A turning point in Australian software patents? Research Affiliates LLC v Commissioner of Patents [2013] FCA 71

This post concerns the decision Research Affiliates LLC v Commissioner of Patents [2013] FCA 71.  The Research Affiliates decision is not consistent with earlier decisions regarding the patentability of software in Australia, and has been largely followed by the IP Australia, who administrate Australian patents.

The title of the patent specification by research affiliates is Valuation in different non-capitalisation weighted index and portfolio. The invention by Research affiliates, roughly speaking, determines the quantity of a security to be included in a portfolio of securities.

The main claim is:
A method of constructing data indicative of a non-capitalization weighted portfolio of assets, the method being implemented in a computer system having at least one computer processor, the method comprising:
(a) receiving in the computer system data gathered in regard to a plurality of assets;
(b) receiving data indicating of selection of the plurality of assets to create data indicative of an index of assets, wherein said selection is selected based on an objective measure of scale other than market capitalization and share price; and
(c) receiving data indicative of a selection of the plurality of assets to create data indicative of an index of assets, wherein said selection is selected based on an objective measure of scale of said each of said plurality of assets,
wherein said weighting comprises:
(i) weighting at least on of said plurality of assets; and
(ii) weighting other than weighting based on at least one of market capitalization, equal weighting, or share price weighting.

As can be seen, the claim weakly ties the computing machine features to the claim. The computing machine feature is confined to the claim preamble. His Honour was of the view that:

The method of the claimed invention does not involve a specific effect being generated by the computer. The mere use of a computer necessarily carries with it the writing of information into the computer’s memory. There is a stark contrast between a computer-generated curve, or a representation of Chinese characters, or the writing of particular information on a smart card, on the one hand, and the quite unspecific index, on the other. There is no practical application in the method of the claimed invention for the improved use of computers. The effect of the implementation of the method is not to improve the operation of or effect of the use of the computer. There is nothing in the Specification or claim 1 that discloses how to produce the index.

Thus, there is nothing in the Specification or claim 1 to indicate:
-how data is accessed in step 1;
-the nature of the processing undertaken in step 2 to identify the selection of assets;
-how the weighting function is accessed in step 3;
-how the relevant measure of scale is chosen in step 4; or
-how the weighting function is applied in step 4 to assign a weighting to each asset.
The case propounded by Research Affiliates depends upon the proposition that information of economic significance, once entered into or produced by means of a computer, becomes an economically valuable artificially created state of affairs, and thus patentable. That proposition must be rejected. The implementation of the method of the claimed invention by means of a computer, at the level articulated in claim 1, is no more than the modern equivalent of writing down the index on pieces of paper. On the face of the specification, there is no patentable invention in the fact that the claimed method is implemented by means of a computer. The Specification asserts a patentable invention, not in the use of the computer, but in the particular series of steps that give rise to the generation of the index. Those steps could readily have been carried out manually. The aspect of computer implementation is nothing more than the use of a computer for a purpose for which it is suitable. That does not confer patentability.

From his comments, Justice Emmett appears to be highly influenced by the lack of detail in the description of the computer implementation of the method and the weak computing machine feature in claim 1. There are hints, I believe, in the above passage that his decision may have been different if there was a stronger link made out in the specification between the invention and the computing machine implementation. This emphasises again the importance of having a quality and detailed specification prepared by a patent attorney with an eye to detail and experience in detailing computer software inventions.

Some aspects of Justice Emmett’s decision are, with respect, problematic. The execution of the method by a computer system is, in my opinion, an artificially created state of affairs and there is clearly economic value. By NRDC and other authority discussed, the invention is in my view patentable. There is no precedent in Australian law to support the idea that execution of the method must at least one of generate a specific effect (presumably what is meant is a physical effect), improve the operation of a computer or the effect of the use of the computer. This is at the very least conflating the ideas of new with the idea of manner of manufacture, which the Authorities warn against. In CCOM, for example, their Honours where of the view that:

“While a claim for a ball point pen now would fail for anticipation and obviousness, it would still be a claim for a manner of manufacture. Yet in the present case there are passages in the reasons of the primary Judge which suggest he was influenced in the determination of the issue as to “manner of manufacture” by asking whether was claimed involved anything new and unconventional in computer use”
This opinion, however, is clearly not shared by everyone.