United States patent law development
The United States Court of Appeals for the Federal Circuit, sitting en banc, has provided guidance on how to determine whether a process is patentable. The decision, Ex parte Bilski1, may have an impact on Australian companies with a United States patent or application. It may also indicate a possible future direction of the Federal Court of Australia in determining its own guidance as to patentable processes.
The United States Court of Appeals was considering a claim to a method for managing the consumption risk costs of a commodity sold at a fixed price. A majority of the court held:
A claimed process is surely patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.
The majority labelled this the ‘machine-or-transformation test’ and held that the claimed method for managing consumption risk did not satisfy this test.
The test has some similarities with the requirements described by the Australian Federal Court. In the Grant2 decision the court considered a claim to a particular method of using a trust and a loan to protect an asset, and found that what is required for patentability is:
An artificial state of affairs, in the sense of a concrete, tangible, physical, or observable effect… A physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation is required.
However, the requirements set out by the Australian Federal Court were also formulated after considering on the United States State Street3 decision, which applied a test of a ‘useful, concrete, and tangible result’. In Bilski, the United States Court of Appeals held this test to be ‘inadequate’. It may be argued that the Australian Federal Court had this alleged inadequacy in mind by adding the requirement for an ‘observable’ effect and affirming a long line of cases holding that mere schemes or plans or other purely intellectual information is not patentable.
One issue that arguably has not yet been decided by the Australian courts is whether a method that is not patentable if claimed generally, becomes patentable if it is tied to a particular machine, for example a computer. The Australian courts may find persuasive some comments made by the United States Court of Appeals in Bilski, namely:
[E]ven if a claim recites a specific machine or a particular transformation of a specific article, the recited machine or transformation must not constitute mere ‘insignificant postsolution activity’.
and referring to a previous United States case:
We rejected the claim because it was merely an algorithm combined with a data-gathering step.
This requirement for something more than ‘insignificant’ activity could be viewed as consistent with the statutory test for patentable subject matter in Australia of a ‘manner of manufacture’. However, it must be remembered that the United States Court of appeals considered only claims to processes, not products and said:
We leave to future cases the elaboration of the precise contours of machine implementation, as well as the answers to particular questions, such as whether or when recitation of a computer suffices to tie a process claim to a particular machine.
Only time will indicate whether the Australian courts continue to follow the United States on what is patentable and where the line will be drawn between patentable and non-patentable computer-implemented inventions in Australia.
Endnotes
1. Appeal No. 2007-1130 (Fed. Cir. October 30, 2008)
2. Grant v Commissioner of Patents (2006) 234 ALR 230
3. State St. Bank & Trust Co. v. Signature Fin. Group, 149 F.3d 1368, 1370 (Fed. Cir. 1998)
This article was written by Carl Harrap, Senior Associate and John Dower, Partner, Sydney.
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