Discovery Holdings Limited
[2011] APO 56
•9 August 2011
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Discovery Holdings Limited [2011] APO 56
Patent Application: 2007257547
Title:A method of managing a life insurance plan and a system therefor
Patent Applicant: Discovery Holdings Limited
Delegate: Ed Knock
Decision Date: 9 August 2011
Hearing Date: Written submissions filed on 31 May 2011
Catchwords: PATENTS – examiner objection – insurance scheme – life insurance plan which also includes insurance coverage for the parents of the person whose life is insured – business scheme – whether a manner of manufacture – no “physical phenomenon or effect” - whether an inventive step involved – all claims lack an inventive step – application refused
Representation: Patent applicant: Matthew Ward of Shelston IP, Sydney
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2007257547
Title:A method of managing a life insurance plan and a system therefor
Patent Applicant: Discovery Holdings Limited
Date of Decision: 9 August 2011
DECISION
The invention defined by claims 1 to 10 is not a manner of manufacture and thus does not meet the requirements of paragraph 18(1)(a) of the Patents Act. As well, the invention defined by claims 1 to 10 does not involve an inventive step and thus does not meet the requirements of subparagraph 18(1)(b)(ii) of the Patents Act.
Furthermore I am unaware of anything disclosed in the specification which is capable of meeting the requirements referred to in the preceding paragraph.
I refuse the application.
REASONS FOR DECISION
This matter concerns examiner’s objections and whether I should exercise the Commissioner’s power to refuse the application under subsection 49(2) of the Patents Act 1990.
Background
Application 2007257547 was filed under the provisions of the Patent Cooperation Treaty on 23 May 2007 as application PCT/IB2007/051947. Australia was among its designations, and it was allocated Australian application number 2007257547. It claimed priority from South African patent application 2006/04673 filed on 7 June 2006. International publication of the PCT application took place on 13 December 2007, the application being accorded the International Publication Number WO 2007/141697. The application did not undergo international preliminary examination under the PCT, and entered the national phase of processing in Australia on 9 December 2008.
The first of a total of four examination reports on this application was issued on 28 April 2010. The final date for acceptance of this application is thus 28 January 2012. In response to the first report the applicant filed fairly extensive submissions and a statement of proposed amendments, inter alia substituting a new set of claims. There have been no further amendments proposed to this application.
The examiner was not persuaded by these and subsequent submissions that the amendments had satisfactorily addressed the deficiencies in the application, and issued second, third and fourth reports. In the third report, the examiner offered the applicant a hearing, but this offer was not taken up. The fourth report went further and indicated the intention of the Commissioner to set the matter for a hearing. This was duly done, with the date for the hearing set at 1 June 2011. The applicant opted not to be heard, and instead filed written submissions for the consideration of the Hearing Officer.
On 2 June 2011 the applicant filed a divisional application of the present application having identical content to the present application. A similar circumstance to this has attracted adverse comment in the recent Patent Office decision Christopher Gary Parmenter [2011] APO 26 at [71]-[72]. I share the concerns in relation to this point expressed by the Hearing Officer in that decision. In essence the use of the divisional application provisions of the Patents Act in this way would appear contrary to the scheme of the Act, which sets up proceedings of the present type as being the decision of the Commissioner of Patents once and for all (subject, of course, to any court appeals) on whether to accept or refuse an application for a patent.
The specification
The present invention is said by the specification to relate to a method of managing a life insurance plan and a system therefor. The specification describes the basic principles of life insurance plans, which are that
“an insured person, sometimes referred to as an insured life, pays a premium to the life insurer, and the life insurer pays a predetermined sum, referred to as the sum insured, to the insured life or his/her beneficiary on the occurrence of an insured event. Typical insured events are the insured life suffering disability, contracting a dread disease or dying.”
The specification notes that the events exemplified in the passage above are events which occur to the insured life, and proposes extending the range of insured events to ones resulting in the insured life’s parents becoming incapacitated in their later years.
After this brief introduction the specification launches into two consistory statements and gives some broad examples of the sort of insured events which are contemplated by the invention.
This is followed by a description of the preferred embodiments. The specification cites 5% of the insured life’s benefit as a typical benefit which would be payable in respect of each parent, and states
“a parent will only be covered if there are no disclosures relating to the parent in the family history section of the policyholder’s application form”
which I take to mean something to the effect that there will be no benefit paid if the parent has a pre-existing medical condition.
