Bellator Pty Ltd
[2018] APO 93
•21 December 2018
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Bellator Pty Ltd [2018] APO 93
Innovation Patent: 2017101681
Title:A method of innovation
Patentee: Bellator Pty Ltd
Delegate: Dr W.E. Guinea
Decision Date: 21 December 2018
Hearing Date: Written submissions filed on multiple dates, due to be filed by 5 October 2018
Catchwords: PATENTS – innovation patent – Examiner objections – manner of manufacture – invention is for a business scheme involving allocation of certain consideration in return for providing innovation services – all claims lack a manner of manufacture – no patentable subject matter in patent – patent revoked
Representation: Patent attorney for the Patentee: Bellator Patent & Trade Mark Attorneys
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Innovation Patent: 2017101681
Title:A method of innovation
Patentee: Bellator Pty Ltd
Date of Decision: 21 December 2018
DECISION
None of the claims are for a manner of manufacture. There is no material within the patent that would lead to a manner of manufacture if made the subject of a claim. I revoke the patent.
REASONS FOR DECISION
Background
Innovation patent 2017101681 (the “patent”) was filed on 2 December 2017 and is a divisional patent of patent application 2017204897 (the “parent application”). Consequently, the patent claims an earliest priority date of 14 July 2017.
Bellator Pty Ltd (the “Patentee”) requested examination on the same day as the patent was filed, however examination of an innovation patent cannot proceed until it has been granted. Subsequently the patent proceeded to grant on 20 December 2017, and the first of five examination reports issued on 1 February 2018. As of the fifth examination report the only remaining objection to the patent is that the claims are not for a manner of manufacture.
On 1 August 2018 the Patentee wrote to the Commissioner requesting to be heard in relation to the remaining objection.
After some preliminary correspondence between the Patentee and the Commissioner, the Commissioner wrote to the Patentee on 10 August 2018 indicating that the hearing would be conducted by way of written submissions due to be filed on 5 October 2018.
The Patentee filed several rounds of submissions on the following dates:
· 1 August 2018, as part of the request to be heard (“PS 01-08-18”)
· 9 August 2018 (“PS 09-08-18”)
· 24 August 2018 (“PS 24-08-18”)
· 29 August 2018, along with proposed amendments (“PS 29-08-18”)
· 30 August 2018, as part of a response to a letter from the Commissioner (“PS 30-08-18”); and
· 5 October 2018 (“PS 05-10-18”),
hereinafter collectively the “Patentee’s submissions”.
The Invention as Described
The patent deals with methods that broadly allow for the establishment of contractual obligations between generators, end users and service providers with respect to intellectual property, such as patents, thereby allowing for the creating and securing of intellectual property rights. In this regard the background section of the patent discusses how intellectual property rights “…typically are, expensive to define and otherwise secure” (page 1, lines 10 to 11). The patent then goes on to expand on these difficulties, which can be summarised as follows:
· self-prosecution is less expensive, but can lead to deficiencies in the rights obtained;
· intellectual property (“IP”) rights are expensive to enforce;
· obtaining rights and commercialising the same is complex and uncertain; and
· there are difficulties in comparing the services, advice and charges between different Intellectual property service providers.
The background section then ends with the following (page 1, lines 28 to 30):
“It is therefore desirable to provide alternative means of innovating and defining or otherwise securing IP rights which in at least one aspect at least partly addresses one or more of these possible shortcomings.”
The nature of the invention as described is best understood by reference to figure 1 (the only figure of the patent), which is reproduced below.
Figure 1 provides an example of an innovation or consulting service provider 10 and an organisation 20 that the innovation or consulting service provider 10 would like to provide services to. The organisation 20 (for example a parts manufacturer) discloses in confidence by agreement 130 details of its processes 30, equipment 40 and systems 50 to the innovation or consulting service provider 10 in the hope that it will be able to help reduce costs and improve its profit.
