Bally Gaming International Inc v Scandic International Pty Ltd

[1994] APO 2

official notice

decision of a delegate of the commissioner of patents

Application        :   No. 613484 in the name of BALLY GAMING INTERNATIONAL INC

Title:   Game Machine Data Transfer System

Action: Opposition under section 59 (Patents Act 1952) by SCANDIC INTERNATIONAL PTY LTD; hearing.

Decision:   Issued            .  Some grounds of opposition established.  Claim not novel, claims not fairly based, description not clear.  Opportunity to amend allowed.

patents act 1990

decision of a delegate of the commissioner of patents

Re:Patent Application No. 613484 by BALLY GAMING INTERNATIONAL and opposition thereto under section 59 of the Patents Act 1952 by SCANDIC INTERNATIONAL PTY LTD.

background

Patent application 613484 was filed as 34504/89 on 5 May 1989 by BALLY  MANUFACTURING CORP.  Following a section 113 direction the application proceeded in the name of BALLY GAMING INTERNATIONAL INC (the applicant).  This was a Convention application claiming priority of 22 September 1988.

Acceptance was advertised on 1 August 1991, and on 31 October 1991 a notice of opposition was filed by SCANDIC INTERNATIONAL PTY LTD (the opponent).  A Statement of Grounds and Particulars was filed on 19 December 1991, and an amendment to the Particulars was allowed on 21 December 1992. After a number of extensions, service of the evidence-in-support was completed on  9 September 1992.  Following a number of extensions, the applicant advised on 27 July 1993 that no evidence-in-answer would be served; consequently a hearing was set down for Canberra on 29 October 1993.  The applicant was represented at the hearing by Mr P Smith of Carter Smith and Beadle, and the opponent was represented by Mr L Allen of Shelston Waters.

As acceptance of the application was advertised after the commencement of the Patents Act 1990, the opposition falls under section 59 of the Patents Act 1952 and Chapter 5 of the Patents Regulations 1991.

The grounds of opposition are stated to be those specified in paragraphs (e) through (i) of section 59 of the Patents Act 1952.

THE SPECIFICATION

The specification states that:

"The invention relates to the field of coin-operated amusement and gaming machines and in particular to systems for transferring data to and from such game machines."

The background of the invention concerns arrangements for the automation of accounting and security functions for a large system of gaming machines.  The specification reveals that a prior art system has used a central computer connected by cabling to the individual game machines.  This arrangement is expensive in terms of the cost of the cabling and the computer power required for real-time processing of data.  Because of data transmission needs this arrangement also places limitations on the physical separation of the game machines and the central computer.

The invention also relates to the automated collection of player data, which may be for security, accounting, or marketing purposes.

The specification also reveals another prior art arrangement, in which data is transferred from a game machine to a central computer using a "portable data recording unit" in the form of a "smart card".  Such a card, according to the specification, is a device generally in the shape of a normal credit card and which contains solid-state memory into which and from which data can be written and read respectively.  Some of these cards, states the specification, also contain microprocessor circuitry; the card used in this prior arrangement and in the preferred form of the present invention is such a card.

However, this prior arrangement suffers from the problems, according to the specification, that it is unable to transfer data to the game machine, and it has no provision for the collection of player data.

The specification then sets out a number of objects of the invention, the first three of which are as follows.

"It is therefore an object of the invention to provide a player or employee carried data unit along with a gaming machine interface that will permit the transmittal of player information and gaming machine information between gaming machines and a central data system.

It is a further object of the invention to provide a player carried data unit containing player account and win information along with player identification information that can be used to transmit player account information to a gaming machine and to receive from the gaming machine and transmit to a central data system  player game play and gaming machine information.

It is an additional object of the invention  to provide the data unit with data memory to store machine information and to receive from the gaming machine identification data identifying the machine along with machine data that can also be used as input to the central data system."

It is stated that the method by which data is transmitted is by the use of a portable data carrier, typically referred to as a smart card.  The specification concedes that smart cards per se are known.

The specification then goes on to describe specific embodiments of the invention.  Much of this is given over to description of alternative data fields which may be used for the cards, however, for the purposes of this decision, I consider that the invention described, at least in a preferred embodiment, can be adequately set out as follows.

