Advanced New Technologies Co., Ltd.
[2021] APO 33
•25 August 2021
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Advanced New Technologies Co., Ltd. [2021] APO 33
Patent Application: 2019204731
Title:Product promotion using smart contracts in blockchain networks
Patent Applicant: Advanced New Technologies Co., Ltd.
Delegate: M. G. Kraefft
Decision Date: 25 August 2021
Hearing Date: Written submissions filed on 30 April 2021.
Catchwords: PATENTS – section 45 – examiner’s objection – whether invention is a manner of manufacture – acknowledgement of presence of technical features – no unusual technical effect – absence of technical contribution – application refused.
Representation: Patent attorney for the applicant: Spruson & Ferguson.
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2019204731
Title:Product promotion using smart contracts in blockchain networks
Patent Applicant: Advanced New Technologies Co., Ltd.
Date of Decision: 25 August 2021
DECISION
The claims of the present application, as proposed to be amended, do not define a manner of manufacture. Moreover, there is nothing of substance in the body of the specification to overcome this finding.
The application is refused.
REASONS FOR DECISION
BACKGROUND
Alibaba Group Holding Limited filed patent application 2019204731 as an international application under the Patent Cooperation Treaty (“PCT”) on 8 April 2019 (“the priority date”). By way of assignments, the application is presently proceeding in the name of Advanced New Technologies Co., Ltd (“the applicant”).
The application has been subjected to three examination reports. Throughout the examination history of the application, the examiner has maintained that the claims, including claims as proposed to be amended, do not define a manner of manufacture.
On 20 April 2021, the applicant requested to be heard.
While the final date for acceptance of the application was 27 May 2021, patent sub-regulation 13.4(1)(g) may be available to extend the time for gaining acceptance to 3 months from the date of the present decision.
SPECIFICATION
The alleged invention relates to product promotion using smart contracts in blockchain networks. As background, the specification notes that distributed ledger systems enable participating entities to securely and immutably store data. Distributed ledger systems can also be referred to as consensus networks or blockchain networks. Examples of blockchain networks can include consortium blockchain networks provided for a select group of entities. A consortium blockchain network can control the consensus process for the select group of entities. The consortium blockchain network includes an access control layer.
The specification describes a coupon as a type of marketing means endorsed by merchants, through which consumers can obtain cheaper products or services. In turn, merchants can get more customers. Coupons can include printed or electronic coupons. When issuing electronic coupons, merchants often generate and associate unique identifiers with the coupons. Typically, the unique identifiers are stored in a centralized data store. Consumers can obtain a unique identifier of a coupon through relevant products and then redeem the corresponding rewards. If the centralized data store is invaded, hacked, or otherwise impaired, coupon information may be leaked, resulting in invalid activities and serious financial losses. In some instances, the unique identifier can be guessed or otherwise deciphered.
The specification states that it is desirable to have an effective means to protect the coupons from being leaked, maliciously deciphered, and other consequences.
The specification, as most recently proposed to be amended on 26 November 2020, ends with 21 claims. Claims 1, 8 and 15 are independent claims. Claim 1 reads as follows.
1.A computer-implemented method for product promotion using a smart contract in a blockchain network, the method comprising:
receiving, by a node of a blockchain network, a creation request to create a promotion event, wherein:
the promotion event is associated with a plurality of promotion codes,
the promotion event is associated with a pair of a private key and a public key for identifying the promotion event, and
the creation request comprises the public key, a digital signature generated using the private key, and one or more rules of the promotion event;
determining, by the node and based on the public key and the digital signature, validity of the creation request; and
in response to determining that the creation request is valid, registering, by the node, the promotion event in the blockchain network using a smart contract, comprising:
inputting, by the node, the rules into one or more functions of the smart contract;
executing, by the node, the one or more functions of the smart contract; and
storing, by the node, the rules in the blockchain network without storing the plurality of individual promotion codes in the blockchain network;receiving, by the node, a redemption request to redeem a promotion code of the plurality of promotion codes, wherein the redemption request comprises the promotion code, an identifier (ID) of the promotion event, and a digital signature of the redemption request signed using the private key;
identifying, by the node and based on the ID of the promotion event, the public key of the promotion event and the rules;
determining, by the node, that the redemption request is valid based on the digital signature of the redemption request and the public key;
after determining that the redemption request is valid, transmitting a notification indicating a success of the redemption request based at least on executing the smart contract; and
determining, by the node and based on the rules, if the promotion code is valid by executing the smart contract.
