No Patent for Commercialising Inventions

Case: Invention Pathways Pty Ltd [2010] APO 10 (21 July 2010)

Delegate: Deputy Commissioner of Patents - P.M. Spann


Patentable subject matter is not to be determined merely on the presence of a physical effect resulting from the exercise of a method as claimed.  Rather, it must be an effect of such substance or quality that the method considered as a whole is proper subject matter for a patent.

Cross references in Bazpat:

Significant cases cited:  

The application

Invention pathways attempted to obtain patent protection for what was effectively a method of commercialising an invention.

Claim 1 defined the invention as having 6 steps that involved various business activities not specifically related to a particular apparatus or device. These steps could be regarded as commercialisation steps, with the first step being the filing of a patent application.

A seventh step involved the entry of information gathered in the first 6 steps into an  "electronically fillable checklist" The checklist was "computer implemented and stored in computer or human readable format in data storage means and associated with processing means to allow updating of the checklist."

The eighth and final step involved the policing of compliance with certain deadlines for the completion of sub-steps by producing reminders based on prescribed time limits.

During prosecution, the examiner objected on two grounds:
  1. The subject matter is not a manner of manufacture within the meaning of paragraph 18(1)(a) of the Act.  In support of this contention, the examiner said that there was "no direct involvement of any physical form or effect with the working of the claimed process and required to be present in Grant v Commissioner of Patents (supra).  Also there is no data transformation in connection with the above mentioned steps of the claimed invention disclosed."
  2. That the invention did not involve an inventive step.

Manner of Manufacture (Subject Matter)

The NRDC case is our landmark case.  Proper subject matter was summarised as a "mode or manner of achieving an end result which is an artificially created state of affairs of utility in the fields of economic endeavour."

In Grant, the Court found that a method of protecting an asset including the steps of establishing a trust, making a gift to the trust, making a loan from the trust and securing the loan was not a manner of manufacture.  The Court found that Mr Grant's method did not produce any artificial state of affairs, in the sense of a concrete, tangible, physical or observable effect." It said that "a physical effect in the sense of a concrete effect or a phenomenon or manifestation or transformation is required." The Court also found that the proposed scheme represented new use of known products (a trust, a gift, a loan and a security) with known properties for which their known properties make them suitable which was not proper subject matter.

In the Catuity case, the Court was not convinced that a "physically observable effect" was required.  It did note that what was claimed was not a business method but concerned a method and device involving components such as smart cards and POS terminals in a range of retail businesses.

The Delegate also considered the long-awaited Bilski decision, which appeared to be somewhat of an anti-climax when issued.  That Court commented on the "machine or transformation" test.  According to that test, proper subject matter would require the implementation of a machine or the transformation of something, such as data, from one form into another. There was some concern in the profession that the Supreme Court may have held that a particular machine may be necessary.  That would have rendered a large number of software-type patents invalid.  In any event, the Court held that while that test may be useful, it was just one test and not the only test (much to the profession's relief).

Invention Pathways contended that the necessary "physical phenomenon or effect" was provided by the creation of the electronically fillable checklist.  However, the Delegate referred to Szabo in which a number of cases were conveniently listed which demonstrated that the mere operation of a method on or with physical things, for example the application of ink to paper or the digging of utility conduits beside a roadway were not patentable.

The Delegate said that Grant was not suggesting that patentability was merely determined on the presence of a physical effect. Rather, he said that "it clearly must be an effect of such substance or quality that the method considered as a whole is "proper subject of letters patent according to the principles that have been developed..."

For practitioners it is important to note that our authorities frequently make reference to US law. In Bilski, the Supreme Court of the US confirmed that "the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of the formula to a particular technological environment" or adding "insignificant post-solution activity".

In applying Grant, the Delegate considered that the "concrete effect or phenomenon or manifestation or transformation" referred to must be one that is significant both in that it is concrete but also that it is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way.

In this case, the Delegate said that, unlike Catuity, the physical effect identified is peripheral and subordinate to the substance of the claimed method, which is a scheme for the commercialisation of inventions. There was no substantive effect produced through the operation of the computer which holds the "electronically fillable checklist" and such an effect does not arise from a synergistic interaction in the operation of the method on the computer or other physical elements.

The Delegate went on to say that the subject matter was, when considered as a whole, a scheme for the commercialisation of the inventions involving commercialisation steps and policing deadlines wherein the holding of information in an updateable form and production of reminders in a machine is merely a matter of convenience and does not result in a substantive effect that can be correctly considered to result in patentable subject matter.

In an alternative view, the Delegate found that the claimed method was not patentable because it merely represented the new use of a known product (a computer with standard software) with known properties for which its known properties makes it suitable. See the Microcell case.

It should be remembered that the Examiner and Delegate alike rejected the invention as claimed and not as it may be regarded by Invention Pathways.  That is to say that if it was possible to define the invention with reference to a software product, the Examiner may well have been in a position not to raise this ground of objection.  Of course, a patent with such a claim may very well have little value if the same result could have been achieved with the steps as claimed and rejected.


Almost every case on obviousness or its antithesis, inventive step, cites Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (supra). My post on this case is here:

Under s 7(2) an invention is taken to involve an inventive step when compared to the prior art base unless it would have been obvious to a person skilled in the relevant art in the light of the common general knowledge within Australia either when considered alone or together with information made publicly available anywhere in the world.

S 7(3) restricts that information to that which could be reasonably expected to have been ascertained, understood and regarded as relevant by the skilled person.

As far as common general knowledge is concerned, Invention Pathways contested that commercialisation agents in Australia would not have a detailed knowledge of the Paris Convention or the Patent Cooperation Treaty.  For example it contested that a commercialisation agent would not have considered that commercialisation should take place within 30 months from the relevant priority date.  The Delegate disagreed.  Personally, I would too, having dealt with a number of such agents over the years.

There were two prior art documents cited by the Examiner.   Invention Pathways contended that commercialisation agents do not routinely conduct patent searches.  Thus, it submitted that it follows that the prior art would not have been ascertained by the relevant skilled person.

The Delegate pointed out that the question was not whether or not in general commercialisation experts conduct patent searches as part of their work but whether they would have when faced with and seeking to solve a particular problem the invention is said to address.  As he pointed out, commercialisation agents rarely invent and develop their own inventions but, in the event that they do, he had very little doubt that they would conduct a review of the prior art including patent documentation.

The problem apparently addressed by the claimed invention was how to ensure that clients of commercialisation agents can achieve timely completion of the commercialisation process taking into account the relatively restricted timeframes associated with intellectual property registration.  The invention appears to rely on there being an advantage in having commercialisation steps undertaken before the end of 30 months after the priority date of a relevant patent application.  As the Delegate indicated earlier, he considered that the advantage was known and therefore did not find that an inventive step lay in identification of this problem.


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