The system consists of a plurality of game machines, a central computer, and an appropriate number and type of smart cards.  Each game machine and the central computer is arranged to interface with the relevant card for the generally bidirectional transfer of data, under microprocessor control.  The cards are basically the same, but differ in their memory arrangements according to their intended purpose.  A player's card may contain, for example, a range of personal data, debit/credit data, and games played data.  An employee's card may contain, for example, data concerning the employee's i.d., and a range of accounting data downloaded from a particular game machine, together with the machine i.d., for subsequent transfer to the central computer for management purposes.  Another type of employee's card transfers data from the central computer to a game machine for the purpose, for example, of changing the game program or the win percentage of the machine.

The essence of the invention described however does not lie in the particular details of the data which is transferred, but rather that it is transferred using a "portable data unit".  Thus, according to the specification, there is no need for expensive cabling, there is no constraint on the relative locations of the game machines and the central computer, and since data is not processed in real-time, the central computer can be a relatively inexpensive PC.

The specification concludes with eighty eight claims; the four which are independent are reproduced below.  In not reproducing any of the others I note that most of the dependent claims detail the data to be stored or transferred and are not likely to be an important consideration in this decision.

The independent claims are:

1.  A data transfer system for use with a plurality of game machines comprising:
a portable data unit including a data memory for storing machine and player data;
a plurality of interface units, wherein each of the game machine includes one of said interface units adapted to physically receive said data unit, for transmitting selected data from the game machine to said data memory and modifying said player data in response to at least a portion of said selected data; and
a central data processor  adapted to receive said data unit and including means to access said selected data and said player data from said data unit.

24.  A data transfer system for use with a plurality of game machines comprising:
a portable data unit including a processor and a data memory operatively connected to said processor for storing machine information;
a plurality of interface units wherein each of the game machines includes one of said interface units adapted to physically receive said data unit and wherein said interface units include an interface processor adapted to communicate data to and from the game machine and to and from said data unit processor; and
a central data processor adapted to receive said data unit and including means to communicate with said data unit processor.

41.  A data transfer system for use with a plurality of game machines comprising:
a portable data unit including a processor and a data  memory operatively connected to said processor for storing machine information including game machine operating instructions; and
a plurality of interface units wherein each of the game  machines includes one of said interface units adapted to physically receive said data unit and wherein said interface units include an interface processor adapted to communicate said machine operating instructions to the game machine from said data unit data memory.

55.  A data transfer system for use with a plurality of game machines comprising:
a portable data unit including a data memory;
a plurality of interface units wherein each of the game machines includes one of said interface units adapted to physically receive  said data unit and wherein said interface  units include an interface processor adapted to communicate data to and from the game machine and to and from said data unit; and
a central data processor adapted to receive said data unit and including means to communicate with said data unit.

THE EVIDENCE

The evidence-in-support of the opposition consists of:

1.  A statutory declaration by Ken Gibson, accompanied by exhibits KG1 to KG10.  Mr Gibson is trained in electronics and is Marketing Manager of Associated Electronics Services Ltd.  This company is primarily involved in the manufacture of a number of fare collection and ticketing products, including a bus fare ticketing system operated by smart cards.  Most of the exhibits relate to describing this system.

2.  A statutory declaration by Phillip Charles Dimond, accompanied by exhibits PCD1 to PCD14.  Mr Dimond is also trained in electronics and is employed as Engineering Manager with the opponent company.  The exhibits consist of a number of patent specifications, journal articles, and the results of some database searches, in all cases using "smart card" (or its equivalent) as keyword.

3.  A statutory declaration by Ngaire Ann Pettit-Young, librarian at UNSW, establishing the publication dates of the articles referred to in the previously mentioned declaration.

4.  A statutory declaration by Leon Keith Allen, patent attorney, with exhibits LKA1 to LKA3.  The exhibits establish the publication dates of the patent specifications referred to in the previous declaration.

No evidence-in-answer was served.  There was no challenge to the admissibility, or publication date, of any of the evidence relied upon by the opponent.