Apart from oblique references to a maximum payment of R100 000 for both parents and to “top up cover”, the preferred embodiment provides no further details of the subject insurance plan.
10. The description of the preferred embodiment then concludes by outlining a rudimentary computer system for implementing the insurance plan. The system is described as comprising a memory and a processor in communication with each other. The memory stores information on premiums and information relating to parents of the insured life. The processor is adapted to receive data relating to the occurrence of an insured event, and upon such an occurrence is adapted to effect the paying out of a predetermined amount to the insured life. It is stated that
“The processor may include modules which are implemented by a machine readable medium embodying instructions which, when executed by a machine, cause the machine to perform any of the methods described above.”
11. No further details of the system are provided.
12. As proposed to be amended the specification concludes with ten claims. The two independent claims, claims 1 and 5, are in the same terms as the consistory statements. The claims read as follows:
1. A computer implemented method of managing a life insurance plan, the method including:
receiving a premium from an insured life;
on occurrence of an insured event to the insured life, paying out a predetermined amount to the insured life; and
on occurrence of an insured event to a parent of the insured life, paying out a predetermined amount to the insured life.
2. A computer implemented method according to claim 1 wherein the insured event is at least one of disability; contracting at least one of a plurality of predetermined diseases; and dying.
3. A computer implemented method according to claim 1 or claim 2 wherein the insured event for the parent or parents of the insured life is contracting at least one of a plurality of predetermined diseases.
4. A computer implemented method according to claim 3 wherein the insured event is at least one of disability; contracting at least one of a plurality of predetermined diseases; and dying.
5.An electronic system for managing a life insurance plan includes:
a memory for storing:
information relating to premiums received from an insured life; and
information relating to parents of the insured life; and
a processor disposed in communication with the memory, the processor being adapted to:
receive data indicating the occurrence of an insured event to the insured life, and in response thereto to effect the paying out of a predetermined amount to the insured life; and
receive data indicating the occurrence of an insured event to a parent of the insured life, and in response thereto to effect the paying out of a predetermined amount to the insured life.
6. A system according to claim 5 wherein the insured event is at least one of disability; contracting at least one of a plurality of predetermined diseases; and dying.
7. A system according to claim 5 or claim 6 wherein the insured event for the parent or parents of the insured life is contracting at least one of a plurality of predetermined diseases.
8. A system according to claim 7 wherein the insured event is at least one of disability; contracting at least one of a plurality of predetermined diseases; and dying.
9. A computer implemented method substantially as herein described with reference to any one of the embodiments of the invention illustrated in the accompanying drawings and/or examples.
10. An electronic system substantially as herein described with reference to any one of the embodiments of the invention illustrated in the accompanying drawings and/or examples.
13. The words “computer implemented” in claims 1 to 4 were introduced as a result of the amendments proposed to the application after the first report. The only other change resulting from those amendments was to add omnibus claims 9 and 10 to the original claims.
Examination history
14. Of the objections in the first report, it is convenient to initially focus on just one of those, in particular that objection which relates to manner of manufacture. According to this objection, the invention was said to not be a manner of manufacture because it was intellectual information, mere working directions and a scheme. The examiner cited Grant v Commissioner of Patents [2006] FCAFC 120 as requiring that a method must result in 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. The examiner also relied on Grant to contend that in the present situation the use of a computer system in implementing the method would not elevate the method to a manner of manufacture as the computer would only have an indirect involvement in the operation of the method.
15. The applicant responded to the first report with amendments (details given above) and submissions. In summary, these submissions defended the method claims against the objection that they did not define a manner of manufacture by arguing that they involved a transformation of data that resulted in a “useful product”. An attempt was made to draw significance from the fact that the method was now defined as being computer implemented, but this approach was subsequently abandoned further into the examination process.
16. In relation to the electronic system claims, the submissions cited the Australian Patent Office Manual of Practice and Procedure at 2.9.2.7, which states that “almost always…..a computer, when programmed to achieve any result which has utility in the field of economic endeavour [will be ‘a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the field of economic endeavour’].” It was submitted that
“This is clearly the case in the present circumstances, on the basis that ‘managing a life insurance plan’ is most certainly a field of economic endeavour.”
17. The submissions also asserted that, because the system claims are directed to an artificial electronic system, they cannot be construed as being directed to a purely intellectual system and they include an artificially created state of affairs as per the method claims.
