United Kingdom Patents Law’ [2001] UNSWLawJl 30; (2001) 24 University of New South Wales Law Journal 420, 461.
[49] It is this policy which seems to inform the policy of the State Street decision which adopted the statement: ‘All of the “doing business” cases could have been decided using the clearer concepts of [patent law]. Patentability does not turn on whether the claimed method does “business” instead of something else, but on whether the method viewed as a whole, meets the requirements of patentability as set forth in … the Patents Act’: [1998] USCAFED 107; 149 F 3d 1368 (Fed Cir, 1998), adopting dicta of Newman J In re Schrader[1994] USCAFED 373; , 22 F 3d 290, 297 (Fed Cir, 1994).
[50] Ronald A Coase, ‘The Federal Communications Commission’ (1959) 2 The Journal of Law and Economics 1, 27.
[51] Ronald A Coase, “The Problem of Social Cost” (1960) 3 The Journal of Law and Economics 1.
[52] Coase above n 50, 27 (note 54).
[53] See for example, Andrew Christie, ‘Some Observations on the Requirement of Inherent Patentability in the Context of Business Method Patents’ (2000) 43 Intellectual Property Forum 16.
[54] [2001] FCA 445; (2001) 51 IPR 327, 354. Before the Full Federal Court – in an appeal that was argued but then settled prior to judgment – this was expressed ‘it is difficult to point to any apparatus that has been modified or affected by the method, so there is no obvious physical or “technical” effect’: Outline of Appellants’ Submissions, Catuity v Welcome Real-Time, Federal Court of Australia Victoria District Registry, 15 February 2002
[55] Australian Patent Office, Manual of Practice and Procedure – National (November 1999), [8.2.10]
[56] Article 52(1), (2) and (3) of the Convention provides: ‘(1) European patents shall be granted for any inventions which are susceptible of industrial application, which are new and which involve an inventive step.
(2) The following in particular shall not be regarded as inventions within the meaning of paragraph 1:
(a) discoveries, scientific theories and mathematical methods;
(b) aesthetic creations;
(c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers;
(d) presentations of information.
(3) The provisions of paragraph 2 shall exclude patentability of the subject-matter or activities referred to in that provision only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such’ (emphasis added).
[57] Ibid.
[58] ‘TRIPs’ is now a well-known acronym for the Agreement on Trade-Related Aspects of Intellectual Property Rights, 15 April 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, reproduced in Daniel Gervais, The TRIPS Agreement − Drafting History and Analysis (1998), 277. TRIPs article 27(1) goes on to provide that ‘patents shall be available and patent rights enjoyable without discrimination as to … the field of technology’.
[59] The Swiss proposal provided, ‘A patent shall be granted for any invention which meets the conditions of patentability. An invention may relate to a product or a process. Patents shall be available for inventions which satisfy the criteria of patentability, in all fields of technology’: Swiss proposal, WTO document number MTN.GNG/NG11/W/38, 11 July 1989.
[60] Negotiating Group on Trade-Related Aspects of Intellectual Property Rights, including Trade in Counterfeit Goods, Meeting of Negotiating Group of 12-14 July 1989, WTO document MTN.GNG/NG11/14, 12 September 1989, [79.4].
[61] Japanese Patent Office, Report on Comparative Study Carried Out Under Trilateral project B3b, 14-16 June 2000, Appendix 6 - EPO Paper on Examination of ‘Business Method’ Applications.
[62] Pension Benefit Systems Partnership Application, Case Number: T 0931/95 - 3.5.1, 8 September 2000.
[63] Ibid 16.
[64] Proposal for a Directive of the European Parliament and of the Council on the patentability of computer-implemented inventions, COM(2002) 92, 20.02.2002, article 4(2), 20.
[65] Ibid article 2, 20. The Explanatory Memorandum to the proposal stated that ‘the term “technical contribution” has been used in the case law of the EPO Boards of Appeals for many years. Consistent with the jurisprudence of the EPO, a technical contribution may result from
• the problem underlying, and solved by, the claimed invention;
• the means, that is the technical features, constituting the solution of the underlying problem;
• the effects achieved in the solution of the underlying problem;
• the need for technical considerations to arrive at the computer implemented invention as claimed’: ibid 15 (footnote omitted).
[66] Opinion of the Economic and Social Committee on the ‘Proposal for a Directive of the European Parliament and of the Council on the patentability of computer-implemented inventions’, OJ C 61/154, 14.3.2003, [3.1].
[67] Ibid [3.1.1].
[68] Ibid [3.2]. The Committee’s position appears to be consistent with the submission made in Welcome Real-Time that under Australian law a claim must exhibit a ‘physically observable effect’: above section 3.1.
[69] Amended proposal for a Directive of the European Parliament and of the Council on the patentability of computer-implemented inventions, European Parliament Session Document T5-0402/2003, 24.9.2003. The text of the proposed amendment is available at: http://swpat.ffii.org/papers/ eubsa-swpat0202/plen0309/resu/index.en.html
[70] Ibid draft article 2.
[71] Ibid (emphasis added).
[72] Justine Pila, Inherent Patentability in Australian, United Kingdom and EPC Law: A History, (PhD Thesis, University of Melbourne, 2003) 186 (footnotes omitted).
[73] Issues Paper above n 6, 19.
[74] Ibid.
[75] John Ayto, Bloomsbury Dictionary of Word Origins (2001), 522.
