Patents – manner of manufacture – computer implemented inventions
The long-running saga of the Aristocrat patent applications (to an electronic gaming machine (EGM) functioning in a certain way), which has been running since 2018, continues, after Burley J held that he is not able to express a view that the majority of the Full Court purported to, or did, reach its decision in a manner that was contrary to the reasoning of previous cases, or that one set of High Court reasons should be preferred over another.
In potted summary:
- A delegate of the Commissioner of Patents determined that the claims were not a manner of manufacture.[1]
- The patent applicant, Aristocrat Technologies Australia Pty Limited appealed from that decision and the decision of the delegate was reversed by Burley J (first instance decision).[2]
- A Full Court subsequently reversed the first instance decision, with two judges (Middleton and Perram JJ, majority decision) giving one set of reasons for determining that the claims were not a manner of manufacture and one judge (Nicholas J, minority decision) providing separate reasons leading to the same conclusion. The Full Court determined that the matter should be remitted to the primary judge.
- Special leave to appeal to the High Court was granted. Six justices considered the matter but there was even division between them, three members of the Court deciding that the claims were not a manner of manufacture and that the appeal should be dismissed (Kiefel CJ, Gageler and Keane JJ) (dismissing reasons) and three members deciding that they were to a manner of manufacture and that the appeal should be allowed (Gordon, Edelman and Steward JJ) (allowing reasons).[3]
The consequence of the High Court’s split decision is that s 23(2)(a) of the Judiciary Act 1903 (Cth) applies, which provides that where the Court is equally divided, the decision of the Full Federal Court which is appealed from shall be affirmed. Accordingly, the Full Court decision was affirmed, and the remittal order made by the Full Court took effect.
On remitter, the parties agreed that the residual issues identified concerned whether claim 5 of the innovation patent number 2016101967 titled “A system and method for providing a feature game” (967 patent); claim 5 of innovation patent number 2017101629 (629 patent); and claim 5 of innovation patent number 2017101097 (097 patent) (as dependent on claims 1, 3 and 4) were to a manner of manufacture.
The parties agreed that if none of the residual claims were found to be for an invention that is a manner of manufacture, none of the claims of the 967 patent, 629 patent, 097 patent and a further related patent not the subject of separate submissions by the parties (innovation patent number 2017101098 (098 patent)) would satisfy the requirements of s 18(1A)(a) of the Patents Act.
There was a dispute between the parties as to the approach to be taken to the residual claims. Aristocrat contended that the Court should: (a) determine that the residual claims are for a manner of manufacture on the basis of the principles set out in the reasoning of the allowing reasons of Gordon, Edelman and Steward JJ; and (b) make factual findings as to whether the claimed invention involves a “technical contribution” of the type, it contends, the dismissing reasons “observed to be missing”. In contrast, the Commissioner submitted that the Court should apply the reasoning of the Full Court to reach the conclusion, consistent with its finding in relation to claim 1 of the 967 patent, that none of the residual claims is for a manner of manufacture.
Burley J was required to consider (a) the operation of s 23(2)(a) of the Judiciary Act; (b) the effect of the remittal order; (c) the relevance, if any, of the High Court decision to the determination of the residual issues; and (d) whether, in light of these matters, any of the residual claims are a manner of manufacture.
In short, Burley J held that: (a) s 23(2)(a) required that he apply the majority reasons of the Full Court (b) the remittal order also required him to apply the majority reasons of the Full Court; (c) the High Court decision was not relevant to the determination of the residual issues, because he was not permitted the latitude to discern from the High Court decision a relevant binding principle (and he was not persuaded that any principle emerges from it); and (d) in light of these matters, none of the residual claims are a manner of manufacture.
To understand why, it is helpful to review the previous decisions.
The Full Court
The majority decision of the Full Court
The majority decision of the Full Court (Middleton and Perram JJ) proposed a two-step analysis: (a) Is the invention claimed a computer-implemented invention? (b) If so, can the invention claimed broadly be described as an advance in computer technology? If the answer to (b) is no, the invention is not patentable subject matter. If the answer to (a) is no, one must then consider the general principles of patentability. The majority decision determined that claim 1 of the 967 Patent was to a feature game implemented on the computer, which is the EGM, and therefore to a computer implemented invention. The majority concluded that the integers embodied an abstract idea, which were a set of rules and a business scheme, and while the claimed invention may involve advances in gaming technology, it did not involve advances in computer technology.
