Patentability of Software in Australia Affiliated with other Significant Jurisdictions
In Research Affiliates LLC v Commissioner of Patents the Full Court of the Federal Court of Australia can be seen to have further consolidated the law on the patentability of business methods and software.
Research Affiliate’s claimed invention involves a new method of selecting and weighting securities for inclusion in an index, where the method is implemented on a computer.
Research Affiliates appealed the Federal Court Judge’s decision, which found the patent application to lack patentable subject matter on the basis that the physical effect criterion was not satisfied by the mere implementation of the method on a computer. While the method is ‘computer-implemented’, the method is not tied to any particular hardware or software, nor does it have any effect on the computer architecture, and the specification provided no detail of the computer implementation. Indeed, the specification even made it clear that it is not necessary to implement the method on a computer.
The Full Court Judges did not contest the inventiveness of the idea, but nonetheless concluded that the idea was no more than an abstract idea and is consequently unpatentable. The inventive steps disclosed in the specification relate to the creation of the index as information and as a scheme, and the computer implementation forms no necessary part of that. Agreeing with the primary Judge, the Full Court Judges held that mere implementation of the method on a computer is not sufficient to confer patentability.
The Judges contrasted this with the scenario in which the computer is inextricably linked with the invention itself and which thereby satisfies the physical effect criterion of patentability. The Judges noted the finding of patentability in the Full Court’s earlier decision RPL Central Pty Ltd v Commissioner of Patents as an example of a computer being an integral part of the invention.
The Judges also found their approach to be consistent with the approach taken in other significant jurisdictions such as Europe, UK and the USA.
Circumventing Problem with Conventional Technique Not Inventive
In Lantana Ltd v Comptroller-General of Patents, Designs and Trade Marks the Court of Appeal considered the scope of the exclusion of computer programs from patentability.
The claimed invention is for a method of extracting and transferring data between two computers which are connected to the internet. By using the method a user on one computer can retrieve a file from the other computer by sending an email, which the other computer automatically responds to (with the file attached). Lantana asserted that this method eliminates the need for continuous connection between the computers, thereby reducing the risk of being hacked or of losing the connection.
The issue was whether the invention’s technical contribution to the prior art consists of excluded matter, given that subsection 1(2)(c) of the Patents Act 1977 excludes computer programs as such from patentability. The hearings officer held that the method did not make the computers run more efficiently or effectively and that it circumvents rather than solves the problems of maintaining a good continuous connection by simply not using a continuous connection. The High Court Judge also maintained the excluded matter objection.
Before the Court of Appeal it was argued that the Judge should have examined the claim as a whole rather than breaking it down into constituent parts. However, this submission was rejected, since determining whether there was a relevant technical step outside the computer program required breaking down the invention into its constituent parts. It was pointed out that the Judge had also made an overall analysis when concluding that in substance the claim relates to computer software running on conventional computers connected by a conventional network.
The Court of Appeal held that each of the steps alleged to make a technical contribution in fact were entirely conventional by the priority date. The method also did not solve a technical problem either inside or outside of the computers utilized. Consequently, there was no identifiable inventive step outside the computer program as such. The Court also clarified that circumventing a problem can be inventive, but that it was not the case here where it involved the use of a conventional technique.
United States of America
CAFC Advertises that Ultramercial's Method is Free to Use
In Ultramercial Inc v Hulu LLC the Court of Appeals for the Federal Circuit (CAFC) applied the Supreme Court’s recent patent eligibility criteria in finding that Ultramercial’s patent for a method of providing advertising in connection with streaming media patent ineligible.
Ultramercial’s patent claimed a method of distributing media over the internet, wherein consumers could access copyrighted material for free after viewing an advert. It is noteworthy that in June 2013 the CAFC made a finding that the same patent was patent eligible. That decision was appealed to the Supreme Court, which remanded it back to the CAFC to rule on in light of the Supreme Court’s intervening decision in Alice Corp v CLS Bank Intl.
In its Alice decision the Supreme Court established a two part test for determining patent eligibility. Namely: (1) Is the claim directed to an abstract idea? (2) If so, are there other elements in the claim sufficient to ensure that the claim amounts to significantly more than the abstract idea itself?
Applying this post-Alice analysis, the CAFC held that the claims described nothing more than the abstract idea of showing an advert prior to providing free access to copyrighted content. Ultramercial’s patent also failed the second part of the test, since the computer implemented method was held to involve nothing more than well-understood, routine and conventional activity.
At a general level the CAFC also held that the transformation of data by a computer could not satisfy the machine or transformation test since any transformation from the use of computers or transfer of content between computers is merely what computers do.
The CAFC also interpreted the Supreme Court’s Alice precedent to be consistent with the proposition that claims directed to entrepreneurial objectives, such as methods for increasing revenue, minimizing economic risk, or structuring commercial transactions are impermissibly abstract.
By contrast patent eligibility requires satisfying the technological arts test. Claims must harness natural laws and scientific principles and use them to solve seemingly intractable problems by not only describing a technological objective, but also setting out a precise set of instructions for achieving it.
ACIP Shapes the Options for Australia's Design System
The Advisory Council on Intellectual Property (ACIP) has released its options paper following its review of the Australian designs system.