Claim 8 is directed to a non-transitory computer-readable storage medium storing one or more instructions executable by a computer system to perform operations in similar terms to that of claim 1.
Claim 15 is directed to a system comprising one or more computers and one or more memory devices inter-operably coupled with the one or more computers, and having non-transitory machine-readable media storing one or more instructions that, when executed by the one or more computers, perform operations in similar terms to that of claim 1.
APPLICABLE LAW
The present application is governed by the Patents Act 1990 (“the Act”) as amended by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (“the Raising the Bar Act”). Amendments to sections 7, 40 and 49 of the Act apply to the present case as a consequence of Schedule 1, items 55(1)(d) and 55(4)(a), and Schedule 6, item 133(7)(d) of the Raising the Bar Act. The application was filed after 15 April 2013.
Thus, the standard of proof that applies in the present case is the balance of probabilities (subsection 49(1)). I must accept the application if satisfied on the balance of probabilities that the application complies with the Act. If I am not so satisfied, then I can refuse the application.
Section 18 of the Patents Act 1990 relevantly provides that:-
(1)Subject to subsection (2), an invention is a patentable invention for the purposes of a standard patent if the invention, so far as claimed in any claim:
(a) is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies; and …
CASE LAW
The principles of law in respect to manner of manufacture, arising from the High Court decisions in National Research Development Corporation v Commissioner of Patents (“NRDC”), [1959] HCA 67, (1959) 102 CLR 252, and D’Arcy v Myriad Genetics Inc (“Myriad”), [2015] HCA 35, are well-documented in previous office decisions. The authorisation of a case-by-case methodology would also be apparent from the High Court decisions.
That case-by-case approach must have regard to the substance of the claimed invention, not simply the form of the claim. The point was made succinctly in the Myriad case by Gageler and Nettle JJ. At [144]:-
“Whatever words have been used, the matter must be looked at as one of substance and effect must be given to the true nature of the claim.”
In Commissioner of Patents v RPL Central Pty Ltd (“RPL”), [2015] FCAFC 177, the Full Court of the Federal Court stated the same thing in the context of an invention that was in substance a scheme. At [96]:-
“A claimed invention must be examined to ascertain whether it is in substance a scheme or plan or whether it can broadly be described as an improvement in computer technology. The basis for the analysis starts with the fact that a business method, or mere scheme, is not, per se, patentable. The fact that it is a scheme or business method does not exclude it from properly being the subject of letters patent, but it must be more than that. There must be more than an abstract idea; it must involve the creation of an artificial state of affairs where the computer is integral to the invention, rather than a mere tool in which the invention is performed.”
Moreover at [98]:-
“It is not a question of stating precise guidelines but of deciding, in each case, whether the claimed invention, as a matter of substance not form, is properly the subject of a patent”.
In Research Affiliates LLC v Commissioner of Patents (“Research Affiliates”), [2014] FCAFC 150, the Full Court of the Federal Court noted a distinction between mere implementation of an abstract idea in a computer and implementation of the idea in a computer that created an improvement in the computer. At [103]:-
“… there is a distinction, between mere implementation of an abstract idea in a computer and implementation of an abstract idea in a computer that creates an improvement in the computer”.
Moreover, at [114] of Research Affiliates:-
“The invention set out in the specification is directed to the index itself. The method of the invention is not one that has 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.”
In also discussing the requirement for the contribution to be technical, the Full Court in RPL stated as follows, amongst other things, at [99]:-
·“It is necessary to ascertain whether the contribution to the claimed invention is technical in nature …
·One consideration is whether the invention solves a ‘technical’ problem within the computer or outside the computer, or whether it results in an improvement in the functioning of the computer, irrespective of the data being processed.
·Does the claimed method merely require generic computer implementation?