THE SUBMISSIONS

The hearing commenced with a challenge by Mr Smith (for the applicant) against the locus of the opponent.  Mr Allen (for the opponent) responded by describing some of the relevant activities in which the opponent is involved, and offered  to adduce evidence on the matter if this was required.  After some discussion, Mr Smith indicated that he would not pursue this objection.

There was then some discussion about the scope of the independent claims; namely whether the claims were for a data transfer system merely suitable for use in a game machine application, or whether the claims were restricted to this application by the inclusion of the game machines in the system.  It was agreed that the latter was the more likely case, and it was on this construction that the hearing proceeded.

Submissions by Opponent

Mr Allen addressed the Particulars by reference to the evidence-in-support, which evidence falls into two groups.  The first of these is the declaration and associated exhibits of Mr Gibson.  All this evidence relates to the installation and operation by Mr Gibson's company of a number of fare ticketing systems using smartcard technology, in Australia, before the priority date of the claims of the present application.  The actual number of systems is not entirely clear, but appears to be about ten; page 24 of exhibit KG10 refers.

The evidence includes a detailed description, supported by user manuals and copies of system print-outs, of such a ticketing system installed in a Darwin bus company, which system commenced operation during 1987.

An (edited) extract from Mr Gibson's declaration describing the operation of this system follows.

"In this system electronic ticket issuing machines were installed on-board buses of the Darwin Bus Service.  The passengers pay a deposit to be issued with a Smartcard which they then use to prepay, say ten trips or a value money or a period of time.

When the passengers board the bus they insert their card in the ticket issuing machine.  There is then a transfer of information between the card and the machine. The passenger keys in the intended destination and the machine determines the appropriate fare.

The information received by the machine from the card includes passenger identification data and passenger account data.  The machine deducts the appropriate fare from the passenger's account and return the modified account data to the card.  In doing so the machine will retain selected data from the card for accounting and statistical purposes.

The machines are able to offer discounts depending on what the Transport Authority wants to give from time to time.  The software in all the systems is able to provide a number of different account possibilities, for instance, a discount can be provided depending upon the current value stored on the card, or a bonus ride can be provided to selected passengers, so if a passenger has a credit of ten rides on their card when they've used them all up the system is able to cope with a negative value on the card so the customer then owes a ride.  The next time the customer revalidates the card for ten more rides, one is taken off so they've only got nine.

The machines include various data, such as bus identification number, the driver's identity, the start and end time of the trip, the route number and individual fare transactions.

The machines include alphanumeric displays to show the fare, time, and all sorts of information that are  necessary for both the driver and passenger.  The display would include for instance, an indication of whether a normal fare or a discount fare was being used, and information such as how many rides are left, or how much residual value there is on the card.

The drivers are also issued with cards so that they can access and control the ticket issuing machines.  The main objects of these cards is to transfer data from the machines to a computer which is located in the bus depot.

When a driver finishes his shift he inserts his Smartcard into the machine and all data is transferred from the machine into his Smartcard; he then carries his card with his days takings into the depot and inserts the smartcard into a reader so that everything is transferred from that card into the computer.  Every aspect of the operation of the machine is stored and downloaded onto the driver's card at the end of his shift, for instance if the machine is disabled, the time and date at which it is disabled, and if appropriate the person who disabled is recorded.  Also, bus identification and bus operation data such as shifts and trips and transactions are also included.

The Inspectors of the bus company are issued with Smartcards which they're able to insert into the machine in order to identify themselves when they board a bus, and if required to obtain a printout of the various transactions that have taken place.

Another different type of Smartcard is used to update the fares held in the machine."

This system was described briefly in articles in Australian Transport (June 1988) and a Darwin newspaper, the Sunday Times (12 June 1988); see KG4 and KG9.

This, Mr Allen submitted, in all respects establishes analogous prior user and consequent want of novelty for the invention.  Also, the invention is a mere collocation of known things performing a known function in a known way, and is not for a manner of new manufacture.  Cases cited were Harwood v Great Northern RailwayCo 35 LJQB 27, Pope Appliance Corp v Spanish River Pulp & Paper Mills (1929) 46 RPC 23, Morgan v Windover (1890) 7 RPC 131, and British Liquid Air v British Oxygen (1909) 26 RPC 509.