18. In his second report on the application the examiner countered the applicant’s “computer implemented” argument by citing the decision in Invention Pathways Pty Ltd [2010] APO 10, and went on to say:
“There is no disclosure of any inventive process relating to the manner in which the calculations are done. There is nothing which constitutes the manufacture of a ‘useful product’. Nevertheless, this argument is a moot point, since there is no step in claim 1 (for example) that determines the payment of a premium. The claim is silent with regard to this feature. In the first step, the premium is already received.
From reading the specification as a whole the alleged invention lies within the method of managing a life insurance plan. The steps involved in this process are mere actions to be taken by legal entities as elements in a business scheme and as such, no concrete, tangible, physical or observable effect is produced as a result of the implementation of the claimed method. Therefore the method is not a manner of manufacture.
The system of claim 5 is clearly defining standard apparatus characterised only by the nature of the data that is stored within it. The only alleged difference between known apparatus and the defined apparatus is a condition of a legal arrangement (if an insured event happens to their parent). Such a difference does not have a material effect on the apparatus that could be considered to be a manner of manufacture.”
19. The applicant’s submissions in response to this second report was to point out that the requirement for a “concrete, tangible, physical, or observable effect” from Grant [supra] applied to the product resulting from the working of a method, not the steps of the method themselves, and went on:
“Taking a plain English meaning of the terms, it is difficult to conceptualise how the making of a payment could be considered as anything other than concrete, tangible, physical and observable. The result is observable in the sense that an observing party can identify that a payment has been made, and the result is tangible, in the sense that there is a real-world occurrence involving physical transfer of physical funds.”
20. The submissions contrasted the present invention with the inventions at issue in Grant [supra] and in Bilski v Kappos 130 S. Ct. 3218, 561 US __, 177 L. Ed. 2d 792 (2010), and suggested that the findings in these decisions was that “tangible” should be taken as requiring “a practical real world result” and “concrete” should be taken as requiring a result that is repeatable and predictable.
21. In his third report the examiner characterised the making of a payment as just being an agreement between the parties involved, and as such involving no physical effect, and continued:
“Therefore, I consider that the alleged invention defines a series of non-technical steps i.e. pure mental acts relating to a method of managing a life insurance policy and it does not relate to an artificially created state of affairs, in the sense of a concrete, tangible, physical, or observable effect. 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. It is apparent from the Grant case that it is the useful product or effect of the method considered as a whole that must result in an artificially created state of affairs, in the sense of a concrete, tangible, physical, or observable effect. The mere use of a physical form or device in the method, or a physical effect or transformation that arises incidentally or indirectly in its operation will also not be sufficient to change the fundamental character of the subject matter claimed.”
22. The applicant responded to this report by disputing the examiner’s characterization of the making of a payment as just being an agreement between the parties involved, and challenged the examiner to provide “a comprehensive and logical explanation as to why the making of a payment is not considered to be a physical phenomenon or effect”. The applicant also disputed the examiner’s apparent use of a test based on whether the invention was of a “non-technical” nature to determine whether the invention results in an artificially created state of affairs. As regards system claims 5 to 8, the applicant stated:
“... we respectfully request that the Examiner provide a reasonable explanation as to where in Australian law there is any basis for objection to a claim to a[sic] electronic system. A[sic] electronic system is, by its very nature, a manner of manufacture. There is no ‘form vs substance’ test under Australian law; that is a European requirement.”
23. In his fourth and final report the examiner reiterated his belief that the making of a payment is just an agreement between the parties involved and as such there is no physical effect involved in the process, and in support of this cited the decision in Iowa Lottery [2010] APO 25. As to the applicant’s request for a reasonable explanation of where in Australian law there is any basis for objection to a claim to an electronic system that it is not a manner of new manufacture, the examiner cited Grant [supra] and Invention Pathways [supra].
24. As well as manner of manufacture, every one of the examiner’s reports also objected to the application on the ground of lack of an inventive step. Two items of prior art were cited by the examiner in support of that ground, namely, United States patent application 2005/0256748 to Gore et al (the inventors of the present invention) and United States patent application 2005/0171820 to Snyder. I will use the same designations D1 and D2 as are used in the examiner’s reports when I refer to these citations at later points in this decision.
Applicant’s written submissions for the hearing
25. The applicant provided an overview of the law, the salient points of which were as follows:
“3.3The current test for assessing a method claim under Australian, based on Grant is that there must 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.
3.4In terms of understanding how to apply this test, it was made clear in Grant that a change in state or information in a part of a machine ... can all be regarded as physical effects.
