Diogenes Limited
[2023] APO 5
•1 February 2023
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Diogenes Limited [2023] APO 5
Innovation Patent: 2020104437
Title:Wagering apparatus, methods and systems
Patentee:Diogenes Limited
Delegate:Greg Powell
Decision Date: 1 February 2023
Hearing Date: 8 December 2022, by Video Conference
Catchwords: PATENTS – examiner objections – whether claims are for a manner of manufacture – substance of the invention is a scheme for offering partial or full buy-outs to players participating in a wagering event – claims are not for a manner of manufacture – nothing could be added to the claims that would avoid this finding – patent revoked
Representation: Patent attorney for the applicant: Madeleine Kelly and Rory Campbell of FB Rice Pty Ltd
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Innovation Patent: 2020104437
Title:Wagering apparatus, methods and systems
Patentee:Diogenes Limited
Date of Decision: 1 February 2023
DECISION
The claims of the patent, as proposed to be amended, do not define a manner of manufacture.
I do not see any subject matter in the body of the specification from which valid claims could be drafted to overcome this finding.
I revoke the patent.
REASONS FOR DECISION
BACKGROUND
Patent application 2020104437 (the present application) was filed by Diogenes Ltd (the applicant) on 6 August 2020 as a complete application for a standard patent (original application number 2020213361). It was filed as a divisional application of patent application 2018204446 (the parent application – which lapsed after not gaining acceptance). On 23 June 2021, the applicant requested that the complete application for a standard patent be converted to a complete application for an innovation patent. This request was granted on 2 July 2021. Following a formalities check and acceptance, a patent was granted on 28 July 2021. Notwithstanding that this is a granted patent, I will refer to it as an application during this decision.
The parent application is a divisional application of patent application 2015242951 (the grandparent application – which lapsed after not gaining acceptance). The grandparent application is a divisional of patent application 2013333573 (the great-grandparent application). Ultimately, the present application claims priority from US applications 13/605813 filed on 6 September 2012 and 13/958028 filed on 2 August 2013.
The present application was filed after 15 April 2013. The present application is therefore governed by the Patents Act 1990 (the Act) as amended by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012. Under section 101E of the Act, if I am satisfied on the balance of probabilities that the application complies with the requirements of the Act, I must notify the patentee that the application has been examined and that a certificate of examination is to be issued. If I am not so satisfied, I can revoke the present application under section 101F.
A first examination report was issued on 16 December 2021 raising objections in relation to manner of manufacture and novelty. The applicant responded to the first examination report on 28 February 2022 by way of written submissions and proposed amendments to the description and claims. A second examination report issued on 30 March 2022 maintaining the objection to just manner of manufacture. Another response was filed on 16 May 2022 with further arguments. On 10 June 2022 there was a phone conversation between the examiner and the applicant’s agent during which the examiner informed the agent that an adverse report would issue. Following that conversation, on 16 June 2022 the applicant requested to be heard. In addition, a third examination report issued on 16 June 2022 maintaining the manner of manufacture objection.
As amendments have been proposed, this decision is based upon the specification as proposed to be amended by the statements of proposed amendments filed up to and including 28 February 2022.
Finally, while examination should have initially been completed, and a decision to certify made, by 16 June 2022, the time for carrying out examination is extended by 3 months from the date of the present decision (see reg 9A.4(f)).
Hearing request
The applicant requested a hearing on the same day that the examiner’s third report issued given the fact that the examiner had informed them in an earlier phone call that they intended to issue an adverse report.
In accordance with the Commissioner’s usual practice, the applicant was initially informed that hearings relating to examiner’s objections are normally heard by way of written submissions, and was provided a deadline to provide any submissions they wished to file. Before the end of the deadline, the applicant requested that the hearing be conducted orally. Written submissions for the hearing were received on 1 December 2022.
Some observations
Great-grandparent application
It is worth noting the great-grandparent application was subject to an opposition. That opposition was successful. In my decision (Sportsbet Pty Ltd v Diogenes Limited[1] – ancestor decision) I found that the claims did not define a manner of manufacture. As I was of the opinion that the great-grandparent application did not contain material that could be used to avoid my finding, I refused the application. I observe that the description and drawings of the present application is essentially identical to that of the great-grandparent application.
[1] [2017] APO 60
Expiry date has passed
I note that the present application expired on 20 August 2021, which was 8 years from the date of the patent, being the filing date of the great-grandparent application. This date was also before the date of the first report. It is not usual for the Commissioner to undertake actions on an expired patent. However, I note that, in order for the patentee to enforce their rights in relation to an innovation patent, it is necessary for that patent to be examined and certified. In such circumstances, and noting that the patentee could potentially bring infringement proceedings up to 6 years after expiry (assuming infringement proceedings occurred just prior to the expiry date – see subsection 120(4) of the Act), undertaking examination (and this decision) after the expiry date is appropriate.
The invention as described
The background to the present invention is contained in the ancestor decision. As outlined in that decision:
“The opposed application relates to the area of wagering systems and methods. The opposed application indicates that there are a range of betting and lottery products in the market and exemplifies pool products in particular, where the user (the “punter”) makes a selection of a number of outcomes (“legs”) of individual games. For example, in many countries it is possible to try and pick the winner of, say, six horse races to win a relatively large prize (a “jackpot”) for a relatively small outlay. However, even if the punter makes only one incorrect selection, they do not receive any pay-out.”[2]
[2] Ancestor decision at [10]
Moreover, as noted in the ancestor decision:
“… the evidence of [inventor Bernard Marantelli] notes (at [6] and [7]) that he believed that, as people got closer to wining the jackpot on their multi-leg wager, they could not emotionally, or financially, handle the ‘all or nothing’ nature of the bet. The specification notes at page 1 that, within this market there was a need for new products ‘to generate and maintain consumer interest’.”[3]
[3] Ibid at [11]
The summary of the invention states that the present disclosure is directed to “a market gap for the creation of a unique betting product”.[4] The product permits a player to make, as a single wager, selections of results in a very large variety of different and discrete events (“legs”). Then, if the player correctly selects the results that occur, they have the opportunity to share in the pool of the stakes of all the other players (e.g. a jackpot), with amounts covering operating costs and/or operator profit being removed from the pool.