·Is the computer merely the intermediary, configured to carry out the method using a computer readable medium containing program code for performing the method, but adding nothing to the substance of the idea? …”
In Aristocrat Technologies Australia Pty Limited v Commissioner of Patents (“Aristocrat”), [2020] FCA 778, Burley J formulated a two-stage process as follows. At [91]:-
“… an initial question of whether the claimed invention is for a mere scheme or business method of the type that is not the proper subject matter of a grant of letters patent. Once that question is answered in the affirmative, the subsequent inquiry becomes whether the computer-implemented method is one where invention lay in the computerisation of the method, or whether the language of the claim involves (to use the language employed in Rokt at [84]) ‘merely plugging an unpatentable scheme into a computer’.”
SUBMISSIONS
In written submissions, the applicant outlined the relevant principles of law before turning to describing the substance of the invention and how that met the requirements for patentable subject matter. The applicant referred to several paragraphs of the specification in support.
Firstly, there is the way the node registers the promotion event in the blockchain network using a smart contract. In particular, the applicant stated that, rather than the traditional approach of storing all data of an event in the blockchain network, the smart contract executes to create an event whereby promotion codes are not stored in the blockchain network. In this way, storage space is saved. Moreover, it relieves the blockchain network from concurrently uploading into the blockchain network a large number of promotion codes of the promotion event. It also prevents the leakage of promotion codes.
Secondly, there is the way that data is protected. Enhanced security is provided in a form that, if a code was obtained by hacking, the hacker would require the identification, the code and the digital signature in addition to meeting the rules of the smart contract.
The applicant noted the nature of blockchain technology incurring costs of computation and memory. Moreover, while the technology provides a general benefit of security in that blockchains are immutable, that immutability comes at a cost of lack of flexibility. The applicant stated that the claimed invention worked around this by allowing promotion codes to be stored outside the blockchain network, even though the corresponding promotion event is registered on the network, while also protecting the codes. The applicant put it that the claimed invention used blockchain technology in association with smart contract and cryptographic techniques to allow a promotion to be redeemed in a manner that is secure yet computation- and storage-efficient. The applicant described the effect as concrete, tangible and physically observable. It related to a technical problem and created a new and improved result in the computer system.
SUBSTANCE OF INVENTION
The claimed invention clearly involves a product promotion and redemption scheme. On the other hand, the claimed invention also clearly relates to the use of a blockchain network, the execution of smart contracts and the use of encryption keys to enhance the integrity of promotion events and promotion codes.
The node of a blockchain network is central to the claimed invention, in its broadest form, in the present case. It receives a creation request to create a promotion event. In described embodiments, a merchant, through a merchant server, may be the originator of the creation request. In some embodiments, the merchant server can be a node. In any case, as claimed, the node then determines the validity of the creation request based on a public key and a digital signature generated using a private key, where both keys are associated with the promotion event. On determining that the creation request is valid, the node registers the promotion event in the blockchain network using a smart contract. As claimed, the latter process comprises the node inputting the promotion event rules into one or more functions of the smart contract, executing the one or more functions of the smart contract, and storing the rules in the blockchain network without storing individual promotion codes in the blockchain network.
In respect to the redemption process, the node receives a redemption request to redeem a promotion code of the plurality of promotion codes. In the described embodiments, a consumer may be the originator of a redemption request. As claimed, the node then identifies the public key of the promotion event and the rules based on an identifier of the promotion event associated with the redemption request. The node then determines the validity of the redemption request based on the digital signature of the redemption request and the public key. On determining that the redemption request is valid, a notification is transmitted indicating a success of the redemption request based at least on executing the smart contract. The node then determines, based on the rules, if the promotion code is valid by executing the smart contract.
In summary, the substance of the claimed invention, in its broadest form, resides in the enablement of a product promotion and redemption scheme using certain hardware and software in certain ways. The promotion event creation and redemption requests are validated using public-key cryptography. If a creation request is valid, the promotion event is registered in the blockchain network using a smart contract. The registration process involves selective storage of the rules of the promotion event in the blockchain network but not the storage of individual promotion codes in the blockchain network. If a redemption request is valid, a notification of such is transmitted based at least on executing the smart contract. The validity of promotion codes is determined by executing the smart contract.
It is thus clear that the claimed invention relates to a marketing scheme to enable product promotion, for example by merchants, and enable product redemption, for example by consumers. That is a business scheme. In considering the Aristocrat decision, the question then is whether the computer-implemented method is one where invention lies in the computerisation of the method, or whether the language of the claim involves merely plugging an unpatentable scheme into a computer.