3.5Other than Grant, NRDC provides a relevant precedent for assessing method claims. NRDC makes it clear that is[sic] a manner[sic] manufacture whenever a process produces an artificially created state of affairs.”
26. As regards the issue of the meaning and effect of the phrase “computer implementation”, the written submissions stated:
“Furthermore, we have purposively[sic] ignored issues concerning the relevance of computer implementation, thereby to distance the present case from Invention Pathways.”
27. On the patentability of claim 1, the applicant reiterated its previous contention that the paying out of an amount is a physical effect and an artificially created state of affairs in the terms of the National Research Development Corporation v Commissioner of Patents, (1959) 102 CLR 252, (1961) RPC 134, 1A IPR 63 decision, and submitted that:
“4.3If the Delegate wishes to uphold the Section 18(1)(a) objection, we respectfully request that the delegate provide specific explanation in relation to the following issues:
(i)If the paying out of an amount is not a physical phenomenon, what is it?
(ii) If the paying out of an amount does not result in an artificially created state of affairs, how can the result be described? That is, if not artificially created, what is it?
(iii)If the Delegate is to follow recent APO decisions which hold that something more substantial is required than any physical effect, explain why it is appropriate to apply jurisprudence from RPC decisions from the United Kingdom in 1901 and 1958 in precedence over the far more recent Australian decision in Grant, which makes no suggestion that a threshold level of physical effect is required.”
28. The submissions also reiterated previous criticism of the use of a test based on whether the invention was of a “non-technical” nature to determine whether the invention results in an artificially created state of affairs.
On claim 5, the applicant submitted:
“5.1As noted claim 5 defines an electronic system. An electronic system is by its very nature a manner of manufacture.
5.2The Delegate is asked to identify any legal precedent (i.e. other than recent APO decisions) that identifies a situation where an electronic system was regarded as failing the requirements of Section 18(1)(a). We specifically note that the Grant decision was concerned solely with the patentability of methods, and hence cannot be used as a basis to uphold an objection to claim[sic] that defines an electronic system or any other physical device. Physical devices have always been regarded as satisfying the manner of manufacture requirement.
5.3If the delegate is to follow the approach in APO[sic] decision in Invention Pathways at paragraphs 32 and 33, we respectfully request an explanation of: it is appropriate to apply the Virginia decision, a 1958 UK decision, in the present circumstances in spite of numerous intervening Australian decisions”.
29. The applicant provided some submissions on inventive step, but these are not all that helpful since they do not address D2, which is the more compelling of the two items of prior art having a bearing on this issue.
Decision
30. The applicant observed in its written submissions that while I am bound by precedent set down in court decisions, I am not similarly bound by previous Patent Office decisions, these being merely decisions of an administrative tribunal. While this is correct, the fact is that there are very few Australian court decisions on manner of manufacture in the area of business methods (in which the present application falls), Grant [supra] and Welcome Real-Time v Catuity Inc [2001] FCA 445, 61 IPR 327 being the only ones which come to mind. In this situation it is proper to draw upon the small, but growing, number of Patent Office decisions for possible guidance in the determination of the present matter. Of course, this only applies to the issue of manner of manufacture. On the other issue in play here - inventive step – there are ample court decisions illuminating the way.
Manner of manufacture
31. Grant [supra] is the most relevant court decision. The Court found that a method of protecting an asset including steps of establishing a trust, making a gift to the trust, making a loan from the trust and securing the loan was not a manner of manufacture. The Court observed at [26] that “The fact that a method may be called a business method does not prevent it being properly the subject of letters patent; see Catuity at [125]–[126]”. However it also found at [30] that Mr Grant’s method:
“does not produce any artificial state of affairs, in the sense of a concrete, tangible, physical, or observable effect. It is quite different from the invention in Catuity, which was a method involving components such as smart cards and point of sale terminals, and produced tangible results in the writing of new information to the Behaviour file and the printing of the coupon (at [128]). While there was not a physically observable end result in the sense of a tangible product, the invention involved an application of an inventive method where part of the invention was the application and operation of the method in a physical device.”
and at [32]:
“A physical effect in the sense of a concrete effect or phenomenon or manifestation or transformation is required. In NRDC, an artificial effect was physically created on the land. In Catuity and CCOM as in State Street and AT&T, there was a component that was physically affected or a change in state or information in a part of a machine. These can all be regarded as physical effects. By contrast, the alleged invention is a mere scheme, an abstract idea, mere intellectual information, which has never been held to be patentable, despite the existence of such schemes over many years of the development of the principles that apply to manner of manufacture. There is no physical consequence at all.”