10. Based on the agreement 130, the innovation or consulting service provider 10 inspects the manufacturing plant 160 and meets with relevant personnel from the organisation 20. From this the innovation or consulting service provider 10 redesigns 70 the processes 30, equipment 40 and systems 50 to improve efficiency.
11. The redesign 70 is documented 80 and the innovation or consulting service provider 10 engages a patent firm 110 to create IP rights with respect to the documented redesign 80, leading, for example to the filing of a provisional patent application 90. The innovation or consulting service provider 10 undertakes this prior to discussing the documented redesign with the organisation 20. The parties 10, 20 subsequently draft an agreement 140 that defines a financial return to the innovation or consulting service provider 10 with respect to the invention, for example some percentage of the value of the redesign.
12. Further embodiments comprise those where an innovation or consulting service provider 12 is similar as discussed above, but has an in house IP department 120 rather than engaging an external provider. In this embodiment the internal cost to the innovation or consulting service provider 12 is offset by the revenue obtained from the returns from the agreement 140.
13. In another embodiment an innovation or consulting service provider 14 is a conventional IP services provider, for example a patent attorney firm. In this embodiment the innovation or consulting service provider 14 also provides the actual innovation services (for the redesign 70) in house or by engaging 110 external inventors and entrepreneurs 100. Again the organisation 20 in effect pays for these services from the innovation or consulting service provider 14 via the value of the innovations through the agreement 140.
14. Further alternatives to the above involve the organisation 20:
· interacting with innovation consultants in a similar manner as it would in the above with the innovation or consulting service providers 10, 11, 12, creating agreements 150 analogous to agreements 130, 140; and
· directly engaging an IP service provider 110.
15. The patent summarises the advantages of the invention (at page 7, lines 5 to 29) in the following way:
“1. It enables a business or other organisation to innovate without costs relating to the associated IP;
2. It enables inventors and entrepreneurs to apply their skills to a business or other organisation to improve processes, equipment or systems of those businesses or other organisations. This makes their innovation and entrepreneurship more targeted and therefore more efficient and effective;
3. It enables at least some of the costs to a business or other organisation associated with innovation, for example those traditionally relating to consulting or IP protection or enforcement, to be paid directly from revenue generated by the innovation;
4. It enables a business or other organisation that does not have significant ‘in-house’ innovation or IP protection or enforcement capability to innovate in a similar way as businesses or other organisations that do have such ‘in-house’ capability;
5. It enables traditional consulting businesses to charge on the basis of the value or benefit of their contribution rather than their traditional means of charging, for example, an hourly, daily or yearly rate or project-based charging;
6. It enables traditional IP services provider, for example a patent or IP law firm to charge on the basis of the value or benefit of the innovation they are providing services in relation to rather than their traditional means of charging, for example, an hourly, daily or yearly rate or project-based charging;
and
7. It provides an alternative means of providing IP services to the traditional means and enables IP services to be provided without patent firms or IP law firms as historically has been the case for more than 70 years.”
The Claims
16. Several proposed amendments have been made to the patent during the course of examination and after the request for hearing. After the most recent proposed amendments the patent comprises 5 claims. These claims are repeated below, noting that claims 1 and 2 are independent claims.
“1. A method of innovation comprising the steps of an organisation engaging with an innovation services provider to innovate, said organisation disclosing aspects of the organisation to said innovation services provider and specifying a financial return to said innovation services provider for said innovation, wherein said innovation services provider confidentially describes or defines or describes and defines said innovation as a corresponding IP right prior to its disclosure to said organisation and the amount of said financial return is determined, at least partially, from the value or benefit or advantage of any sort or any other consideration or value of any kind to said organisation of said IP right.
2. A method of innovation comprising the steps of an innovation services provider engaging with an organisation to innovate, said organisation disclosing aspects of said organisation to said innovation services provider and specifying a financial return to said innovation services provider for said innovation, wherein said innovation services provider confidentially describes or defines or describes and defines said innovation as one or more corresponding IP rights prior to its disclosure to said organisation and the amount of said financial return is determined, at least partially, from the value or benefit or advantage of any sort or any other consideration or value of any kind to said organisation of said IP right.