Notable options for change include:
• Substantially reducing the fees due for multiple designs, which would encourage applicants to protect multiple embodiments of a product.
• Joining the Hague Agreement. This would require extending maximum term from 10-years to 15 years. ACIP supported the suggestion that the additional 5-years of protection should only be available to certified designs. It was also noted that there could be difficulties with filing representations that satisfy the requirements of different jurisdictions.
• Introducing a 6-month grace period for prior disclosure by the applicant.
• Introducing the option of deferred publication of up to 6-months.
• Whether ‘partial designs’ should be allowed – namely whether isolated parts of an integrated product should be separately protectable.
• Allowing protection for computer screen display designs.
• Introducing border protection measures. Although this may need to be limited to identical designs and exclude partial designs (if introduced) so as to relieve Customs of the burden of assessing whether there is a substantial similarity in overall impression.
• ACIP does not support introducing an unregistered design right.
Submissions are requested by 23rd January 2015.
3. Trade Marks
High Court Keeps In-Tune with Prior Precedent in Finding Cantarella's Marks Inherently Adapted to Distinguish
In Cantarella Bros Pty Limited v Modena Trading Pty Limited the High Court made a finding on when words used as trade marks can be inherently adapted to distinguish goods of one trader from another. The expression “inherently adapted to distinguish” first appeared in the UK Trade Marks Act 1938 and made it into Australian legislation by way of the Trade Marks Act 1955.
Cantarella had registered ORO and CINQUE STELLE in respect of various coffee products in class 30. After Modena made use of the marks, which mean ‘gold’ and ‘five stars’ respectively in Italian, Cantarella initiated infringement proceedings, while Modena cross-claimed for cancellation on the basis that the marks are not inherently adapted to distinguish the goods for which they are registered. Cantarella succeeded in its infringement action before the Federal Court, but this was overturned by the Full Court of the Federal Court, who held that the registrations should be cancelled.
A point of contention in the High Court proceedings was the correct test to be applied for determining when words being used as a mark are inherently adapted to distinguish. Cantarella favoured previous High Court precedent, which applied the following test:
“by reference to the likelihood that other persons, trading in goods of the relevant kind and being actuated only by proper motives – in the exercise, that is to say, of the common right of the public to make honest use of words forming part of the common heritage, for the sake of the signification which they ordinarily possess – will think of the word and want to use it in connexion with similar goods in any manner which would infringe a registered trade mark granted in respect of it.”
However, Modena favoured the earlier UK House of Lords precedent in the W & G Du Cros case, which held that the registrability of a trade mark as distinctive should:
“largely depend upon whether other traders are likely, in the ordinary course of their business and without any improper motive, to desire to use the same mark, or some mark nearly resembling it, upon or in connection with their own goods.”
In its majority decision the High Court applied its previous precedent, including the Mark Foy’s TUB HAPPY case, to hold that determination of words inherent adaption to distinguish requires consideration of the ordinary signification of the words to persons in Australia concerned with the goods to which the trade mark is to be applied. Whereas the Full Court criticised the Federal Court Judge’s view of common heritage and ordinary signification as ‘Anglo-centric’, the High Court considered the Full Court had wrongly found that the evidence showed the words to be words that other traders have and were likely to want to use in trade.
The Court found that ORO and CINQUE STELLE were not shown to convey a meaning or idea sufficiently tangible to anyone in Australia concerned with coffee goods as to be words having a direct reference to the character or quality of the goods. Accordingly, the Court held that the trade marks were inherently adapted to distinguish the goods for which they were registered from the goods of other traders.
In NYDJ Apparel LLC v Commissioner of Trade Marks NYDJ successfully appealed an Assistant Commissioner’s decision in which registration of their mark was refused. NYDJ’s mark is for a criss-cross stitching pattern applied to the inside of the two front pockets to designate that the jeans contain slimming panels. The mark is not visible when the jeans are worn.
The Assistant Commissioner considered the design had a “low level” of inherent distinctiveness and that other traders may wish to use such a mark without improper motive. The Assistant Commissioner also considered that consumers may assume it to be functionally related to the technical function of the slimming panels, and it was also noted that the mark is applied in a location that consumers are not accustomed to finding a trade mark. Regarding acquired distinctiveness the Assistant Commissioner was not convinced that purchasers would view the criss-cross stitching as a trade mark and that, due to the hidden nature of the mark, nor would the general public.
The Court acknowledged that the stitching could be viewed as merely functional, but also recognized that stitching can and has functioned as trade marks on jeans. It was noted that while the specification was not delimited as such, in-use the criss-cross stitching is in the contrasting colour of red or purple. NYDJ agreed to amend the ‘explanation’ associated with the mark and to subject the mark to a disclaimer regarding stitching in a criss-cross pattern in general. Subject to these and some other minor changes the Court considered the mark has an inherently distinctive character.
The Court also considered NYDJ had done enough to establish acquired distinctiveness and considered that the Assistant Commissioner reached the opposite conclusion on account of setting the evidentiary bar too high. NYDJ used the criss-cross symbol in its promotional activities and on ‘fit days’ a ‘fitting expert’ would point out the distinguishing stitching to customers. Evidence also showed that retailers regarded the stitching as distinctive and associated it with NYDJ.