Furthermore in its conclusion at [47] the Court stated:
“Whether the method is properly the subject of letters patent is assessed by applying the principles that have been developed for determining whether a method is a manner of manufacture, irrespective of the area of activity in which the method is to be applied. 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.”
32. The Patent Office decision of most relevance to the present matter is Iowa Lottery [2010] APO 25. The facts of that case bear a very close resemblance to the present situation. In Iowa Lottery the subject of the invention was a prize pool for a multi-group lottery game, a method of paying prizes in a multi-group lottery game and a method of managing a prize pool for a multi-group lottery game, where the “groups” concerned are to be understood as being from different gaming jurisdictions. Perhaps of most pertinence is claim 3, which reads:
“3. A method of paying prizes in a lottery game to be played among a plurality of groups, the prizes comprising a jackpot and first and second subordinate prizes, the method comprising the steps of:
collecting a fee for entry into the lottery game by each player;
accumulating an individual group prize pool for each group participating in the lottery game from a first portion of the entry fee;
accumulating a super prize pool from a second portion of the entry fee;
creating a jackpot prize limit in one or more of the groups;
paying the first subordinate prizes from individual group prize pools; and
paying the jackpot and the second subordinate prizes from the super prize pool in one or more groups having a jackpot winner such that money in the super prize pool in excess of the jackpot prize limit is awarded as the second subordinate prizes.”
33. In common with the claim 1 of the present application, claim 3 of the Iowa Lottery application defines the collecting of a fee from each of the participants in the lottery (equivalent to receiving a premium), then on the occurrence of a defined event (the drawing of certain numbers held by an individual) paying out a prize (equivalent to paying out a predetermined amount as an insurance payout).
34. The applicant in the Iowa Lottery case made arguments very similar to those which were made in the present matter. From the decision:
“Such an "[concrete, tangible, physical, or observable] effect" was equated to the ‘artificially created state of affairs’ requirement laid down by the NRDC case. The Applicants submit that the end result of the claimed method, the payment of prizes in a lottery game, falls within the meaning of an ‘observable effect’. In other words, claim 3 as amended does not merely recite abstract mathematical calculations, but actually results in a concrete, observable output in the form of prize payments. Indubitably, a recipient of such a prize would be able to observe the effect of the payment of the prize, as many advertisements for lottery games testify. Indeed in the view of some, there is no more ‘concrete’ phenomenon in the modern world than the acquisition of wealth. This holds regardless of the fact that the claimed prize payment is not limited to physical forms of money such as cash or bullion.”
35. The Hearing Officer subsequently rejected the proposition that the requirement stated in Grant [supra] for a “concrete, tangible, physical or observable effect” is met by the payment of prizes, and drawing on Grant at [32] (as quoted previously) said he failed to see how this is in any way different to the situation in Grant where the method involved a number of legal and financial transactions. He concluded that a financial transaction or other legal transfer of an asset, is not the sort of physical or observable effect that the Court was referring to as meeting the requirement for a manner of manufacture.
36. I am of the same mind. In my view an insurance payout is no more a physical effect than paying a lottery prize (as in Iowa Lottery) or taking a charge over an asset (the final step of the method in Grant). In each case the process has not led to the creation of anything physical, but rather has resulted in a transfer of legal rights of ownership or entitlement. Clearly the notion of a “right” is abstract in nature. In the case of Grant, the entitlement is in the form of a charge over an asset; in the present case and in Iowa Lottery the entitlement is to a portion of an insurance pool and a prize pool, respectively. Just as in Grant it is a mistake to see the “asset” as being the outcome of the method – the asset exists before the method is carried out- in the present case it is not the “predetermined amount” which is created as a result of the method, merely the entitlement to it. All the method of the present invention does is to transfer ownership of pre-existent funds paid by the insured lives as premiums to certain of those insured lives who meet certain pre-conditions (occurrence of an insured event).
37. Interestingly, at one point in the prosecution of this application the applicant attempted to draw a distinction between the present invention and Grant [supra] and Bilski [supra] along the lines that the outcome of the methods of Grant and Bilski was the management of risk, which was not physical or observable, whereas the present invention was physical because “the method produces a physical result/effect in the form of a physical payment being made to a specified party”. Putting aside the fact that the claims do not actually define the payment as being physical, the present application relates to life insurance, which, along with property insurance, is probably the most well-known form of hedging of risk known to man, and the present claims could, if it was so wished, have readily been drafted with that emphasis.