[4] Specification, page 2a lines 3–4
Differentiating the product from those that existed previously is the concept that, after the player has placed their wager, and at a point in time after the start of the wager, including a time where some of the legs have not been decided, a “buy-out” offer is made to those players who have correctly selected the results so far and could still win the jackpot. This buy-out offer is, in effect, an offer for the player to sell their ticket(s) back to the game operator, or other entity, at a price that could be the full jackpot value of the ticket, but is not usually the full jackpot amount, but is, nevertheless, more than what they paid for the bet. If the player accepts the offer, they no longer remain in the game and cannot share in the jackpot.
Figure 5 illustrates the process that occurs after the player has made their wager and a number, but not all, of the legs have been completed:
While this is not evident from the figure above, the invention also includes what is called a “partial buy-out offer”. The partial buy-out offer is an amount offered to the player for their ticket which, if they accept, allows them to remain in the game such that, if they are then successful in the remaining legs, they share in the jackpot prize, but they receive less of the jackpot pool that they would have received if they did not accept the partial buy-out offer.
Program architecture
The functional program architecture is shown in blocks in figures 3A, 3B and 3C. These blocks show different parts of the architecture:
Mid-Tier program
The “core program” of the invention is represented by the centre block which is identified as the Mid-Tier program 402. This program interacts with the customer and website administrator input programs in the left side block identified as the Website program 404, and with the accounting programs in the right side block identified as the Micro Tote program 408. Mid-Tier program 402 communicates bi-directionally with the Website program 404 using the Merchant API 406 and with the Micro Tote program 408 using the Tote API 410.
The Mid-tier program is composed of a Merchant API program 420, a Cash-in program 422 and an Administration program 424. Each program is composed of several sub-routines for carrying out various tasks associated with the placing of a wager and provision of buy-out offers, files storing data that can be updated as results of legs are received, and programs associated with administrative functions.
The applicant stated that the most critical program of the Mid-Tier program was the Cash-In program 422. This program is responsible for determining when an offer to buy-out a ticket holder will be made, and the price that will be offered. The Tickets routine 456 in the program stores all the tickets for a pool and who the rightful owner is, the Offers Generation routine 452 generates, when the time comes, a set of offers for those tickets that could still win and send those offers to those players who possess those tickets (which offers the players can decline or accept), and the Offers routine 454 stores all the offers made, accepted and declined.
The other programs of the Mid-Tier program, being the Merchant API 420 and the Administration program 424 communicate with the players and control the Mid-Tier program, respectively. Their tasks do not need to be expanded upon in detail. I will observe, just for clarity, that the Merchants 460 routine is to create, read, update and delete (CRUD) third party Merchant details within the Mid-Tier program.
Website program
The Website program 404 is the part of the system that enables a player to interact with the Mid-Tier program. While the tasks carried out by this program seems self-explanatory from the labels in the various parts, this program can present a dedicated website to a player (User Interface 480) allowing them to login and enter wagers. Alternatively, the player could interact with a Merchant Microsite 500 that the player is already a customer of, which has its own established means of collecting wagers from, and paying disbursements to, the player. The Merchant Microsites would communicate with the Mid-Tier program via its own Merchant API 406.
The Admin Console 510 is operated by the website administrator to manage customer details, manage customer deposits and withdrawals, and manage sales, marketing and customer service.
Micro Tote program
The Micro Tote program 408 is described as being:
“the program equivalent to a ‘Totalisator’ which receives, calculates and provides a display output for all bets made in a given progressive pool bet system.”[5]
As such, the various routines within the program sum all the wagering and calculate each potential pay-out from the pool. It calculates and continuously recalculates the odds as each bet is placed, accepted and as each event result occurs, so as to determine the odds for each potentially winning ticket within the pool bet. This information is sent to the Mid-Tier program via the “TOTE API”.
[5] Ibid page 12 lines 18–19
System
Figure 1 shows the basic architecture of the system used in implementing the process:
The description states that the program, specifically the Mid-Tier program 402, may be:
“a dedicated stand-alone server system and program for hosting the pool based wagering system of the present disclosure, or the subroutines unique to the pool based wagering system of the present disclosure may be added to a server system and program that also hosts other types of wagering pools”[6]
[6] Ibid page 9 lines 20–23
That is, the program could be hosted on server 12, allowing a player to use various electronic means such as dedicated terminals in betting establishments, laptops, smart phones, and the like to access the server. The player selects the winners, or, in some cases, the particular scores (or any other variables) of the matches, for each particular sporting event within a defined accumulated pool. The player receives, depending on the option they access the server with, either a printed ticket, or an electronic ticket representing the selections and the amount of the bet. Depending on the option used, the player can place bets via a coin slot, a note or bill acceptor, readers or validators for credit cards and the like, or electronically via phones, RFID tags or other wireless devices. The device would also include options that allow a player to accept and buy-out offer if it is offered, or to collect their winnings.
It must be noted that the discussion of the system, in terms of technical detail, does not go much further than the language that I have used above. In general, elements are mentioned in very broad terms and exemplified by entirely generic examples of that element. At various points the description makes mention of various types of displays being used (e.g. LCD, LED, OLED, television, plasma, etc), mentions servers, computers, stations, monitors, etc, and mentions APIs and POST routines. However, these are all generic elements. Specifics are not as detailed as they might be when describing, for example, the circuitry that exists in each machine. In addition, the described mode of operation uses terms such as “generate”, “determine”, “receive”, “calculate”, and the like. The actual implementation is left entirely up to the reader.