The majority decision went on to consider whether, even if the invention was a mere scheme, it may be found to disclose patentable subject matter including because it is technical in nature and solves technical problems in, and involves technical and functional improvements to, the operation of EGMs. The majority held that they were not in a position to determine this issue, and that it was appropriate that the matter be remitted to the primary judge to determine any residual issues in light of the Full Court’s reasons.
The minority decision
The minority decision (Nicholas J) observed that although mere business schemes, and abstract ideas or information, have never been regarded as sufficiently tangible in character to constitute patentable subject matter, once a scheme is given practical effect and transformed into a new product or process which solves a technical problem, or makes some other technical contribution in the field of the invention, it may no longer be considered a mere scheme. The question is whether what may have begun as a mere scheme, an abstract idea or mere information, has been transformed in some definite and tangible way so as to result in a product or method providing the required artificial effect. There must be some technical contribution either in the field of computer technology or in some other field of technology to which the invention belongs.
The minority decision posed the question of whether there is anything about the way in which the game code causes the EGM to operate which can be regarded “as having transformed” what might otherwise be regarded as purely abstract information encoded in memory into something possessing the required artificial effect. Justice Nicholas observed that neither the specification nor the expert evidence suggested that the invention described and claimed in the specification was directed to any technical problem in the field of gaming machines or gaming systems, and that the invention is not directed to a technological problem residing inside or outside the computer.
The minority decision considered that the proceeding should be remitted to the primary judge to consider whether claim 1 of the 967 patent, or any of the other claims in issue, is a manner of manufacture on the basis that it involves technical and functional improvements to EGMs. That is, unlike the majority decision, the minority decision left room for a subsequent finding that the configurable symbols in claim 1, and the residual claims, might amount to a technical contribution to the field of gaming technology. Despite expressing agreement with the terms of the orders proposed by the majority decision, the remitter contemplated in the minority decision was broader in scope and would involve a further factual inquiry.
The High Court
The dismissing reasons
The dismissing reasons endorsed the approach of the minority decision, and therefore implicitly rejected the position that had been adopted by the majority decision in the Full Court. The dismissing reasons criticise the two-step analysis proposed by the majority decision as unnecessarily complicating the analysis of the critical issue, which is as to the characterisation of the invention by reference to the terms of the specification, and expressed the view that since a new idea implemented using old technology is simply not patentable subject matter, there was no occasion for the Full Court to consider remitting the proceeding to the primary judge to enable findings to be made as to whether the claimed invention made any technical contribution to the CGK of computerised gaming.
The dismissing reasons rejected an argument advanced by Aristocrat that the matter should be remitted for determination of the issue whether the claimed inventions involved a technical contribution, including in the field of gaming technology, on the basis that the essential question is to characterise the invention by reference to the claim in light of the specification as a whole and the CGK, not by reference to further evidence. The dismissing reasons concluded that the claim does not disclose any technical contribution to either computer or gaming technology outside the CGK, and that Aristocrat should not expect to be allowed to expand its appeal to extend the final resolution of the matter by remitting it for further litigation of issues of fact not adverted to when special leave was being sought.
The allowing reasons
The allowing reasons noted the concession made by the Commissioner at trial that if the relevant claim involved a mechanical implementation “using cogs, physical reels and motors to create the gameplay” then there would have been no doubt that the relevant claim was a manner of manufacture and observed that in the 21stcentury, a law that is designed to encourage invention and innovation should not lead to a different conclusion where such physical mechanisms are replaced by complex software and hardware that generate digital images.
The allowing reasons noted that in determining whether a manner of manufacture exists there is only one question, which is whether there is a manner of manufacture within s 6 of the Statute of Monopolies. That question should not be deconstructed to require, separately from the general principles of patentability, consideration of whether the subject matter is “computer-implemented”. The allowing reasons conclude that properly characterised, claim 1 is not a scheme or idea for a game that is separate from the external or artificial application of that game, because the operation of the game controller cannot be severed from the interdependent player interface in the EGM. The allowing reasons found that the claimed operation of the game controller, displayed through the player interface, is an altered EGM involving an artificial state of affairs and a useful result amounting to a manner of manufacture.