3. An IP right description or definition or description and definition deriving from a method of innovation of claim 1 or claim 2.
4. An agreement relating to said method of innovation or said IP right description or definition or description and definition of any one or more of claims 1 to 3, wherein said agreement at least substantially specifies said financial return to said one or more innovation services provider or said one or more organisations or both for one or more of each said innovation.
5. A method of innovation, IP right description or definition or description and definition or agreement as claimed in any one or more of claims 1 to 4 wherein said IP right description or definition or description and definition comprises a patent application.”
The Remaining Objection
17. As noted above the only objection outstanding is that the claims are not for a manner of manufacture. I will briefly outline the nature of this objection as made during examination below.
18. The objection that the claims are not for a manner of manufacture has been pursued throughout all five examination reports. The reasoning presented by the Examiners concerned has varied in emphasis across the reports, perhaps due to proposed amendments and in view of the Patentee’s submissions. In any case I consider that the Examiner’s objections may be summarised, in a general way, as alleging that the claimed invention is nothing more than a business model or scheme for the provision of a business arrangement whereby two (or perhaps more) parties agree to undertake certain activities and to allocate financial rewards from the activities between the parties. This is perhaps best illustrated by the following passages from the fifth examination report:
“The applicant states at various places in the multiple responses filed to the examiner’s 4th report that the alleged invention refers to a business model (see at least second last paragraph of response filed on 24 July 2018, paragraph 1 of pages 2 and 3 respectively of response filed on 25July 2018). To this the examiner agrees, your invention is a business model.
It is well established from various case laws that business, commercial and financial schemes as such are not patentable…
...I fail to see how the features of “said innovation related service providers confidentially describing said innovation as a corresponding IP right priorto (sic) their disclosure to said organisation”, make your alleged invention technical. Your application is not for a technological innovation, it is a business model that can be applied to commercialise technological innovation, which is not a manner of manufacture. Therefore, claims 1-5 are not for a manner of manufacture within the meaning of Section 18(1A)(a) of the Patents Act 1990.” (italics in original)
The Patentee’s Submissions
19. Contrary to the statements in the fifth examination report, the Patentee does not concede that the invention is a business model; this much is apparent at PS 05-10-18 at page 2. Although there was significant recourse to a multitude of authorities in the Patentee’s written submissions, the crux of the Patentee’s arguments appears to be that the presence of “innovation” within the claim language confers patentability. This is perhaps best illustrated by the following passage from page 5 of PS 05-10-18:
“The purpose of the present invention is innovation: ‘a method of innovation’. The scope of the present claims therefore must relate to innovation, and consequently, inventions. Inventions, which are the very reason for the Statute of Monopolies, must be, according to the terminology of the fifth examination report, ‘technical’. As such, the present invention cannot relate to anything other than ‘technical’ or a ‘technological innovation’. According therefore to the circular logic of a) and e) of the fifth examination report itself, the present invention is a ‘manner of manufacture’.”
20. The Patentee also asserts, on several occasions throughout their written submissions, that there was no basis for the Examiner objections, that examination has not been consistent with principles of natural justice and that the hearing fee should be refunded. This is perhaps best illustrated in the following passages from the Patentee’s submissions:
“Further to our letter 8 August, we respectfully submit that no sound basis has been provided for the manner of manufacture objections. They have therefore not been substantiated and we therefore respectfully submit, on the basis of the submissions of our request for a hearing, that prima facie the applicant has no case to answer. We therefore also respectfully request that the hearing fee be refunded. We respectfully submit that to do otherwise will add to our respectful submission of our request for a hearing that Examination hasn’t been consistent with natural justice.” (from PS 09-08-18);
“Despite our final response to the fourth examination report being filed at 2.37 pm on Thursday 26 July, the fifth examination report issued at 3.37 pm on 1 August, the final date for certification. It was also explained to Mr Hussain during the conference referred to above that this delay isn’t consistent with natural justice. This delay is also despite being assured by the examiner on Tuesday 24 July that any response to examination reports would be considered by another of the 400 examiners while he was on leave for a week from the 25 July. Issuance of the fifth examination report late on the final date for certification ensured that the applicant’s only options were to file a divisional patent, request a hearing or both.