DISCUSSION
History
In computing, key encryption has been part of the state of the art for data and communications security for a considerable period before the priority date.[1] Blockchain technology and smart contracts are more recent. Nonetheless, those concepts may also be dated before the priority date, and back as far as the 1990s.[2] The Advanced New Technologies Co., Ltd decision (“the ANT decision”), [2021] APO 29, at [44] and [45], also describes some useful understanding of blockchain technology at the relevant time.
[1] G. J. Simmons, “Public-key cryptography”; G. Iredale, “History of Blockchain Technology”, >
At the priority date of the present application, blockchains were well known in the art as specific types of databases where data is collected together and held in blocks. The blocks have certain storage capacities and, when filled, are chained onto the previously filled block, forming a chain of data, hence the blockchain. All new information that follows a freshly added block is compiled into a newly formed block that will then also be added to the chain once filled. Before storing in a block, individual data is cryptographically hashed. In simple terms, that is a process of data transformation into a fixed-length hash value, regardless of data size. The hash values for individual data elements are themselves hashed to ultimately provide a block hash. Moreover, each block is linked with the previous block with a cryptographic hash of the previous block in the chain.[3]
[3] Specification [032], [033] and [022].
The system inherently makes an irreversible timeline of data when implemented in a decentralised nature. Each block in the chain is given a timestamp when it is added to the chain.[4] In a blockchain network, each node or selected nodes may have a full record of the data that has been stored on the blockchain since its inception. If one node has an error in its data, or it is tampered with, other nodes within the network may be used as a reference to correct the data. Thus, no single node within the network can alter information held within it. To change such information, a majority of the decentralised network’s computing power would need to agree on the change. Thus, data in each block of a blockchain is essentially irreversible.
[4] Specification [022].
On the face of it, the term “smart contracts” may appear somewhat unusual. Smart contracts are neither intelligent tools nor are they contracts in the legal sense. They are little more than business rules translated into software. Effectively, a smart contract is a self-executing contract with the terms of agreement between parties being directly written into lines of code. The contract operates on an “if-then” principle. If certain conditions are met then the contract will automatically execute. For example, the ownership of a home will only be passed on to a buyer’s account when the agreed amount of money is sent to the system. The code controls the execution. The code and the agreements contained therein exist across a decentralised blockchain network and transactions are trackable and irreversible. Moreover, smart contracts require an environment that supports key cryptography. For example, the system needs to enable users to sign off for transactions using their unique cryptographic codes.
Consideration
It may be said that public and private keys, blockchains and blockchain networks are technical features in computing systems. Smart contracts may be more debatable in this context, although there may be instances where the execution of a smart contract may result in a technical contribution. In the present case, the principal question is whether the claimed method for product promotion using these features solves a technical problem, or makes a contribution to the art that is technical in nature, or results in an improvement in the functioning of the computing system.
In the present case, the node, as claimed, is clearly the facilitator of many of the operations pertaining to the claimed invention. It is important though to distinguish the node from a blockchain itself. The node is part of the blockchain network which includes a blockchain. The specification does not add substantially more about blockchains themselves beyond what is already described above.
One or more nodes may be part of the blockchain network. They are principally computing devices that manage data by broadcasting, verifying and validating transactions, etc., for blocks of blockchains.[5] As claimed, the node receives, determines, validates and identifies various inputs and registers a specific event. On the face of it, there is nothing unusual described or claimed about the computing functionality of the node.
[5] Specification [023].
It is notable that the claimed invention also defines public-key cryptography and smart contracts in very general terms. The claims principally go no further than defining the use of public and private keys, and the use of smart contracts for their normal, intended purposes. There is nothing particularly technical that is defined in the use of the cryptographic keys to validate creation and redemption requests for a promotion event. Similarly, there is nothing particularly technical that is defined about the validation of a promotion code by executing the smart contract.
The claimed promotion event registration process warrants additional scrutiny. It includes the step of storing, by the node, the promotion event rules in the blockchain network without storing the plurality of individual promotion codes in that network. That is, there is selective storage of some data relevant to the promotion event in the blockchain network, but other related data is not stored therein. That may be technical in nature. The applicant pointed out the resultant computational and storage efficiencies of that feature and submitted that was a concrete, tangible and physically observable effect. On the other hand, selective storage of data has long been recognised before the priority date to result in data storage efficiencies.