[76] [2001] FCA 445; (2001) 51 IPR 327, 353-354.
[77] This expression of the NRDC principle is offered by the Full Federal Court in CCOM v Jiejing [1994] FCA 396; (1994) 51 FCR 260, 295.
[78] Christie above n 53, 20.
[79] [1959] HCA 67; (1959) 102 CLR 252, 264.
[80] [2001] FCA 445; (2001) 51 IPR 327, 353.
[81] But see William van Caenegem, ‘The Technicality Requirement, Patent scope and Patentable Subject Matter in Australia’ (2002) 12 Australian Intellectual Property Journal 41 where the author argues, contrary to the position put here, that a technicality requirement serves the useful function in Australian patent law of circumscribing the scope of patentability.
[82] Australian Patent Office, Manual of Practice and Procedure – National (September 2002), [8.2.10.4]: ‘There is no explicit requirement in Australian law that a method must have a technical solution or advantage’ (emphasis in original). It might be questioned by those who dislike (viscerally or otherwise) business methods as patentable subject matter the appropriateness of a single judge of the Federal Court making such a ‘precedent-setting’ judgment. However, Heerey J had to make a decision as to the validity of the patent claims before him one way or the other. If his decision was to (say) find a broad, policy-based exclusion, this would arguably be an even more ‘precedent-setting’ judgment to the extent it cut across the clear philosophy expressed in NRDC. Rather than radical, Heerey J’s approach was in accord with existing authority.
[84] See generally David J Brennan and Andrew F Christie, ‘Patent Claims for Analogous Use on the Face of the Specification’ (1997) 25 Federal Law Review 237.
[85] (1838) 3 Hayward’s Patent Cases 125.
[86] Topicality exists because of reform to the Australian patent system has introduced a new second-tier patent, the ‘innovation patent’: Patents Amendment (Innovation Patents) Act 2000, No 140. The twelfth innovation patent granted in Australia was for a ‘circular transportation facilitation device’; a wheel: Innovation Patent No 2001100012, granted 13 June 2001. See generally, David Brennan, ‘2001 and He’s Patented the Wheel’, The Age IT1, 3 July 2001, 8.
[87] (1838) 3 Hayward’s Patent Cases 125, 141.
[88] (1940) 58 RPC 21, 23-24.
[89] Ibid.
[90] [1959] HCA 71; (1959) 102 CLR 232, 248.
[91] Ibid 249.
[92] (1995) 183 CLR 655, 663-665. While the expression of the opening words of section 18 have been now altered as a consequential amendment arising from the introduction of innovation patent protection (omitting ‘a patentable invention is an invention that’, and substituting ‘an invention is a patentable invention for the purposes of a standard patent if the invention’: Patents Amendment (Innovation Patents) Act 2000 No 140, schedule 1, item 6) it seems unlikely that this change in itself could give rise to an interpretation different from that arrived at by the Philips v Mirabella majority.
[93] [1998] HCA 19; (1998) 194 CLR 171, 191-193. Note that this was a decision under the Patents Act 1952 (Cth), however the court considered the effect of its earlier decision in Philips v Mirabella.
[94] See generally Clayton M Christensen, The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail (1997).
[95] Above n 4.
[96] The primary features of the method claim and its central utility are set out above n 7.
[97] Bryan Pfaffenberger and David Wall, Que’s Computer and Internet Dictionary (6th ed, 1995), 269.
[98] It seems that a recent Trilateral patent office study discerned a similar principle existed for business method patents in US, European and Japanese patent law: ‘To merely automate a known human transaction process using well known automation techniques is not patentable’: Japanese Patent Office, Report on Comparative Study Carried Out Under Trilateral project B3b, 14-16 June 2000, Consensus Summary.
[99] Internet Society Panel on Business Method Patents, Panel on Patents and the Internet, 3 October 2000, transcript at: http://www.oreillynet.com/ pub/a/policy/2000/10/23/isoc.html. See also Lawrence Lessig, The Future of Ideas (2001), 210-211.
[100] Richard A Posner, Economic Analysis of the Law (5th ed, 1998), 14-17.
[101] Janet Abbate, Inventing the Internet (1999), chapter 2.
[102] An ARPANET intellectual property issue that arose in the early 1970’s neatly illustrates the insignificance of intellectual property rights in this environment. The main ARPANET contractor was the private firm Bolt, Beranek and Newman (BBN). The US Defence Department was funding both BBN and a team of researchers at the University of California, Los Angeles (“UCLA”) to develop one aspect of the network. They were to achieve distributed control routing, so that there would be no one central location that might take down the network if it failed. To this end BBN had developed a flow control algorithm. However BBN then permitted the UCLA team to access only the algorithm, and not its underlying source code. This created a heated conflict between the two parties. The US Defence Department, funder of both, swiftly stepped in to resolve the issue. The Defence Department, as it was entitled to do under the terms of the funding contract, compelled BBN to make the source code available to any interested agencies or individuals for the cost of its reproduction. BBN’s attempt to assert property in its code was nipped in the bud. See Edward P Schelonka, “Resource Sharing With Arpanet” in Marshall Abrams et el (eds), Computer Networks: Text and References for a Tutorial (1975), 5-19; Charles Babbage Institute, Oral History Collection, An Interview with Leonard Kleinrock conducted by Judy O’Neil, 3 April 1990,10: http://www.cbi.umn.edu/oh/pdf.phtml?id= 175.
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