Aqua Index Ltd
[2014] APO 2
•16 January 2014
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Aqua Index Ltd [2014] APO 2
Patent Application 2008290256
Title:Water as a commodity for financial investment
Patent Applicant: Aqua Index Ltd
Hearing officer: P M Spann - Deputy Commissioner of Patents
Decision Date: 16 January 2014
Hearing Date: Heard on the written record
Catchwords: PATENTS – examiner’s objections – system and method for trading water using financial instruments – no patentable subject matter disclosed – application refused.
Representation: Patent applicant: P C Dummer, patent attorney,
Wallington-Dummer, Sydney
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2008290256
Title:Water as a commodity for financial investment
Patent Applicant: Aqua Index Ltd
Date of Decision: 16 January 2014
DECISION
Patent application 2008290256 is refused pursuant to subsection 49(2) of the Act.
REASONS FOR DECISION
This matter concerns examiner’s objections in respect of the application and whether I should exercise the Commissioner’s power to refuse the application under subsection 49(2) of the Patents Act 1990.
Background
Patent application 2008290256 is a PCT application. It was filed as an international application under the Patent Cooperation Treaty (PCT/IB2008/053327) on 20 August 2008 and claims priority from US patent application 50/956,933, filed on 21 August 2007. Following entry to the national phase it has been the subject of three adverse examination reports, each including objections that the subject matter claimed is not a manner of manufacture. Three statements of proposed amendments have been filed, but, since the examiner’s objections were maintained, the applicant has requested a decision on the written record. It did not wish to be heard further in the matter.
The applicant’s decision not to be heard should not be taken as a lack of interest in the fate of the application. Rather, it is clear that the applicant (Aqua) seeks the opportunity to preserve its interests through an appeal noting that the final date for acceptance is 28 February 2014 and that a full Federal Court has reserved its judgement in the appeal of Emmett J’s decision in Research Affiliates LLC v Commissioner of Patents [2013] FCA 71 (Research Affiliates). As will be apparent below this decision is highly relevant to my decision on the present application.
As a further matter I note that the examiner has focussed on the issue of manner of manufacture and, at least in the second and third examination reports, has reserved his report in relation to novelty and inventive step. This means that if Aqua is successful in an appeal the matter of the application’s compliance with section 18(1)(b) remains to be determined. The Act however anticipates further examination of the application providing under subregulation 13.4(1)(h) for the extension of the period for obtaining acceptance on determination of an appeal.
It is also worth noting that the provisions of subregulation 13.4(1)(g) to extend the period for acceptance to 3 months from the date of this decision cannot apply to the present application. This is because examination was requested prior to 15 April 2013 and the amendments made by the Intellectual Property Legislation Amendment (Raising the Bar) Regulation 2013 do not apply (see r 23.26(4) Item38). Furthermore, as the applicant requested a hearing only on the written record, the Commissioner was not required to set a date for the filing of written submission or an oral hearing and therefore the precondition for subregulation 13.4(1)(g) does not exist in any event.
The patent specification
The subject matter of the application concerns the trading of water as a commodity and particularly the development of an investment instrument for the trading of water on financial markets. The specification indicates that while water is a valuable commodity there is not a stable international market for water as there is for commodities such as wheat, corn or oils. It is suggested that such a market would facilitate investment in developing water resources.
It is further apparent from the description that a problem affecting the trade in water is the establishment of a standardised index for valuing water. The description therefore discusses how water from various ‘sources’ can be valued according to a number of weighting factors and then combined to obtain a global index. For example as shown in Figure 3, the index is calculated based on following water sources – ‘fresh export’, ‘domestic’, ‘desalinate’, ‘bottled’, ‘purify’, ‘food crops’ and ‘biofuels’. For each, relevant factors are taken into account. So, the value for desalinated water is calculated based on the cost of production and volume of water produced in particular countries. For food crops, the water price is calculated based on both the water content of the food crop and the quantity of water used in its production. The water value for biofuels also is calculated based on the water input to the production of the fuel (see pages 10-12). Once a value is calculated for each source, a global water price is calculated by combining the values based on the volume of water from each source. This value can then be adjusted by a number of factors including transport costs, exit fee costs, the recycle rate, a supply and demand factor and a waste factor to produce an index value for water.
The specification further describes how the index value can be used for the trading of shares or other financial instruments (for example bonds, certificate, futures, stocks or basket) based on the calculated water index value. It mentions in the paragraph bridging pages 6 and 7 that index values can be stored in the memory of a desktop computer and calculated using the processor of the computer, presumably from inputted data obtained from various sources.
The claims as last proposed to be amended on 30 October 2013 are directed to methods and systems all involving the use of a processor in the calculation of an index value. Claim 1 is in the following terms:
“1. A system for trading water using financial instruments, each of the financial instruments identifying a particular amount of water, the value of the financial instruments determined by an index value of the water and by the particular amount of water, comprising:
a processor configured to determine the index value of the water based on a-value of at least one commodity other than water and based on at least one of (i) a quantity of water utilized in production of the at least one commodity and (ii) a quantity of water constituent in the at least one commodity,
wherein the index value of the water is determined by the processor using one or more mathematical operations to mathematically combine the value of the at least one other commodity and the at least one of (i) a quantity of water utilized to product the at least one commodity and (ii) a quantity of water constituent in the at least one other commodity,
the processor further configured to re-calculate the index value of the water based at least in part on updates in the value of the at least one commodity.”