The question for Burley J on the remitter
Aristocrat contended that the operation of s 23(2)(a) of the Judiciary Act leaves it open to the Federal Court on remitter to apply the allowing reasons of the High Court in considering the residual claims and that the Court should make findings going to the “technical contribution” made in the residual claims based on the evidence led at trial. Burley J concluded that neither course was open to him.
His Honour considered that s 23(2)(a) yields the result that the decision appealed from applies (although that application is complicated by the fact that the Full Court made the remittal order which requires questions of substance to be considered). The terms of the remittal order were for determination of any residual issues in light of the Full Court’s reasons, including any issues which concern the position of the residual claims and the costs of the hearings before the primary judge.
The controversy between the parties was the application to be given to the words “shall be affirmed” in s 23(2)(a) of the Judiciary Act and the words “in light of the Full Court’s reasons” in the remittal order. The decision of the High Court does not create any binding precedent because only unanimous or majority decisions of that Court have binding authority.
Burley J concluded that the language of s 23(2)(a) is plain in its terms, and the decision of the Full Court in the present case has been “affirmed”. His Honour said that it was not correct to draw upon the reasoning of the High Court to influence the primary judge’s decision in the relation to the residual claims, because s 23(2)(a) is directed to ensuring an outcome in the case, without necessarily producing a binding precedent. The result is that the decision of the Full Court (including the reasons) remains in place. Justice Burley considered that those orders and the reasons for them bound him as a single judge.
Justice Burley also considered that the language of the remittal order, which gives effect to the decision of the Full Court, reinforces this conclusion. It required that he determine the residual issues “in light of the Full Court’s reasons including any issues which concern the position of claims other than claim 1”, which calls for the determination of the question of the manner of manufacture of the residual claims by having regard to the reasoning of the Full Court.
Burley J concluded that the consequence of these two matters is that, even if he were disposed to consider that a relevant principle of law emerges from the decision of the High Court, by virtue of the operative language of s 23(2)(a) and the remittal order, he was not permitted the latitude to discern from the High Court decision a relevant binding principle. Furthermore, Burley J was not persuaded that any principle emerges from the High Court decision that can properly be considered to be relevant to the remitter. He noted that although each of the High Court dismissing reasons and allowing reasons was critical of the two-step analysis set out in the Full Court majority decision, a review of each set of reasons indicates no uniformity of approach from which a ratio decidendi may be discerned.
In the dismissing reasons, the criticism of the majority decision was not as to the characterisation of the invention, or of the view that there must be some variation or adjustment to “generic computer technology” to give effect to or accommodate the needs of the new game ([73]). Rather, the dismissing reasons required consideration of those aspects of the claim that were considered to be “new” and it was only in relation to the feature game that the “invention” was claimed to subsist. The dismissing reasons considered that the claimed invention took its character as an invention from those elements, which were not part of the CGK and those elements did not include a component that produced “some adaptation or alteration of, or addition to, technology otherwise well-known in the common general knowledge” ([75]). On that basis, Burley J consider that the dismissing reasons distinguished the approach of the majority decision.
By contrast, his Honour viewed the allowing reasons’ rejection of the approach of the majority decision as more fundamental. The allowing reasons did not criticise the characterisation of the invention. However, the allowing reasons considered that the question of whether a claim is for a manner of manufacture should not be deconstructed to require, separately from the general principles of patentability, consideration of whether the subject matter is “computer-implemented”, and instead the implementation of a scheme or idea on a computer (as with any other machine) should create “an artificial state of affairs and a useful result” as propounded by NRDC. On that basis, the approach of the majority decision was rejected.
From this brief analysis, Burley J observed that it cannot be said that a common thread of reasoning can be discerned in the High Court decision that is critical of the two-step analysis in the majority decision. Rather, for reasons aligned with the differences of principle expressed between the dismissing reasons and the allowing reasons, each expressed a different basis for its critique.