Claims
The specification, as proposed to be amended on 28 February 2022, has 4 claims of which claim 1 is independent. The claims as proposed to be amended are as follows:
“1.A wagering apparatus operative with a wagering device for allowing a placement of a wager on a wagering event, the wagering apparatus comprising:
a server system controller configured to communicate with the wagering device, wherein one or more of the server system controller and the wagering device comprise one or more of:
a payment acceptor to establish credits on the wagering device,
meters configured for monitoring credits established by the payment acceptor, and a display and one or more user input controls;
the server system controller further configured to cause at least one of the server system controller and the wagering device to:
receive a wager from the player, wherein the wager comprises a value associated with one or more potential outcomes of the wagering event,
determine that the wager has the potential to correctly select an outcome of the wagering event based on the continuously monitored progress, thereby qualifying the player to win,
generate an option for the player to one or more of fully cash out of the wager or partially cash out of the wager prior to a conclusion of the wagering event,
present the option on the display,
receive a selection of the option from the player, wherein the selection of the option is provided via the user input controls,
upon receiving the selection of the option, one or more of: terminate the player’s participation in the wagering event, allow the player to continue to participate in the wagering event with at least a portion of the wager, relinquish rights of the player in at least a portion of the wager, and one or more of transfer, sell or put out for bid or auction at least a portion of one or more of an entitlement, right, or ownership in at least a portion of the wager of the player to at least one of a third party or another player; and
issue one or more of a credit, tokens, currency, coupon, voucher, credit slip, award, and funding of a player's electronically recordable identification card or online account of the player.
2.The wagering apparatus of claim 1, wherein the wagering event comprises one or more of an entire wagering event, a partial wagering event, a divisible component of a wagering event, multiple independent wagering events occurring sequentially or concurrently, and a compilation of related wagering events, including one or more probabilistic events, sporting events, eSports, e–sports, competitive gaming, electronic sports, fantasy events, real games, virtual games, fantasy games, slot machines, keno, poker, video games, racing, lotteries, live events, pre-recorded events, online events, broadcast events, card games, politics, sales, stocks, celebrity gossip, movies, reality TV, football (‘soccer’), American football, Australian rules football, baseball, cricket, basketball, golf, hockey, auto racing, legends, rugby, wrestling, surfing, mixed and martial arts.
3.The wagering apparatus of claim 1 or claim 2, wherein an amount of the option is variable and based on one or more of a calculated probability, an originator of the proposal, a negotiation, a bidding process, an auction, the one or more players, and a third party, and wherein the award comprises one or more selected from the group consisting of monetary awards, a designated monetary amount, a percentage of the designated monetary amount, nonmonetary awards, a prize, a payment, a designated currency, virtual currency, tokens, credits, coupons, services, personal property, real property, virtual property, assets, investments, negotiable instruments, commodities, food, lodging, entertainment, alleviation of obligations, gaming opportunities and wager enhancement.
4.The wagering apparatus of any one of claims 1 to 3, wherein the wager comprises one or more of: fixed odds single wagers, multiple wagers, full cover wagers, full cover wagers with singles, Any to Come (‘ATC’) or if cash wagers, specialty wagers, forecasts, fixed, variable, guaranteed, parimutuel wagering, tote wagering, fixed-odds wagering, accumulator or parlay wagering, fixed odds, a pool, progressive, fixed pool, variable pool, and guaranteed pool, exotics wagers, pre-off and in play wagers, and antepost wagers.”
“continuously monitored progress”
During the hearing, I noted that I had some concerns around the phrase “continuously monitored progress”. I stated that I was not entirely sure what it meant. I noted that the applicant referred to page 25 lines 20-22 and page 26 lines 8-10 of the specification in their submissions, but questioned how these clarified the matter.
Page 25, lines 20–22 state:
“It is also envisioned that cash-in buy back may also operate during live play and offer continuous cash-in ability as soon as it is technically possible, for example at the half-time of a match or during the running of a match when possible.”
Page 26, lines 8–10 state:
“It is further contemplated that the ability to trade or sell tickets back to the system operator may be continuous, and also in these circumstances, the bid may be extremely time sensitive.”
I questioned what effect “as soon as it is technically possible” on page 25 had on how “continuous” the continuous monitoring of progress was. I observed that the passage gave the half-time of a match as an example of when cash-in buy back is “technically possible”. I also noted that the specification referred to pausing game play of a gaming machine after four reels had spun and were displaying, but the fifth reel had not stopped spinning, or pausing the drawing of Lotto balls or the like after a certain number of balls being drawn and offering a cash out or buy-out option. I noted that, to my mind, rather than being a second-to-second monitoring, the monitoring of progress it was not continuous even though the passage uses the word “continuous”. That is, a cash in ability became “technically possible” at certain specific points in time, whether it was a natural break in game play (e.g. half-time) or a deliberate pausing of the game, but it was not technically possible prior to that point.
As to page 26, I observed that the passage indicated that the invention allowed for the ability to trade or sell tickets back to the system operator being continuous. However, in my opinion, that had nothing to do with the progress of the event. Instead, it was a capability of the player being able to present their ticket to the machine or the like at any time to enquire what they might be offered as a buy-out for their ticket. Neither passage provided something that clarified the scope of the term.
I observed that “continuously monitored progress” had been added to claim 1 via the amendments made, but they are not used in the description. I noted that this cast doubt on whether the amendment was allowable. I noted that “continuously monitoring progress” may be a concept that arose out of the specification despite the absence of the words, but, when the amendment to insert the words had been proposed (in anticipation of an examination report), there had been no indication of what part of the specification provided support, unlike other instances for this, and any ancestor, application. I invited the applicant to provide submissions on the parts of the specification that the applicant thought supported this concept, and why the amendment was allowable. The applicant provided these submissions (post-hearing submissions) on 13 January 2023.