This sequence of events also delays certification. For reasons explained in these submissions, we respectfully submit the applicant is clearly entitled to certification.” (from PS 24-08-18)
Relevant Legal Principles
Manner of Manufacture
21. The statutory basis for manner of manufacture with respect to innovation patents is found at s18(1A)(a) of the Patents Act 1990 (the “Act”) which states:
“an invention is a patentable invention for the purposes of an innovation patent if the invention, so far as claimed in any claim is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies.”
22. Fundamental principles with respect to manner of manufacture were outlined by the High Court in National Research Development Corporation v Commissioner of Patents [1959] HCA 67 (“NRDC”) at [14];102 CLR 252 at 275:
“It is therefore a mistake, and a mistake likely to lead to an incorrect conclusion, to treat the question whether a given process or product is within the definition as if that question could be restated in the form: "Is this a manner (or kind) of manufacture?" It is a mistake which tends to limit one's thinking by reference to the idea of making tangible goods by hand or by machine, because "manufacture" as a word of everyday speech generally conveys that idea. The right question is: "Is this a proper subject of letters patent according to the principles which have been developed for the application of s. 6 of the “Statute of Monopolies?"”
23. The NRDC decision related to a process for eradicating weeds from crop areas. A test applicable to the facts of this case was given in NRDC at [22], 275:
“The point is that a process, to fall within the limits of patentability which the context of the Statute of Monopolies has supplied, must be one that offers some advantage which is material, in the sense that the process belongs to a useful art as distinct from a fine art (see Re Virginia-Carolina Chemical Corporation's Application (1958) RPC 35, at p 36) - that its value to the country is in the field of economic endeavour.”
24. In Grant v Commissioner of Patents [2006] FCAFC 120 (“Grant”) the court considered the patentability of what may be generally described as a business system or method directed towards protecting assets via the creation of a trust, this not involving any computer implementation. Their Honours in Grant (at [26]) did not consider the question as to whether a business system is or is not patentable. Rather they found Mr Grant’s claimed systems and methods were not for a manner of manufacture in the sense described in NRDC at [47]:
“It has long been accepted that "intellectual information", a mathematical algorithm, mere working directions and a scheme without effect are not patentable. This claim is "intellectual information", mere working directions and a scheme. It is necessary that there be some "useful product", some physical phenomenon or effect resulting from the working of a method for it to be properly the subject of letters patent. That is missing in this case.”
25. More recently the authorities have directly considered the patentability, or otherwise, of computer implemented business methods, most notably in Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 (“Research Affiliates”) and Commissioner of Patents v RPL Central Pty. Ltd. [2015] FCAFC 177 (“RPL”). The discussion in RPL referred to the terminology from NRDC, with the observation at [117] that such terminology was apposite but “…not conclusive of patentability”. This observation was given with respect to consideration of a similar conclusion by the majority in D’Arcy v Myriad Genetics Inc. [2015] HCA 35 (“D’Arcy”) at [23]:
“This Court in NRDC did not prescribe a well-defined pathway for the development of the concept of "manner of manufacture" in its application to unimagined technologies with unimagined characteristics and implications. Rather, it authorised a case-by-case methodology. Consistently with that approach, and without resort to the "generally inconvenient" proviso in s 6 of the Statute of Monopolies, there may be cases in which the court will decide that the implications of patentability of a new class of inventionare such that the invention as claimed should not be treated as patentable by judicial decision”.