A representative number of the independent claims was then considered.  It was submitted that these claims should carry little weight since, in the main, they were concerned only with the data being manipulated, and in any case, were analogous to data in the bus ticketing system.

Mr Allen then moved to the second body of evidence, being the declaration by Mr Dimond and its exhibits.  This evidence consists, firstly, of a number of patent specifications  relating to aspects of smartcards ranging from card security, static protection, card architecture, to particular applications of smartcards, including gaming, broadcast subscription, and financial transactions.  Secondly, several journal articles of a generalised introductory nature about smartcard technology, including one from each of the popular magazines BYTE and Scientific American.  This material was all published between 1979 and a few days before the present priority date.  Thirdly, a large number of abstracts obtained from commercial database searches; the search criteria were that the document contain the term "smart card", "IC card", or "memory card", and be available in an Australian university library prior to July 1986.

From this material, particular reference was made to  Australian patent 511904 (PCD9 of the exhibits).  Read in the light of common general knowledge in the art (cgk) at the priority of the present claims, there was hardly any difference, it was argued, since smartcards were part of the cgk of any electronics engineer, irrespective of their speciality.
It was submitted that the evidence showed that the properties, possible uses, actual uses, applicable to smartcards, were widely known before the present priority.  The sheer weight of this evidence, it was submitted, was such that it forms part of the cgk.

It was also argued that the claims were  not fairly based or were not clear in relation to the terms "portable data unit", "adapted to physically receive", and the absence of definition of an interface for the central computer.

Submissions by Applicant

As no evidence-in-answer was filed, the only submissions made on behalf of the applicant were made verbally at the hearing.  These included the following:

-  It was strongly argued that the evidence does not establish what was cgk in the relevant art, namely that of game machines.

-  The evidence fails to establish that smartcards were cgk in any particular art, including those of transport systems and game machines.

-  In any case the invention does not depend on the use of smartcards as the portable data unit.

-  The absence of any declaration on behalf of the opponent that smartcards were part of the cgk is significant.

-  The fact that subject matter is widely published does not prove that it is part of cgk.

-  Therefore the grounds of opposition that rely on establishment of cgk must fail.

-  Even if smartcards were part of cgk, there is no single document, or mosaic of documents (were this allowable), in the opponent's evidence, which discloses the combination claimed.  United States patent 4764666 (PCD2 of the evidence) was specially referred to.

-  Even if one integer of a claimed combination is part of cgk, it does not make the combination of integers obvious (Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd (1980) 144 CLR 253).

-  An invention may be found in an idea; there is no need for invention to lie also in the implementation of that idea.  See Hicktons Patent Syndicate v Patents & Machine Improvements Co (1909) 26 RPC 339, and Thomas v Chappel 1991 AIPC 90-798.

-  In this case the invention lies in the use of a known portable data transfer device to replace the known wired or radiative systems for data transfer.
-  With regard to analagous use, that use, on the evidence, was not widespread.

-  The invention is clearly for a manner of manufacture.

-  The section 40 grounds were generally disputed.

DECISION

The weight of the specification and of the submissions by the applicant clearly are that the invention lies in the notion of using a portable data carrier to transfer data between remote machines and a central computer.  My following decision, and the reasons for it, are drafted assuming this to be the case.

Yet confusingly, the specification states briefly that this was a feature of a prior system developed by a division of the applicant - see page 2 from line 31.  No further light was able to be shed on this at the hearing.

This is at least a section 40 defect, due to a lack of consistency in describing what is the problem solved and a lack of clarity in distinguishing what is the prior art from what is the invention, and requires clarification.

If this clarification establishes that this system with this feature was published before the priority date, in my opinion, it may publish the invention of claim 1, because a memory device is not characterised by the data it stores.

However I proceed on the basis of the above-mentioned assumption.

Publication

It was conceded at the hearing that no single prior document discloses all the integers claimed.  I have serious doubts about claim 41 in this respect, which I will explain under the next heading.  Consequently this ground of opposition fails, except for the invention claimed in claim 41.

