Deputy Commissioner of Patents says software and business methods not patentable?


Last Tuesday's Next carried an impassioned opinion piece by Richard Smallman (founder of the Free Software Foundation) on why the EU should not allow software patents.

In a sidebar (scroll to end, subscription may be required soon), a Deputy Commissioner for Patents appears to be reported as saying that, unlike the US, pure software and business methods are not patentable in Australia. He also refers to a September 2003 study that says that business methods should be excluded. (He did go on to say that software inventions are patentable when implemented on a machine as "A patentable software invention must involve some amount of ingenuity and produce a practical solution to a technological problem.)

It may be that the Deputy Commissioner is being misquoted, but then the Patents Office has recently ruled that a "reverse mortgage" is not patentable by resurrecting the so-called Morton Rules the rest of us thought had been killed off by the NRDC case: Peter Szabo & Associates Pty Ltd [2005] APO 24.

In rejecting the patent application the Deputy Commissioner declared:

36. I think it is a mistake to take the phrase ‘an artificially created state of affairs’ out of its context in the NRDC decision. In NRDC, the High Court was dealing with the question of whether a weed-free tract of land was an artificially created state of affairs. The phrase is used in the context of the proper interpretation of Morton’s rules. Historically, Morton’s rules were formulated at a time when most inventions were mechanical, chemical, or electrical. Since that time (and, indeed, since the NRDC decision) there are many new fields of technology – such as biotechnology and computing – that properly give rise to patentable inventions. I would describe the underlying concept of Morton’s rules as requiring the application of science or technology in some material manner. And the import of NRDC vis-à-vis Morton’s rules is about avoiding inappropriate fetters arising from terms like ‘vendible product’ that arise when science or technology is applied to new areas of endeavour. It is in this context that the phrase ‘artificially created state of affairs’ has relevance. It is artificial through the application of science or technology – not through the mere involvement of human endeavour in any manner or form.

and

47. My views expressed above relate to the proper interpretation of the meaning of ‘manner of manufacture’. I am aware that in the practice of the European Patent Office there is a requirement for the presence of a "technical effect". This requirement is of no direct relevance to interpreting the scope of manner of manufacture as used in the Patents Act 1990; however I do note that it is broadly consistent with the concept that patents for inventions relate to science and technology.

Hmmm. OK, Catutity did not involve a business method patent, but Heerey J did find the US reasoning in State Street compelling.

I don't know what study the Deputy Commissioner was referring to, but had thought ACIP had reached a different conclusion in its September 2003 report. Indeed, it specifically recommended (and the Government recently accepted) against amending Australian law to require a European style limitation of a "technical effect"??? For links, see here.

One might also have thought that importation of a requirement of technical effect by analogy to European law was highly contestable in light of the repeated strictures against importing into Australian law European concepts derived from quite different legislative/Conventional instruments. See the Full Federal Court in CCOM and the High Court in Alphapharm and Lockwood v Doric.

Posted: Sunday - 10 July, 2005 at 10:28 AM         |

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