In their post-hearing submissions the applicant firstly took issue with my observation that the phrase “as soon as it is technically possible” meant the type of event that could be wagered on had to have breaks, and a second-to-second monitoring was not contemplated. They noted that:
“At page 4, lines 22 to 33, an event is described by way of the following examples:
any event where betting may be utilized or even scenarios where play is just for fun, such as, and without limitation, any type of actual or virtual sporting event or any type of game […] other types of sporting events (i.e., American football, horse racing, car racing, hockey, baseball, basketball, lacrosse, wrestling, just as a few examples) as well as being expanded to other events such as games (both virtual and real), including but not limited to, virtual and real card games (e.g., jacks, poker, blackjack, Texas hold 'em, etc.), lotteries, racing, slot machines and other multi-leg/multi-events/multi-outcome or divisible games (such as games or sets in tennis, innings in baseball, etc.), or any combinations of desired events.”[7] (bolding in submission)
[7] Post-hearing submissions, pages 1–2
They also noted that:
“… the specification defines the term “leg” for example, page 5 lines, 13 to 26:
The term ‘leg’ as used herein should be broadly construed and may comprise any desired number of individual components of any type of event, such as any type of game or sporting event. For example, and without limitation, a leg may comprise a sporting event in its entirety, such as a soccer game, American football game, horse race, car race, hockey game, baseball game, basketball game, lacrosse game, wrestling match, etc., any portion of a sporting event, such as an inning of baseball, a half of a soccer game, a single horse race, a quarter of an American football game, a single wrestling match, etc., an occurrence within an event or game, such as a particular player scoring a goal (e.g., in hockey or soccer) or a particular player getting a hit in a baseball game, or a combination of games or events such as the World Series in baseball or any other sports playoff series. In addition, as an example and without limitation, a leg may comprise any desired number of individual components of any game or a game in its entirety, virtual and real, such as, for instance, and without limitation, keno, jacks, poker, blackjack, Texas hold ‘em, racing, video games (including live and online video games, as examples), slot machines and lotteries, etc.”[8] (bolding in submission)
[8] Ibid, page 2
The applicant submitted that, given this discussion, a wagering event could be a “divisible game” such a soccer match which has predefined “break points”, such as the two halves of the match, but could also be a game that does not have predefined “break points”, such as a single horse race.
I disagree that the quoted passages support a finding that continuous monitoring includes a second-to-second monitoring arrangement. It is clear that a horse race is described in the quoted passages as a “leg” of a wagering event that is comprised of several horse races. Clearly, in that case, the wagering event does have predefined break points; these being at the end of each race. As such, “as soon as it is technically possible” means that options are updated at breaks.
The applicant stated that their interpretation was:
“further supported by the description in the summary section on page 2, paragraph 1, which states:
The present disclosure is directed to a market gap for the creation of a unique betting product where players make selections in a number of different legs which, as defined below, can include any of a variety of different discrete events (e.g., an auto race), partial events (e.g., an inning of a baseball game, a set in tennis), components of events (e.g., one or more at bats by a particular player in baseball game or numbers selected in a particular position in a lottery drawing), multiple independent events (e.g., two football games that may occur sequentially or concurrently) and/or compilations of events (e.g., a championship series).”[9] (bolding in submission)
[9] Ibid, page 2
This passage does not help the applicant. All of these examples are natural breaks. For example, every time a particular player steps up to bat in an innings of a baseball game, the previous batter must have been called out, thereby creating a “pause”
The applicant also pointed to a passage in the specification that states:
“A unique differentiator of the product of the present disclosure may be that at any desired time after initiation of an event (such as at any time after a ‘ticket’ is purchased until completion of an event, after each leg has been completed, between legs, including potentially as a leg is ‘in-play’, and/or during a designated span of time before, during and/or after any of the legs), any desired number of players who remain eligible for a prize (and potentially those still eligible for bonus and/or consolation prizes) or to win or have correct (win) predictions for each of the events or legs that are completed, may be offered a ‘buy out’ or an opportunity to sell their tickets”.[10]
[10] Specification, page 3 lines 4–11
The applicant relied upon this passage because, in their opinion, it:
“… provides support for the feature of ‘the continuously monitored progress’ in that it makes it clear that after the initiation of an event and up until the event has completed, a user may be offered an opportunity to cash out or partially cash out their wager. This would inherently require monitoring of the event, and particularly where a buyout offer may be made as a leg is ‘in-play’, continuous monitoring. For example, if a baseball player comes up to bat for a second time, and a wager has been placed that said player will bat three times, the value of the wager will have gone up, as the likelihood of the circumstance eventuating has increased. The user who placed the wager may then cashout their ticket with the increased value, based on the continuous monitoring of the game.”[11]
[11] Post-hearing submissions, page 3
However, what this passage, in common with the passage from pages 25 and 26 quoted above is describing as being executed “in-play” are buy-out opportunities. These offers, while calculated based upon the monitoring of what has occurred in each leg, are not the monitoring of the leg.
The applicant further referred to other passages that stated that:
“… the players that correctly select the winners of any number of legs can also win one or more interim Jackpots that occurs prior to completion of the event.”[12],
“… a betting parlor may have a series of televisions and monitors broadcasting the event (i.e., a soccer match), while also displaying streaming data concerning for example the number of tickets that remain in the pool, alerts when a goal is scored that eliminates tickets from the pool, and potentially the offers to buy outstanding tickets.”[13]
and
“As each match is played – and each goal is scored – player bets represented by their respective tickets will gradually be eliminated from the remaining tickets that can still win the Jackpot Pool.”[14],
and submitted that:
“… to be able to provide live updates of the betting pool as described above, the progress of the event would need to be continuously monitored”[15]
[12] Specification, page 3 line 34 – page 4 line 2
[13] Ibid, page 20 lines 8–12
[14] Ibid, page 22 lines 19–21
[15] Post-hearing submissions, page 4
They also referred to the passage from page 25 quoted above and stated:
“… for the cash-in buyback to be feasible during live play and offered continuously (as soon as it is technically possible), continuous monitoring of the event must inherently be taking place.”[16]
[16] Ibid, page 4
I think it can safely be said that the wagering event is “continuously monitored’. However, it has not been established that this monitoring is one that provides a second-to-second monitoring and update of betting pools. Indeed, it could be said that the specification teaches away from this option. All examples given in the specification involve breaks, at which time whatever system exists is updated by whatever method might be contemplated by the person skilled in the art (which includes a manual input). It is certainly envisaged that a buy-back scheme can be offered continuously, allowing the players to take that option, but the monitoring does not have to be second-to-second to achieve this. And the specification does not establish how it is done, or how it could be done.
