Computer-implemented inventions patentability: Guidance from the FCAFC in Encompass

On 13 September 2019, a rare five-judge bench of the Full Court of the Federal Court of Australia handed down the highly anticipated judgment in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161 (‘Encompass’).

In a unanimous judgment, Allsop CJ, Kenny, Basanko, Nicholas, and Yates JJ (five eminent IP judges) upheld the trial judge’s decision in finding that Australian Innovation Patents 2014101164 and 2014101413 (‘the Patents’) were invalid. The invalidity of the Patents hinged on whether or not they described a ‘manner of manufacture’, a threshold an invention must meet to be considered patentable subject matter.

Encompass and SAI Global had alleged at trial that InfoTrack had infringed the Patents with its REVEAL data visualisation tool. However, Justice Perram, the trial Judge, held that the Patents were invalid.

Perram J didn’t consider that the patents involved a manner of manufacture because the invention did not achieve anything that couldn’t already be achieved on a computer. He saw the two patents as a process incorporating a combination of three existing inventions, but not themselves patentable inventions.

On appeal, the Full Court unanimously upheld the invalidity decision.

IP professionals were hoping that the appeal would provide much-needed clarity concerning the patentability of computer-implemented inventions. However, the Full Court determined that the ‘appeal does not provide the occasion for this Court to set out the metes and bounds of patentable computer-implemented inventions’.

As disappointing as that may be, there is some comfort to be had in the implicit statement that computer-implemented inventions can be patentable. The Full Court did also at least provide some guidance that will be useful to attorneys, IP lawyers, and inventors.

Computer-implemented inventions need not be an improvement to be patentable subject-matter

The Court reiterated that the test for a manner of manufacture is contextually separate to other elements of patentability, reiterating and confirming the long-standing decisions in CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260 and Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 (‘Research Affiliates’).

The Court conceded that ‘the primary judge made a number of statements about whether the method and apparatus described in the specifications resulted in a computer being used to do something it has not been used to do before’, which the appellants relied upon in submitting that the trial judge erred in his decision. The Court accepted ‘that his Honour’s use of this language suggests that other, conceptually distinct elements of patentability might have intruded into his Honour’s consideration of whether the claimed method and apparatus were directed to a manner of manufacture’. Even so, the Court came to the same decision as to the invalidity of the Patents.

A mere generic computer implementation of an otherwise abstract idea is not enough

The Court did not accept the appellant’s submission that the claimed method was itself a high-level description of a computer program. The Court reiterated that ‘patentable subject matter is not provided simply because the method is a “method ... in an electronic processing device”, which itself is not characterised’.

It found that the claimed invention was no more than mere computer automation that itself was not patentable.

The Court determined that the trial judge did not err in relying on Research Affiliates in finding that a method which brings about an artificially created state of affairs does not in and of itself constitute the claimed method as a manner of manufacture.

The Court reiterated that a mere generic computer implementation of an otherwise abstract idea is not enough to meet the test for a manner of manufacture.

A physical effect doesn’t automatically correlate with a finding of patentable subject-matter

The Court affirmed that an artificially created state of affairs of economic significance, as discussed in National Research Development Corporation v Commissioner of Patents [1959] HCA 67, ‘was not intended to be, and should not be seen as, a definition of “manner of manufacture” given that, in the same case, the High Court “had denounced the idea of an exact formula”.’

The Court reiterated that there is not, and should not be, an all-encompassing definition of what a manner of manufacture is. The Court found that it follows that a ‘satisfaction of such a formulation does not, in any event, mandate a finding of inherent patentability’.

Ultimately, the Court reflected that ‘the matter is of no great moment because none of the claims in either patent claim patentable subject matter in any event, given that none of them are directed to a manner of manufacture and cannot, therefore, satisfy s 18(1A)(a) of the Act.’

What happens next?

It had been hoped that Encompass would give a precedent-setting decision providing clarity on the patentability of computer-implemented inventions. Unfortunately, the Full Court appeared constrained by the bounds of the appeal and only gave limited assistance of a general nature.

However, what assistance has been given is of some use to practitioners.

IP Australia said in its 19 September 2019 Bulletin that the Commissioner of Patents will not alter current examination practice, but she will ‘take this opportunity to review the Manual to ensure [IP Australia’s] practice and procedures are reflected clearly and consistently in the relevant sections’.

Given the limited scope of the Encompass decision, its hard to see the examination approach to computer implemented inventions changing.

The Full Court’s decision may yet be appealed, and in any event another appeal on the patentability of computer- implemented inventions is sure to materialise before too long, providing another opportunity for clarity. In the meantime, the status quo is largely maintained.

I previously published two articles on this matter, the first concerning the key issues to be tried considered by the FCAFC and the second concerning the submissions of the parties to the appeal.