26. It in this light that their Honours, at [96] to [98] of RPL, outlined considerations useful in determining whether a computer implemented business method is patentable:
“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. Where the claimed invention is to a computerised business method, the invention must lie in that computerisation. It is not a patentable invention simply to “put” a business method “into” a computer to implement the business method using the computer for its well- known and understood functions.
Is the mere implementation of an abstract idea in a well-known machine sufficient to render patentable subject matter? Is the artificial effect that arises, because information is stored in RAM and there is communication over the Internet or wifi, sufficient? Does any physical effect give rise to a manner of manufacture? Are the mere presence of an artificial effect and economic utility, without more, sufficient to determine manner of manufacture?
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.”
27. Thus in relation to so-called business related inventions, it is necessary to look at the invention as a matter of substance, rather than as a matter of form. Upon doing so one will then be able to ascertain if this substance provides for a manner of manufacture using the established authorities. Relevantly RPL and Research Affiliates provided principles that assist in determining where the substance of these types of inventions resides and whether that material is patentable. In particular at [99] to [107] of RPL, their Honours reiterated a series of these principles from Research Affiliates (in particular at [94]).
28. Conveniently these principles have been summarised by the Delegate in Aristocrat Technologies Australia Pty. Ltd. [2016] APO 49 at [35], which I repeat below:
“I conclude that it is relevant to consider a range of matters. Without seeking to be exhaustive, these include:
·there must be more than an abstract idea, mere scheme or mere intellectual information;
·is the contribution of the claimed invention technical in nature;
·does the invention solve a technical problem within the computer or outside the computer;
·does the invention result in improvement in the functioning of the computer, irrespective of the data being processed;
·does the application of the method produce a practical and useful result;
·can it be broadly described as an improvement in computer technology;
·does the method merely require generic computer implementation;
·is the computer merely an intermediary or tool for performing the method while adding nothing of substance to the idea;
·is there ingenuity in the way in which the computer is utilised;
·does the invention involve steps that are foreign to the normal use of computers; and
·does the invention lie in the generation, presentation or arrangement of intellectual information.”
29. I note that there appears to be no dispute as to the legal principles involved. Rather the area of disagreement is the substance of the invention and its characterisation.
Stringency of Tests
30. As examination was requested after 15 April 2013, the substantive amendments of the Act brought about by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (“RTB”) apply to the patent. In particular the amendments to s101E of the Act allow the Commissioner to revoke an innovation patent if she is not satisfied on the balance of probabilities that the invention, so far as claimed, satisfies the criteria of s18(1A)(a).
Do the Claims Comprise a Manner of Manufacture?
31. I will initially consider this question with regard to the independent claim (claim 1) and will afterwards consider the dependent claims.
Claim 1
32. Claim 1 involves a method of innovation that may be summarised as follows:
· an organisation engages with an innovation services provider to innovate;
· the organisation discloses aspects of the organisation to the innovation services provider;
· a financial return to the innovation services provider for the innovation is specified
· the innovation services provider defines the innovation as an IP right prior to its disclosure to the organisation; and
· the financial return is at least partially based on the value/benefit/advantage to the organisation of the IP right.
33. To my mind claim 1 is nothing more than a mere business scheme outlining the nature of consideration due to one party for rendering innovative services to another. The parallels to Grant are both obvious and compelling. Like Grant there is no “…artificial state of affairs, in the sense of a concrete, tangible, physical, or observable effect”, and as stated in Grant at [32] mere schemes have never been held to be patentable. It follows that claim 1 is not for a manner of manufacture.
34. I have arrived at the above using principles available from Grant alone. When recourse to more recent jurisprudence is undertaken, in the form of Research Affiliates and RPL it is clear that one arrives in the same place. The substance of the invention is the business scheme as discussed above.