As such, I am satisfied that the amendment to insert this feature is allowable. However, in my opinion, the function that is captured by the phrase “continuously monitored progress” is the capturing (or input) of a result or occurrence within an overall wagering event to generate what might be termed a data point at discrete points in time, with this data point then being used to update various files to determine tickets that could still be successful in the wagering event. There is nothing more “technical” than this. I would also observe that this monitoring, to my mind, is the first step shown in figure 5 above.
Manner of manufacture
Through all three reports, the examiner has maintained an objection that the claims do not define a manner of manufacture. It is appropriate to summarise the law at this point.
Statutory framework
Section 18(1)(a) of the Act provides that an invention is a patentable invention for the purposes of a standard 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 1623 (Imp) (“Statute of Monopolies”).
Legal principles
The classic definition of “manner of manufacture” is set out in National Research Development Corporation v Commissioner of Patents[17]:
“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?’”[18]
[17] [1959] HCA 67 (“NRDC”)
[18] NRDC at [14]
The High Court then went on to set out a test in terms relevant to the facts of that case:
“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 … that its value to the country is in the field of economic endeavour.”[19]
and
“The effect produced by the appellant's method exhibits the two essential qualities upon which ‘product’ and ‘vendible’ seem designed to insist. It is a ‘product’ because it consists in an artificially created state of affairs, discernible by observing over a period the growth of weeds and crops respectively on sown land on which the method has been put into practice. And the significance of the product is economic; for it provides a remarkable advantage, indeed to the lay mind a sensational advantage, for one of the most elemental activities by which man has served his material needs, the cultivation of the soil for the production of its fruits.”[20]
[19] NRDC at [22]
[20] NRDC at [25]
However, the High Court was not laying down a precise formulation that can be applied unthinkingly. In D'Arcy v Myriad Genetics Inc[21] it was said:
“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.”[22]
[21] [2015] HCA 35 (“Myriad”)
[22] Myriad at [23]
That case-by-case approach must have regard to the substance of the claimed invention, not simply the form of the claim[23]. The point is made most succinctly by Gageler and Nettle JJ:
“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.”[24]
[23] Myriad at [6] and [88]
[24] Myriad at [144]
To further guide the determination of patentable subject matter in the context of computer implemented inventions, a range of principles have been developed by the Full Federal Court. Recently, consideration has been given to these principles in the High Court decision in Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents[25] where the Court was evenly split regarding a finding of patentability. While split, the High Court affirmed the correctness of decisions in Commissioner of Patents v RPL Central Pty Ltd[26], Research Affiliates LLC v Commissioner of Patents[27], Encompass Corporation Pty Ltd v InfoTrack Pty Ltd[28], and Commissioner of Patents v Rokt Pte Ltd[29], while also appearing to confirm that an advance in computer technology is not a useful test for patentability.
[25] [2022] HCA 29 (“Aristocrat”)
[26] [2015] FCAFC 177 (“RPL Central”)
[27] [2014] FCAFC 150 (“Research Affiliates”)
[28] [2019] FCAFC 161 (“Encompass”)
[29] [2020] FCAFC 86 (“Rokt 2”)
The applicant sought to argue that the High Court in Aristocrat established that if a claimed invention disclosed an “adaption or alteration of, or an addition to”[30] apparatus that was well known in the common general knowledge “to accommodate the exigencies of”[31] a new idea, it was patent eligible. Then, along these lines, the applicant submitted that the claimed invention, involving the configuring the server system controller (which they conceded was known) to undertake the tasks defined was “an adaption or alteration of, or an addition to, apparatus well known in the common general knowledge” providing the capability to (i.e. to accommodate the exigencies of) change wagers.
[30] Aristocrat at [75]
[31] Aristocrat at [76]
I do not think that the Aristocrat decision creates any new principles over and above those of the Federal Court decisions that the High Court explicitly agreed with. Clearly, it is not the case that any “adaption or alteration of, or an addition to” a computer system results in a manner of manufacture. If that were the case, then the inventions of Research Affiliates, RPL Central, Encompass and Rokt would have been found to be a manner of manufacture. Clearly, adaptions, alterations, or additions to systems must be of the right character to confer patentability.
The principles of law that apply to the present matter in the context of computer implementation appear to be well reflected in that summarised and generally accepted by Robertson J in Rokt Pte Ltd v Commissioner of Patents[32] as follows:
[32] [2018] FCA 1988 (“Rokt 1”)
“17.1 The Court must decide, as matter of substance not form, whether the claimed invention is the proper subject-matter for a patent: RPL Central at [99]; Research Affiliates at [106], [117].
17.2 This requires consideration of both the claims of the Application and the invention described in the body of the specification: RPL Central at [114].
17.3 The assessment is not done mechanically. There are no precise guidelines or mathematical formula. It is ‘a question of understanding what has been the work of, the output of, and the result of, human ingenuity’ and then applying the developed principles: Research Affiliates at [116]. See further RPL Central at [112]:
Recognising that the claims are to a method and system comprising a combination of integers, it is necessary to understand where the inventiveness or ingenuity is said to lie ...
17.4 One well-settled principle is that a distinction exists between a technological innovation and a business innovation. A technological innovation is patentable. A business innovation is not: Research Affiliates at [94]; RPL Central at [100]. Consequently, a business method or scheme is not, per se, a proper subject for letters patent: RPL Central at [96]. Nor are abstract ideas, mere intellectual information or mere directions for use patentable: Research Affiliates at [101]; RPL Central at [100].
17.5 A computerised business method or scheme can, in some cases, be patentable. However, ‘[w]here the claimed invention is to a computerised business method, the invention must lie in that computerisation’: RPL Central at [96] (emphasis added). This requires ‘some ingenuity in the way in which the computer is used’: RPL Central at [104]. It is not a patentable invention ‘to simply “put” a business method “into” a computer to implement the business method using the computer for its well-known and understood functions’: RPL Central at [96]. In other words, if the ingenuity lies in the business method or scheme alone, the invention will not be patentable despite the computer-implementation.