Novelty

Under this heading I consider the application of the "reverse infringement test" as set out in Meyers Taylor Pty Ltd v Vicar Industries (1977) CLR 228. In applying this test I must determine whether all of the essential features of the claimed invention are disclosed by the prior document, see Rodi & Wienenberger AG v Henry Showell Ltd (1969) RPC 367. In deciding what are the essential features of the claimed invention I am guided by the discussions in Catnic Components v Hill & Smith Ltd (1982) RPC 183.

It was recognised at the hearing that the two most relevant prior documents were the earlier mentioned AU 511904 and US 4764666.  The former discloses a game machine which includes a processor and an interface for receiving a magnetically coded card.  The card is coded with data relating to player credits which is read by the machine; data is written to the card as debits for games played and credits for wins.

The US specification discloses an on-line wagering system for the playing of games of chance.  This system consists of a central processor and a plurality of terminals which are accessed by a player smartcard.  Various data are written to and read from the card at the terminal, and is also transferred to and from the central processor via a communication link, which is preferably a telephone line or radio communication, between the terminals and the central processor.

Now considering the present specification, it is clear that the primary object of the invention requires the ability to transfer relevant data from the remote machines to a central processor without the use of a direct communication link.  This being the case, the actual provision of a central processor and the absence of such a communication link are essential characteristics of the inventive system.

I note that at the hearing there was some suggestion that the claims were sufficiently broad to include such a link, however in view of what I have just said this would be an unreasonable construction of the claims, and I do not accept it.

The cited Australian specification does not mention a central processor, and obviously therefore, transfer of data in the way claimed is not contemplated.  The US specification does disclose a central processor and provides for the two-way transfer of data between the processor and the remote terminals, but by way of a telephone or radio link.  I conclude therefore that independent claims 1, 24, and 55 are not anticipated by either of these documents, or by any other cited document.

Independent claim 41 however does not define a central processor, and is simply a system in which game machine operating instructions are transferred from a smartcard, the memory of which contains the instructions, to the game machine via an interface.  All these integers are disclosed in US 4764666.

It could be argued that this patent does not disclose the transfer of "machine operating instructions", though this is a very broad expression, however this is at best only a difference in the data, and it does not function to distinguish the apparatus.  It could also be argued that the "agent terminal" of the patent is not a "game machine", ie that it is the central processor in the patent which serves as the game machine.  However, data is still communicated to the central processor-  game machine, and is therefore within the scope of what is claimed by claim 41.
I conclude then that claim 41 is anticipated by US 4764666.

Obviousness

In considering the question of obviousness I must take into account what has been established as common general knowledge in the relevant art at the priority date of the claims - 3M v Beiersdorf (supra).  The evidence consists of a number of patent specifications, articles, abstracts, and details of the bus ticketing system.  There are no statements from skilled persons testifying as to what was common knowledge in the art.
The applicant argues strongly that this evidence fails to clearly establish what was common general knowledge in the art, and I am inclined to agree, except for the question of smartcards, on which the parties disagreed.  I consider that the relevant art is not one narrowly confined to game machine systems, but is more likely to involve the electronic arts and particularly systems for the electronic transmission of data.

The weight of evidence shows, in my opinion, that a person of ordinary skill in this art would be aware of the general properties of smartcards, their possible uses, and probably some actual uses, at the priority date.  However I do not consider that the evidence establishes anything else about the common knowledge in the art.

The question then is this.  Would it be safe to say that, to the non-inventive worker in the art of data communication systems, possessing a background knowledge of smartcard technology, and contemplating the problem of data transfer between remote game machines and a central computer, that it would be obvious that smartcards could be used for this purpose?

In my opinion the opponent's evidence does not establish an affirmative answer to this question, and accordingly I find that the claims do not fail for obviousness.

In any case (it was argued) the invention does not rely on the use of smartcards, though these are preferred.  This is the reason that much of the evidence is of little assistance, since it is focussed primarily on smartcard technology.  It was argued that the invention lies in the idea that a known portable data carrier, such as a smartcard, could be used for the special purpose involved.  However I do not fully accept this argument, insofar as the permissible scope of "portable data carrier" is concerned, as I explain later under the section 40 heading.