Burley J also rejected the argument that only the allowing reasons are consistent with established High Court authority. His Honour observed that the dismissing reasons, without disagreement, refer to and apply the established authorities, including each of NRDC, Myriad, CCOM, Grant, Research Affiliates, RPL Central, Encompass and Rokt. At no point do the dismissing reasons criticise previous High Court decisions or purport to overturn existing Full Court authority. The allowing reasons of the High Court also refer to those authorities but consider that their application calls for a different outcome. Burley J concluded there was no basis upon which a single judge on remitter can form the view that the dismissing reasons must be set aside in preference to the allowing reasons. Nor did Burley J consider that on remitter it was available to him to express a view that the Full Court’s majority decision purported to, or did, reach its decision in a manner that was contrary to the reasoning of previous cases.
Burley J next rejected Aristocrat’s submission that the Court on remitter should make factual findings of the type that the dismissing reasons observed to be missing (which the first instance decision considered to be unnecessary when it held claim 1 to be a manner of manufacture), which would provide a basis for the Court to conclude that the residual claims are for an invention that involves a technical contribution, including in the field of gaming technology. His Honour observed that the majority decision rejected Aristocrat’s submission that, if the first instance decision was wrong in finding that claim 1 was not a manner of manufacture, then the Full Court should proceed to consider its Notice of Contention that the invention the subject of claim 1 of the 967 patent was nevertheless a manner of manufacture because it is “technical in nature and solves technical problems in, and involves technical and functional improvements to, the operation of EGMs” as procedurally misconceived. The majority decision noted that the evidentiary material necessary for consideration of that contention was not before it, and declined to find in favour of the Notice of Contention.
Justice Burley found that the basis for the majority decision’s remitter was “to determine any residual issues in light of the Full Court’s reasons”. His Honour concluded that it was apparent that, having failed to establish that the first instance decision was correct on a basis other than the reasons set out in that decision, the majority decision left no avenue open for Aristocrat to seek different or additional findings of fact to support an alternative analysis. The dismissing reasons rejected Aristocrat’s submission that the majority decision reflected error for failing to remit the matter for that purpose. Having regard to its conclusion that claim 1 of the 967 patent was for a manner of manufacture, it was not necessary for the allowing decision to address the question of remitter. Justice Burley concluded that no door was left open by which it could be said that the High Court considered that additional findings of fact on the basis of the expert evidence adduced ought to be reconsidered.
Burley J concluded that he was bound to follow the reasons set out in the majority decision in considering the patentability of the residual claims and that it was not open to him to consider whether those reasons are in conformity with established principle. Justice Burley observed that Aristocrat’s submissions proceeded on the basis that the Court was not bound by the majority decision. He considered that they ignored the terms of the remitter and proceeded on the basis that the hearing was a re-trial.
Having regard to the findings of the majority decision of the Full Court, in Burley J’s view, the only conclusion available was that the residual claims provided no additional features that would warrant a conclusion different to the conclusion reached by the majority decision in respect of claim 1 of the 967 patent.
Therefore, his Honour concluded that Aristocrat had not established that any of the residual claims is a manner of manufacture. The consequence is that the appeal from the decisions made by the delegate of the Commissioner of Patents on 5 July 2018 to revoke the 967 patent, 629 patent, 097 patent and 098 patent was dismissed.
The authors’ commentary
Burley J’s analysis of the law seems to these authors to have some force.
The effect of s 23(2) of the Judiciary Act is that the majority decision applies, and his Honour is bound by it. The remitter which was granted required his Honour to consider residual issues in light of the majority decision.
However, the authors understand Aristocrat holds a different view and is seeking leave to appeal the decision. So it appears a view about which minds might differ!
On any view, Burley J’s application of the law leads to the unsatisfactory result that his Honour was required to apply reasons which were roundly criticised (albeit on different bases) by both the allowing reasons and the dismissing reasons of the High Court.
Inevitably, this issue will wend its way back to the High Court, either via this proceeding or through another, similar, vehicle. The authors hope that any Full Court (or High Court) tasked with considering these issues on appeal will seek to reconcile the various authorities on this issue in order to provide practitioners with some much-needed guidance on this vexed and vexing area of the law.
[1] Aristocrat Technologies Australia Pty Limited [2018] APO 45.
[2] Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778 (Burley J).
[3] Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCA 29 (High Court decision)