17.6 Thus, 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: RPL Central at [96]. Contrary to [the applicant’s submissions at [49]], this is a binary distinction: the invention is either an unpatentable scheme or plan, or it is a patentable improvement in computer technology. In conducting the analysis, it is useful to:
17.6.1 ascertain whether the contribution to the claimed invention is technical in nature: RPL Central at [99], Research Affiliates at [114];
17.6.2 consider whether the invention solves a ‘technical’ problem within the computer or outside the computer: RPL Central at [99], Research Affiliates at [103];
17.6.3 consider whether the invention results in an improvement in the functioning of the computer, irrespective of the data being processed: RPL Central at [99], Research Affiliates at [118];
17.6.4 consider whether the invention requires merely ‘generic computer implementation’, as distinct from steps which are ‘foreign’ to the normal use of computers: RPL Central at [99], [102]; Research Affiliates at [101]; and
17.6.5 consider whether the computer is merely the intermediary, configured to carry out the method using program code for performing the method, but adding nothing to the substance of the idea: RPL Central at [99].”[33]
[33] Rokt 1 at [189]
Moreover, in looking at this, it is necessary to keep in mind the state of the art. In this regard Myriad stated:
“This appeal, however, collapses the anterior and subsequent questions – ‘Is there an invention?’ and ‘Is there a patentable invention?’ – into one inquiry. That inquiry requires a definition of the allegedly patentable invention. That definition depends upon the construction of the impugned claims read in the light of the specification as a whole and the relevant prior art. The prior art in this case was reflected in expert evidence at trial and set out in the scientific primer agreed between the parties and summarised later in these reasons.”[34]
and
“Based upon the expert evidence at trial, the primer may be taken as embodying the scientific background, presumably comprising common general knowledge, or at least relevant prior art, against which the complete specification, including the claims, is to be read.” ([39] my emphasis)
[34] Myriad at [12]
This point was emphasised in Rokt 2:
“The present appeal also calls attention to the single enquiry identified in this passage, namely whether, upon construction, claim 1 as read in the light of the specification as a whole in the light of the relevant prior art, which in the present case is the common general knowledge, is a manner of manufacture.”
…
The role of expert evidence in construing the patent specification and the claims is limited. It is to place the Court in the position of the person acquainted with the surrounding circumstances as to the state of the art and manufacture as at the priority date: Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd [2001] HCA 8; (2001) 207 CLR 1 at [24]; Myriad Genetics at [12]”[35]
[35] Rokt 2 at [68] and [73]
Examination
In the first report of 16 December 2021 the examiner raised lack of novelty and lack of manner of manufacture for a set of claims that had been filed in anticipation of examination. Relevant to this decision, the examiner, under manner of manufacture, stated (against slightly different claims) that:
“… the substance of the claimed invention lies in the conditions of the wager offered to the user”
These “conditions” related to the fact that the system and method of the invention provided the player with the opportunity to cash out of the wager before the end of the event (i.e. via a buy-out offer), with the amount offered being determined based on the wager and/or the potential outcome of the wagering event. The examiner observed that the substance was nothing more than a scheme for wagering implemented in generic hardware which did not “result in a useful physical result in relation to a material or tangible entity”.
In their response of 28 February 2022, the applicant amended the claims to insert the feature that specified the outcome that was to occur depending on the option selected by the player when offered a buy-out. These features had been found novel by the examiner in the first report. The claims are those that are before me now.
With respect to manner of manufacture, the applicant, observing that what was required was an advancement in computer technology, argued that the claimed invention represented an advancement in computer technology because there was an improvement in the functioning of the wagering apparatus as the functionality for the wagering apparatus had been changed so that it could distribute stakes between the game system itself (via a buy-back from the player), the player (via a full or partial buy-out offer) and/or a third party (by selling it the player’s stake), while ensuring the ownership of the various stakes was accurately recorded.
This argument was not accepted by the examiner in their second report of 30 March 2022. The examiner stated that the features added by the applicant:
“… cannot be said to enable the computer to perform an activity which it was not possible to perform prior to the method. The claimed invention instead defines wagering rules which when implemented do not result in a product or method providing the required artificial effect. There is no technical contribution either in the field of computer technology (eg. an improvement in processor, memory or display technology) or in some other field of technology to which the invention belongs. Contrary to the applicant’s submissions, neither the substance of the claimed solution nor ‘problem’ of ‘accurate and efficient stake distribution and organisation in a single or multiplayer wagering game/system’ are properly characterised as technical in nature. They are instead better characterised as belonging to the realm of business, commercial and financial schemes that have never been considered patentable.”
The applicant responded on 16 May 2022 and argued that configuring a system to provide accurate and efficient stake distribution and organisation in a single or multiplayer wagering game/system was a technical problem.
They stated that claim 1 recited specific and detailed implementation steps to be performed by the system to facilitate the accurate and efficient stake distribution. They noted:
“In other words, the specifically claimed technical implementation is the technical contribution that achieves improved accurate and efficient stake distribution and organisation.”
Referring to the Commissioner’s decision of Facebook, Inc.[36], the applicant argued that the logic employed by the examiner would have meant the invention of Facebook, which was found to be a manner of manufacture, would be considered “a scheme of saving data and reading data, using generic hardware, and not a manner of manufacture”, and that:
“… the fact that the improvement in Facebook was addressed to a developer imposed mechanism/a simple scheme, further shows that solutions to configuring systems to address problems, and provide functionality such as those addressed by the Facebook invention and the presently proposed claims, may indeed be considered a manner of manufacture.” (bolding in original)
[36] [2020] APO 19 (“Facebook”)
The applicant argued that the present application addressed:
“… the technical problem of how to configure a single or multiplayer wagering game/system to provide accurate and efficient stake distribution”,
and the solution was the specific implementation claimed.
The examiner remained unconvinced and, in their objection in the third report (which was directed to the claims set out above), stated:
“I have considered the applicant’s submissions in relation to manner of manufacture but do not find them persuasive. I maintain that the claimed invention is not patentable within the meaning of Section 18(1)(a) of the Patents Act 1990.
The applicant has submitted that ‘efficient stake distribution and organisation in a single or multiplayer wagering game/system is indeed a technical problem. The specific and detailed implementation steps to be performed by the system to facilitate the single or multiplayer wagering game and provide accurate and efficient stake distribution and organisation are recited in proposed claim’.