Manner of Manufacture

The law on analogous use was set down in the cases of Morgan & Co v Windover & Co (supra), Harwood v Great Northern Rlwy (supra), Pope Appliance Corp v Spanish River etc Mills Ltd (supra), and British Liquid Air v British Oxygen (supra).

In Harwood it was stated at page 38:

"...there would be no end to the interferences with trades...if every slight difference in the application of a well-known thing were held to constitute a patent..."

And:

"...you cannot have a patent for a well-known mechanical contrivance, merely because it is applied in a manner, or to a purpose which is analogous to the manner or to purpose to which it has been notoriously used" (my emphasis).

Pope Appliance says at page 56:

"The doctrine of analogous user only applies as to things in actual use."

Morgan at page 137 says:

"...the mere adaption to a new purpose...if that purpose be analogous to which it has already been applied...and no invention is displayed in the manner in which it is applied, is not the subject for a patent."

In British Liquid Air at page 532:

"It is of course well-settled law that the application of a known device to its ordinary purpose under analogous circumstances is not good subject-matter for Letters Patent, because it does not  involve invention.  But this principle does not apply when the circumstances are not analogous, or when invention is required to adapt the device to the new circumstances."

In my opinion, the facts of the present case do not satisfy all of these principles, so as to establish the condition of analogous user.  While the evidence establishes actual prior use of the apparatus in the bus ticketing system, I do not consider that the prior use is proven to be "notorious" at the relevant date, and indeed it almost certainly was not, in view of the relatively small number of  installations and, in many cases, their relative remoteness and small size.

Also, I do not consider that the present use is really analogous and consequently without invention, since the problem solved by each use is different.  The problem addressed by the prior use relates to the automation of a ticketing system.  The collection of game machine data however was already automated; the problem related to the transfer of data to the central computer.  There was obviously never any possibility that buses would be connected to the central computer by cables, so that the whole context in which the present invention was realised is, in my opinion, different.

There were also submissions that the invention was a mere collocation.  I think that this argument is unsuccessful because of the failure to establish what was common general knowledge.

Therefore I conclude that the claims do not fail for want of defining a manner of manufacture.

Section 40

I find that there are a number of section 40 problems, as follows.

1.  As I have said there is a lack of consistency in the description as to what is the prior art and what is the invention, and a lack of clarity as to what is the problem solved by the invention.

2.  The description is unclear in setting out the basic form of portable data carrier which may be used.  The passage at page 4 lines 13-25 says that data transfer is by the "use of a portable data carrier, typically referred as a smart card."

I consider that the term "portable data carrier" is much broader than "smart card"; the former includes devices such as floppy disks, cassette tapes, and magnetic stripe cards, whereas a smartcard is a card-like device with a substantial solid-state memory which can be written to and read from.  The card may also include logic circuitry, most probably a microprocessor, though external logic circuitry may be used.

3.  For reasons I set out earlier, claim 41 lacks fair basis in not defining a central processor in the system claimed.

4.  In claiming the portable data unit in just those words, the claims in my view lack fair basis.  The magnetic stripe card has insufficient memory to perform the simplest of the functions envisaged by the invention, and there is nowhere any suggestion that devices such as floppy disks or cassette tapes were considered as useful.

I consider that further defining the portable data unit to be a solid-state memory card (or equivalent words) would be unobjectionable, and I leave the choice of words to the applicant.

CONCLUSION

1.  I find that claim 41 is not novel and is not fairly based in not defining a central processor, claims 1, 24, 41, and 55 are not fairly based in defining the portable data unit, and the description is inconsistent and unclear as set out previously.

2.  I allow the applicant 60 days from the date of this decision to propose amendments directed toward overcoming these objections, else I will refuse the application.

COSTS

While the opposition has only been partly successful, it has identified significant defects in the specification.  Accordingly I award costs against the applicant.

R G Tolhurst
Delegate of the Commissioner of Patents

Patent attorneys for the applicant  :  Carter Smith & Beadle,  Melbourne

Patent attorneys for the opponent   :  Shelston Waters, Sydney