Schemes and Business Methods
In NRDC at  the High Court stated that:
“The point is that a process, to fall within the limits of patentability which the context of the Statute of Monopolies has supplied, must be one that offers some advantage which is material, in the sense that the process belongs to a useful art as distinct from a fine art (see Re Virginia-Carolina Chemical Corporation's Application (1958) RPC 35, at p 36) - that its value to the country is in the field of economic endeavour.”
Implementation of an invention on a computer has been said to provide an artificially created state of affairs. However, in Research Affiliates LLC v Commissioner of Patents  FCAFC 150, the Full Federal Court found (at ) that:
“The characterisation of patentability by reference only to the description in NRDC of a product which consists of an artificially created state of affairs of economic significance was part of the High Court’s reasoning but did not represent a sufficient or exhaustive statement of the circumstances in which a claimed invention is patentable.”
They noted (at ) that the question to be asked, which was articulated by the High Court in NRDC (supra), was:
"Is this a proper subject of letters patent according to the principles which have been developed for the application of s. 6 of the Statute of Monopolies?"
The invention in Research Affiliates was a method of generating an index of securities to create a portfolio of assets. The Court in Research Affiliates found that, where the subject matter of the invention was a scheme merely implemented on a computer, then it was the invention in substance that needed to have the requisite characteristics of a manner of manufacture.
The Court in Research Affiliates noted that NRDC:
“spoke in terms of a separate result achieved by the claimed method that has its own economic utility consisting in the improvement. By this reasoning, the High Court directed attention to the subject matter to which the claimed method was directed, which needed to exhibit the required characteristics of a manner of manufacture to be patentable” (),
and the Court found that the invention did not have:
“any artificial or patentable effect other than the implementation of a scheme, which happens to use a computer to effect that implementation. There is no technical contribution to the invention or artificial effect of the invention by reason of the intervention of the inventors. To take the words of NRDC at 268, the process does not produce “either immediately or ultimately, a useful physical result in relation to a material or tangible entity.” The claimed method, the result of the ingenuity of the inventors, does not produce such a result; the ingenuity is in the scheme. Again, drawing from NRDC at 270, there is a useful result of the claimed process but there is no physical thing “brought into existence or so affected as the better to serve man’s purposes”. There is no “physical phenomenon in which the effect, be it creation or merely alteration, may be observed” (NRDC at 276).” ()
Consequently, where it is clear from the specification as a whole that an invention is truly a scheme, an abstract idea or mere intellectual information, which are not patentable themselves, then implementing that invention on a computer is not an artificially created state of affairs that can be held to be patentable (Research Affiliates at ).
While the use of a computer necessarily involves the writing of information into the computer’s memory, and it could be said that this means that there are a number of “physical effects” in the sense of transformed data and memory storage during the claimed process, that is not determinative of whether the invention is truly an artificially created state of affairs as required by NRDC. The Court in Research Affiliates at  made it clear that to consider such effects as sufficient to create the artificially created state of affairs was an impermissible “mechanistic application of the criterion of artificiality or physical effect”. It elevated form over substance. In other words the Court determined that the mere implementation of a scheme on a computer does not change the fact that the invention, properly construed, was a non-patentable scheme or abstract idea.
Research Affiliates indicated at  that:
“transformation of data occurring in the computer at each stage of the process, of accessing data, processing data, accessing the weighting function and applying the weighting function, culminating in the creation of an index”
are examples of mere implementation of a scheme that will not provide the requisite manner of manufacture.
It should be noted that the fact that computer implementation of a scheme is described in extensive detail does not necessarily mean that the requisite effect is achieved if this is merely a recital of standard computer hardware or software. Nor does the presence of elements of computer processing within the claims mean that the computer is integral to the invention for the purpose of determining whether a manner of manufacture is claimed. This would be raising form over substance.
Rather, it is necessary to consider the substance of the invention claimed in light of the description including the role and effect of computer implementation.
The same applies where a method operates on, or with, a physical object, or otherwise in a physical environment, other than a computer. The fact that some physical consequence or effect can be identified is not sufficient in itself to meet the manner of manufacture requirement.
For example, an invention such as a method of protecting an asset including steps of establishing a trust, making a gift to the trust, making a loan from the trust and securing the loan, as was the case in Grant v Commissioner of Patents  FCAFC 120, will not be patentable if it is merely implemented on a computer or includes the step of constructing the asset (e.g. a house) protected by the method.
In contrast, an invention that involves an improvement in the operation of, or effect of the use of, the computer will more likely be a manner of manufacture. For example, the Full Federal Court has considered that a claim directed to computer processing apparatus for assembling text in Chinese language characters (CCOM v Jiejing 28 IPR 481; (1994) AIPC 91-079) is a manner of manufacture. As a further example, the production of an improved curve image by computer (see International Business Machines Corporation v Commissioner of Patents (1991) 33 FCR 218) was held to be patentable. In each of these inventions the result was clearly a new and improved computer. The invention, as properly construed with regard to the specification as a whole, was not a scheme implemented by a computer. That is, these Federal Court decisions demonstrate that the invention was inextricably linked with the computer itself.
Patentable computer related inventions may be claimed in different forms. For example:
processing apparatus characterised by its method of operation;
software or programs in a machine readable form causing a computer to operate in an improved or better way when executed;
a computer, when programmed with code (source or executable) to operate in a particular way;
a computer readable medium containing program instructions to implement a particular method; or
a computer implemented method.
Regardless of the form that the invention is claimed in, if the invention is truly a scheme implemented on a generic computer, using standard software and hardware, then the invention will not result in an artificially created state of affairs and will lack a manner of manufacture.
Examiners are encouraged to consult OH&L if they are unsure whether to take a manner of manufacture objection following the principles of Research Affiliates.