I respectfully disagree with the applicant’s characterisation of the identified problem as being necessarily technical in nature. The distribution of stakes in a wagering game seems better characterised as a financial process belonging to the realm of abstract business, commercial and financial schemes that have never been considered patentable. As stated in at [96] in Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177,
There must be more than an abstract idea; it [ie, the invention] 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.
While the applicant here has pointed to the specific steps of the claimed method, these do not relate to the specifics of computerisation. They instead define the steps of the scheme which, broadly put, are: receiving a wager, determining the potential of the wager, generating an option for the player to cash out the wager and issuing credit if the wager is cashed out. The implementation of this scheme cannot be said to result in a useful physical result in relation to a material or tangible entity which would generate the necessary artificial state of affairs to confer patentability.
The applicant draws my attention to Facebook, Inc. [2020] APO 19 and submits ‘that much like how the invention of Facebook was addressing the technical problem of configuring a mobile device to track advertisement conversion, the claims of the present innovation patent address the technical problem of how to configure a single or multiplayer wagering game/system to provide accurate and efficient stake distribution’.
While I accept that the ultimate problem addressed in that decision was allowing ‘the tracking of advertising conversion between clicks and downloads’, I draw the applicant’s attention to paragraph 85 of the decision where the hearing officer finds that the use of shared memory overcomes a technical limitation in the context of sandboxing. I am unable to identify any analogous problem solved by the current invention. I further direct the applicant’s attention to Sportsbet Pty Ltd v Diogenes Limited [2017] APO 60 which considered the parent application from which the current specification is ultimately derived. The hearing officer in that case refused the application as he considered that the specification did provide any material from which a claim to a manner of manufacture could be derived.”
To my mind, I see the examiner’s objections as pointing to the implementation in standard or generic computer technology (and using standard techniques) of a method that, in substance, presents a buy-out offer (full or partial) to the player and the player is given the option to accept the offer. In their opinion, this was not something that provided any technical effect or improved technology (computer or otherwise).
What is the subject matter of the claims?
The invention defined by claim 1 as proposed to be amended is a wagering apparatus which can interact with a wagering device so that wagers can be placed on a wagering event. The wagering apparatus includes a server system controller that is “configured” in some way such that the controller and/or the wagering device receive wagers for a wagering event, identify potentially winning wagers based upon the progress of the wagering event, generating, and presenting to the player, a cash out option which can be selected by the player and, if selected, causes the controller to undertake certain actions in relation to the wager and the player. As is clear from figure 1 above, the present invention includes computers and other hardware (e.g. televisions or mobile phone application technology), and the language used in RPL Central and Encompass, dealing with computer-implemented inventions, is applicable.
What is the contribution to the claimed invention?
Referring to the recent High Court decision in Aristocrat, the applicant submitted that a claim should be characterised in view of the common general knowledge. There is nothing controversial about this statement. It accords with the principles that have been developed in the case law. While the applicant submitted that the “relevant prior art” that the case law refers to is just another reference to the common general knowledge, which I do not think is entirely correct, in the present case this is of no import. This is because, while the applicant made submissions that the examiner had not established the common general knowledge at the priority date of the present application, the applicant conceded that the claimed features of the payment acceptor, the meters, the display and the player input controls were common general knowledge at the priority date.
Essentially, the applicant’s submissions reduced down to one particular position – that the characterisation of the examiner of the invention was wrong. In the applicant’s opinion, the invention should be characterised as a new betting platform that facilitated the changing of a wager. In the applicant’s submission, the configuration of new betting platform was claimed in claim 1. Key to the configuration were the steps of:
“ determine that the wager has the potential to correctly select an outcome of the wagering event based on the continuously monitored progress, thereby qualifying the player to win,
generate an option for the player to one or more of fully cash out of the wager or partially cash out of the wager prior to a conclusion of the wagering event,”.
Of specific importance to the applicant was that the controller continuously monitors the progress of the event. This meant that the system was able to perform the monitoring in real-time (and/or near real-time) and generate cash out options that track the event progress. To achieve this the applicant submitted that this required:
“… a specifically configured computer having the ability to perform these time-sensitive operations (in real time and/or near real-time)- without adversely impacting the in-progress (live) event. In other words, the system doesn’t merely generate cash out options but, rather, intelligently generates (and prompts the player with) a time-sensitive cash out option during a live (in progress) event at a particular point in time, through continual monitoring of the event’s progress. This gives the player the ability to react to the cash out option (generated and prompted by the system) in a timely manner, while ensuring that the cash out option accurately tracks the current progress of the ongoing event.
Thus, by configuring the server system controller to cause the server system controller and/or the wagering device to continuously monitor progress of the wagering event, the server system controller and/or the wagering device can determine that the wager has the potential to correctly select an outcome of the wagering event qualifying the player to win, and accordingly generate an option for the player to fully or partially cash out of the wager prior to the conclusion of the wagering event.” (bolding in original)
The applicant believed that, by continuously monitoring progress of the wagering event to determine whether the wager remained a potential winning wager, and consequently giving an option for the player to fully or partially cash out of the wager prior to the conclusion of the wagering event, the contribution was a specifically configured server system controller that achieved a technical benefit, rather than a generic implementation. While not explicitly stated by the applicant, the technical benefit would appear to be an improved wagering apparatus that allowed for changes in wagers to be made during the wagering event.
The applicant submitted that the specification set out the specific technical manner in which the server system controller was configured to perform this functionality. This, according to the applicant, solved the technical problem of how to provide an improved wagering apparatus that facilitated changes in wagers during the actual wagering event. The problem with this position is that the specification does not support it.
True it is that the specification says that the server is configured such that it determines when an offer to buy-out a ticket holder will be made, and the price that will be offered, which requires that those who own the tickets be identified. But this is not a technical problem. As I have already noted, the element that distinguishes the applicant’s offering from those of other persons operating in the same area, is the scheme of offering buy-outs which the applicant identified as a “market gap”. There is nothing to suggest in the specification, or elsewhere, that previous systems could not carry out such functions. While the applicant states that a server being configured to continuously monitor the wagering event and generating offers leads to a conclusion that what is being described and claimed is an essentially technical invention, with the greatest respect to the applicant, these are mere words.