The applicant also emphasised the security aspects around the claimed processes. Firstly, there is the validation or protection of promotion codes through cryptographic, promotion identifier and smart contract execution features. Whilst some of those features are not directly claimed as related to determining the validity of a promotion code, nonetheless any technical aspects around those features, leading to security of promotion codes, are expressed in the most general of terms as though such functionality were well-understood. The thrust of the discussion is simply to use cryptographic, promotion identifier or smart contract techniques. Secondly, it may also be that there is enhanced security around distributed storage of related data, including the separation of promotion codes directly from the promotion event. Similarly, that outcome may be technical in nature. On the other hand, such an outcome from distributed storage would have been entirely expected at the relevant time. In a similar way, the immutability of blockchains would have been clearly understood at the relevant time as inherently enhancing the security of data and of computing operations.
The applicant further emphasised the combined effect of redeeming a promotion in a manner that is secure, yet computation- and storage-efficient. As claimed though, there would appear to have been no hindrance, at the relevant time in any technical sense, to the achievement of those objectives independently or together. As such, a solution to a technical problem in this context is not apparent in the present case.
The ANT decision also provides a useful contrast. At [53], the delegate stated that the substance of that invention lay in processing a transaction request within a blockchain wherein the transaction data is irreversibly converted into a non-recognisable form, namely a data abstract. That data abstract is used to firstly get approval for the transaction only from transaction nodes and then use the approved data abstract to then get consensus validation from all of the consensus nodes. The delegate noted that, by processing the transaction request in this manner, only the data abstract gets to be stored in the blockchain and not the transaction data.
That process would appear to hinge on a data transformation to conceal the original data and a demarcation of node types that respectively perform sequential approval and validation of transactions based on the transformed data. That, together with the non-storage of the original data in the blockchain, is said to protect the transaction data. No such data transformation or demarcation of functionality amongst nodes, or the like, forms the substance of the claimed invention in the present case. Whilst it may be fair to say that validation of promotion creation and redemption requests, in the present case, involves cryptographic key technology and digital signatures, there is no transformation of creation and redemption requests per se, nor of the promotion codes themselves. In any technical sense, the protection of the latter is principally focused on the handling of them as not for storage in the blockchain network.
In the present case, there may well be technical aspects defined in the claims. That is not necessarily enough. In the ANT decision, the delegate commented as follows. At [49]:-
“While I accept that blockchain is integral to the working of the claimed invention and that blockchain is inherently a computer implemented technology, that does not necessarily lead to the conclusion that the claimed invention is a technological innovation. As noted by the authorities, it is important to look at the claimed invention as a matter of substance and not of form.”
The above-mentioned RPL decision at [99] mentions the necessity of a contribution to the claimed invention that is technical in nature (my emphasis).
In this context, the Research Affiliates decision is also pertinent. At [108] in that case:-
“The computer that may be utilised is described in general terms, without an indication that any unusual technical effect is utilised.” (my emphasis)
In the present case, the claimed invention relates to the running of a product promotion using public-key cryptography, blockchain networks and smart contracts. One summary description provided in the specification is a blockchain smart contract promotion event management apparatus.[6] There may well be technical features present. On the other hand, an unusual technical effect is not apparent. The claimed invention is devoid of technical detail related to those features such that a technical contribution to the art is absent. Put another way, and in the context of RPL at [99], it is not apparent that the result is an improvement in the functioning of computer systems. The computing system, as claimed, is merely the intermediary that enables the running of the product promotion.
[6] Specification [0104].
I have briefly referred above to some disclosures from the body of the specification. Having reviewed the specification in its entirety, I see no subject matter to counter the above position.
CONCLUSION
I conclude the claims of the present application, as proposed to be amended, do not define a manner of manufacture. Moreover, I find there is nothing of substance in the body of the specification to overcome this finding.
It is appropriate that the application be refused.
M. G. Kraefft
Delegate of the Commissioner of Patents
JavaTPoint, “History of Blockchain”, Marr, “A Very Brief History of Blockchain Technology Everyone Should Read”, 16/2/2018, Petersson, “How Smart Contracts Started And Where They Are Heading”, 24/10/2018, Network, “The Origin of the Smart Contract”, 17/4/2018,