35. I note that the inclusion of “method of innovation” and “innovation” in the claim language does not materially affect the substance of the invention or provide sufficient physicality to the invention to overcome the prohibition based on Grant. The reason for this is that it is apparent from the invention, both claimed and as described, that the “innovation” exists at a conceptual level such that the precise details therefore are not important to the performance of the invention. That is, in terms of “innovation” per se, the invention as claimed and described comprises nothing more than a request or direction to an innovation services provider to “go away and innovate for me”.
Claim 2
36. Claim 2 is substantially similar in scope to claim 1, and similarly suffers from the same defects. It follows that claim 2 is also not for a manner of manufacture.
Are any of the Dependent Claims for a Manner of Manufacture?
37. I have also considered each of the dependent claims. None of these add anything of substance that fundamentally escapes the patentability issues of the independent claims. It follows that none of the dependent claims are for a manner of manufacture.
Is there anything within the Patent that provides for a manner of Manufacture?
38. I have considered the patentability of the invention as claimed in view of the patent as a whole. I will now consider whether there is any material in the patent, beyond that already considered, that may be claimed and result in a manner of manufacture.
39. All the alternative embodiments disclosed in the patent have been outlined earlier in this decision. It is apparent that each of these merely provide a variation on the invention the subject of the claims, principally with respect to the nature of the innovation services provider (e.g. having in house patent attorney or in contracting entrepreneurs). As for the invention as claimed these embodiments if claimed would still be for nothing more than a business scheme setting terms of financial reward in return for innovation services provided.
40. I conclude that there is nothing in the patent, beyond that already considered, that could be claimed so as to result in a manner of manufacture.
41. I consider it appropriate to now consider the Patentee’s submissions on manner of manufacture. It should be apparent from the above that I disagree with the Patentee’s primary contention that the incorporation of “innovation” per se confers patentability, simply because such innovation exists in the claim at a conceptual level and no more.
42. I note that the Patentee has made extensive submissions with recourse to a multiplicity of authorities. However, none of these submissions detract from the fact that the invention as described and claimed is for a scheme per se. They also do not ameliorate the fundamental flaw in the Patentee’s arguments, namely that the inclusion of “innovation” at a conceptual level does not materially alter the patentability of the invention.
43. It should also be clear that there is no basis to refund the hearing fee, given that the manner of manufacture objection has been upheld. I also fail to see how there has been any denial of natural justice as suggested by the Patentee. The fourth report issued on the 24 July 2018 and the Patentee responded with amendments and submissions on the same day. Further submissions were filed on 25 July 2018, followed by two further filings of separate amendments and submissions on the 26 July 2018. The Examiner considered these in the fifth report, indicating that principles of natural justice were met. The fact that this report went out on the final day to gain certification is not, per se, a denial of natural justice. It is a mere consequence of the fact that s101C(b) and reg9A.4 prescribe a certain timeframe within which examination of an innovation patent must be completed.
44. Finally, there were assertions made by the Patentee (in PS 05-10-18 at page 7) to the effect that “…exclusion from ‘manner of manufacture’ is extreme and hardly ever justified and ‘it is well settled that the Commissioner ought not to refuse acceptance of an application and specification unless it appears practically certain that letters patent granted on the specification would be held invalid’…”. These submissions appear to ignore the fact that the post RTB standard applies to the patent which, as noted above, allows the Commissioner to revoke an innovation patent if she is satisfied on the balance of probabilities that it does not comprise a manner of manufacture. It should be apparent that I consider that such is the case. Nevertheless, even if the previous standard of being “clear or practically certain” applied then I would still reach the same conclusion as to the patentability of the invention both as claimed and as described with respect to all embodiments.
Manner of Manufacture – Conclusion
45. None of the claims are for a manner of manufacture and there is no other subject matter within the patent that would lead to a manner of manufacture if made the subject of a claim.
Conclusion
46. None of the claims are for a manner of manufacture. In addition I see no material in the patent that could be made the subject of a claim so as to result in that claim being for a manner of manufacture. I therefore revoke the patent.
Dr W.E. Guinea
Delegate of the Commissioner of Patents
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