As I have already discussed above, “continuously monitored progress” is the capturing of a data point(s) at discrete points in time, with this data point(s) representing an outcome within the wagering event.
Certainly, the system described gathers information about players, tickets and results of a wager event, stores this information, and uses it to generate offers. It also the case that the system is configured to identify which tickets remain potential winners because the event is continuously monitored. However, I cannot see how merely stating that something is “configured” achieves the result that what has been done is something more than a mere scheme.
To my mind, the contribution to the claimed invention is a scheme for offering partial or full buy-outs to players participating in a wagering event.
Is there an improvement to a device?
As noted above, the summary of the invention states that the present disclosure is directed to “a market gap for the creation of a unique betting product”. Moreover, as I have already noted, in the ancestor decision, that there was a belief that, as people got closer to wining the jackpot on their multi-leg wager, they could not emotionally, or financially, handle the “all or nothing” nature of the bet. The specification also noted that there was a need for new products “to generate and maintain consumer interest”.
Of these problems, there are none that are not a business problem. Prima facie, business problems require business innovations. It has been definitively established that business innovations are not patentable. Nevertheless, it is possible for an invention which may be, in essence, a scheme to nevertheless satisfy the requirements of manner of manufacture if it results in what may be termed a “real-world improvement”. See, for example, Grant v Commissioner of Patents[37]. That is, if, in implementing the business innovation, technical innovation is necessary, then that invention could be a manner of manufacture.
[37] [2006] FCAFC 120
It is at this point that the lack of detail of the specification defeats the applicant’s stance. Beyond the fact that the server carries out functions that were not done previously, which functions are part of the scheme, I cannot see any improvement to the device. No technical innovation can be gleaned from the specification. As I noted in the ancestor decision, the specification:
“… does not allude to any problem with the generic computers and users devices (such a [sic] smart phones) implementing the invention being incapable of performing the invention. Indeed, the applicant stated at the hearing that, having become aware of the invention, it was well within the skill of a programmer to write the software to implement the idea of a partial buy-out (notwithstanding its complexity – see also paragraph [40] of Mr Marantelli’s declaration). In addition, it was acknowledged that the components forming the system (and carrying out the method) were all known components and it was not contended that they were operating in any different way.”[38]
[38] Ancestor decision at [77]
The level of detail in the specification is clearly a factor in deciding what innovation is being carried out. As the Full Court noted for the patent dealt with in Encompass:
“… the specification leaves it to the user to implement the method in the way he or she might choose to do so, assisted by broadly-expressed and non-limiting suggestions or possibilities.”[39]
This is the case with the present application.
[39] Encompass at [23]
Having noted that, the Encompass Full Court then said:
“As the oral argument developed during the appeal, the appellants submitted that the claimed method is, itself, a high-level description of a computer program. We do not accept this characterisation. If approached from this point of view, the method is really an idea for a computer program, it being left (as we have said) to the user to carry out that idea in an electronic processing device. Indeed, the method, as claimed, is no different in principle to the methods claimed in Research Affiliates and RPL Central. Patentable subject matter is not provided simply because the method is a ‘method … in an electronic processing device’, which itself is not characterised. To find otherwise would be to elevate form over substance.”[40]
[40] Encompass at [101]
Analogously, as I observed in the ancestor decision, the present application is not directed to a technical innovation which was required to implement a business innovation. While it is accepted that the specification includes technical elements which have functionality that enables the scheme to operate, the presence of those technical elements does not change the substance of the invention from being a business innovation – i.e. a high-level idea for offering a buy-out offer to potentially winning tickets as a wagering event progresses. The scheme is what is shown in figure 5 (above) and it is clearly a business scheme.
Moreover, as I have noted above, stating that the computer has the capability of “continuously monitored progress” is, in this case, just that – a statement. It is no more technical than that and cannot establish that there has been an improvement to the device. To paraphrase Aristocrat[41], there is no reason to characterise the claimed invention as other than a claim for a new system of gaming. It is only in relation to this system that the invention subsists.
[41] Aristocrat at [73]
The dependent claims add nothing that could be characterised as something more than part of the business scheme. Claim 2 merely provides examples of multi-leg wagers (e.g. football, card games, politics, sales, stocks, celebrity gossip), claim 3 defines the options for payment of the amount (e.g. monetary awards, nonmonetary awards, food, lodging) and claim 4 defines the types of wagers that could be placed (e.g. fixed odds single wagers, multiple wagers, parimutuel wagering, tote wagering). None of these features could be said to be anything other than aspects of the scheme. They are entirely within the realm of business.
It follows that I agree with the examiner. The claims are not directed to a manner of manufacture.
Conclusion
The invention is not a manner of manufacture. Given the level of disclosure in the specification, I cannot see what could be added to the claims that would avoid this finding. In these circumstances, there is no utility in continuing examination.
Consequently, it is appropriate that I revoke the present application.
Section 40 observation
For completeness, I will note that, if it were the case that, to provide the server with the capability of continuously monitoring any wagering event (even those that did not have any natural breaks during the course of the event), something other than the programming that was within the skill of persons in the art would be required, then the specification is likely to be deficient under section 40(2)(a) of the Act. As I noted above, there is very little in the way of technical detail beyond mentions of elements in very broad terms and exemplified by entirely generic examples of that element. Most of the specification is taken up with a discussion on the rules, types of game, wagering process, game progress and pay-out arrangement of the scheme, with very little discussion of the actual programming involved. If this programming is not within the ordinary skill of the art, then it must be disclosed to the extent that the person skilled in the art could perform the invention. No disclosure would mean that the specification did not contain a clear enough and complete enough disclosure for the invention to be performed by a person skilled in the art, and this level of disclosure is required by section 40(2)(a). However, given my conclusions on manner of manufacture, it is not necessary to make any formal determination as to whether the specification complies with section 40(2)(a).
Greg Powell
Delegate of the Commissioner of Patents
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