The examiner’s objections
10.It is unnecessary to consider the examiner’s reports in detail. It is sufficient to say that the examiner has objected and maintained that the claims do not define a manner of manufacture within the meaning of Section 18(1)(a) of the Patents Act. The objection as summarised in the second report is that:
“… the substance of the claims is to claim the intellectual concept of assigning prices to commodities based on their water content. This is a financial scheme or a legal arrangement and as such is not a manner of manufacture. See the reasoning of Grant v Commissioner of Patents [2006] FCAFC 120. The peripheral activities of measurement of commodities and water or storage or manipulation of numbers in a computer do not alter the underlying nature of the claims in a way that would bring the claims into the realm of a manner of manufacture.”
11.As indicated above the examiner has reserved opinion on whether the claimed invention complies with section 18(1)(b), that is, whether the claims are novel and involve an inventive step.
The Applicants submissions
12.The applicant’s submission filed on 3 September 2012 in response to the examiner’s first report, argues that what is claimed “is a technical solution to a technical problem” and involves performing physical processes eg the measurement or estimation of water content in a product. They also submit that the computer is not incidental to the result produced.
The further submissions filed on 30 October 2013 rely on the decision of the Federal Court in RPL Central Pty Ltd v Commissioner of Patents [2013] FCA 871. They argue that in using the computer to determine an index value there is a change in state or information in a part of the processor and enables the method to be performed. The submissions also rely on Middleton J’s statement at [147] that the authorities do not import a requirement for substantiality or centrality of a physical effect to meet the requirements for a manner of manufacture. The submissions do not however address the decision in Research Affiliates.
Manner of manufacture
14.Justice Emmett in Research Affiliates considered that a computer implemented method for generating a weighted index of assets was not patentable. In particular he stated at [70] that:
“The method of the claimed invention does not involve a specific effect being generated by the computer. The mere use of a computer necessarily carries with it the writing of information into the computer’s memory. There is a stark contrast between a computer-generated curve, or a representation of Chinese characters, or the writing of particular information on a smart card, on the one hand, and the quite unspecific index, on the other. There is no practical application in the method of the claimed invention for the improved use of computers. The effect of the implementation of the method is not to improve the operation of or effect of the use of the computer.”
and at [71]
“The case propounded by Research Affiliates depends upon the proposition that information of economic significance, once entered into or produced by means of a computer, becomes an economically valuable artificially created state of affairs, and thus patentable. That proposition must be rejected. “
15.It will be apparent that, subject to consideration by a Full Federal Court of the appeals in Research Affiliates and RPL, the decisions of both Emmett and Middleton JJ are binding on the Commissioner. However, while some statements of law in RPL and Research Affiliates might be seen as contradictory, Middleton J sought to distinguish the decision in Research Affiliates (at [162]-[172]) on the basis of the role played by the computer in the implementation of the claimed invention and the extent to which the implementation was described. It follows in this case that I do not need to go further to resolve the authorities since what is claimed clearly is of the same nature as that considered in the Research Affiliates case and different to that in RPL. Both the present case and Research Affiliates concern the generation of financial indexes where the involvement of a processor or computer to calculate the index is of similar effect. If anything, the involvement of the processor and the description of its implementation are significantly less here than in Research Affiliates. Fundamentally the invention lies in the calculation of an index value to facilitate the trading of water on financial markets.
16.Consequently while there are differences in the informational content of the indexes I find that the claims do not define a manner of manufacture on a similar basis as found by Justice Emmett in Research Affiliates. In this regard I reject the submission that a determinative physical effect lies in a physical process of measuring or estimating water content as suggested by Aqua. All that the method or system claimed requires is that such data be used in the calculation of the index value however obtained.
17.In Research Affiliates it was conceded by the parties that method and system claims fell together. To the extent that Justice Emmett was not required to decide this point it might be said that this leaves uncertainty as to the treatment of claims to computer systems characterised essentially only by a method that is considered to lie outside of the scope of patentable subject matter. If so, I am of the view that the comments of Justice Lloyd Jacob in Re Virginia-Carolina Chemical Corporation's Application (1958) RPC 35 are relevant. The substantive requirement for a patentable invention to be a manner of manufacture cannot be reduced to a matter of mere drafting. This is apparent in the case of printed sheets, films and recordings where what is claimed is a physical article but nevertheless is not considered to be a manner of manufacture if characterised only by intellectual information that is reflected on it (See also Re Cooper’s Application for a Patent (1901) 19 RPC 53).
18.In Commissioner of Patents v Microcell Ltd. [1959] HCA 71 it was also the case that the High Court looked beyond claims to an article (A self-propelled-rocket projector) finding that the alleged invention merely amounted to the use of a known material for which its properties made it suitable. Claims to a low-pressure mercury vapour discharge lamp were treated in a similar way in NV Philips Gloeilampenfabrieken and Philips Lighting Pty Limited v Mirabella International Pty Limited [1995] HCA 15. Therefore it is apparent that, when considering the manner of manufacture requirement under Australian law, a substantive rather than purely literal approach is to be taken to the claims.
19.In the United States a similar approach was taken to computer system claims by a majority of the Court of Appeals for the Federal Circuit in CLS Bank Intl. v. Alice Corp. Pty. Ltd., 2011-1301 (Fed. Cir. May 10, 2013), finding that the same analysis under the “abstract idea” subject matter limitation applied “regardless of claim format”.
20.Taking this into account I am of the view that whether characterised as a method or system what is in substance claimed amounts to a mere scheme, abstract idea or mere information and is not patentable. Furthermore there is no patentable subject matter disclosed within the specification that could be made the subject of a valid claim.
Conclusion
21.I have found that the claims are not directed to a manner of manufacture. Furthermore, I do not consider that patentable subject matter has been disclosed in the specification and that consequently the application should be refused.
P M Spann
Deputy Commissioner of Patents
0
2
0