38. So far I have approached this matter by having regard to the specifics of the invention. However the taking of a broader perspective leads to the same result. As the Court said in its conclusion in Grant:
“Whether the method is properly the subject of letters patent is assessed by applying the principles that have been developed for determining whether a method is a manner of manufacture, irrespective of the area of activity in which the method is to be applied. It has long been accepted that "intellectual information", a mathematical algorithm, mere working directions and a scheme without effect are not patentable.”
39. When manner of manufacture is in consideration, it is usual to speak of “schemes” and “plans” in the one breath, so the court could well have included “plans” in its menu of things which traditionally are not patentable. The present invention involves a plan, specifically a method of managing a life insurance plan, and this thus would seem to give force to the view that it is not patentable. Approached slightly differently, the word “scheme” is often found juxtaposed with the word “insurance”, which is a strong hint that methods of insurance are inherently mere schemes and hence prima facie not patentable.
40. I turn now to the question of whether the fact that claims 1 to 4 and 9 are directed to a computer implemented method and the fact that claims 5 to 8 and 10 define an electronic system configured to implement that method succeeds in elevating the matter defined in these claims to being a manner of manufacture, despite the fact that the method underlying these claims is not. It is clear that, at best, the computing technology defined in the claims is both rudimentary and commonplace.
41. The Hearing Officer in Invention Pathways Pty Ltd [supra] explored this issue in some depth, stating:
“35.A number of the cases conveniently listed in Szabo at [38] further demonstrate that the mere operation of a method on or with physical things or producing changes in physical things, for example the application of ink to paper or the digging of utility conduits beside a roadway, has not been held sufficient for patentability. Rather something more is required such as, in relation to the ‘ticket cases’, a mechanical purpose in the arrangement of information. In this regard in Re Cooper’s Application for a Patent (1901) 19 RPC 53 at [54] not only is it clear that a mere scheme or plan is not patentable but that ‘the subject … must be one which results in a material product of some substantial character’. A printed sheet, or its equivalent, distinguished only by the arrangement of information relating to the scheme was not considered sufficient.
36.In Grant the Court clearly was stating a view that without a physical effect in the sense of a ‘concrete effect or phenomenon or manifestation or transformation’ a claimed method could not be considered to be within the realms of patentability but, as I have indicated, I do not take it to suggest that patentability is merely determined on the presence of a physical effect. Rather it clearly must be an effect of such substance or quality that the method considered as a whole is ‘proper subject of letters patent according to the principles which have been developed for the application of s. 6 of the Statute of Monopolies’.
37.The decisions in Grant and Catuity both referenced US law and in Bilski I note the Supreme Court confirmed that in the US the ‘the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of the formula to a particular technological environment’ or adding ‘insignificant post-solution activity’ (Diehr at 191-192). It was said in that decision:
‘To hold otherwise would allow a competent draftsman to evade the recognized limitations on the type of subject matter eligible for patent protection. On the other hand, when a claim containing a mathematical formula implements or applies that formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect (e. g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of 101.’
38.Insignificant post-solution activity has been taken to include steps such as the inputting, storage or displaying of data. I take from this aspect of US law however only confirmation of the unremarkable conclusion that one must consider whether the subject matter of a claim considered as a whole falls within the scope of patentable subject matter and that this cannot be achieved merely by pointing to some physical effect or transformation that, while present in the claimed method, does not alter its fundamental character. In applying the decision in Grant I therefore consider that the ‘concrete effect or phenomenon or manifestation or transformation’ referred to must be one that is significant both in that it is concrete but also that it is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way. Consequently while the step of building a house involves a concrete physical effect it is peripheral to the method of acquiring a house and indeed could hardly be said to characterise the subject matter of the method such that it is considered an artificially created state of affairs. I consider the same to apply to a business scheme implemented in some part by computer and do not believe the patentability of such a method can arise solely from the fact that, in a general sense, it is implemented in or with the assistance of a computer or utilises some part a computer or other physical device in a incidental way.”
42. The Hearing Officer went on to find that in the case he was dealing with the physical effect identified was “peripheral and subordinate to the substance of the claimed method”. I consider that that is precisely the situation with the application in suit.
43. I also note that all appended claims simply specify certain insured events.
44. I therefore find that none of the claims define an invention which is a manner of manufacture, the alleged invention being a mere scheme or plan.
Inventive step
45. Section 7 of the Act states that:
“(2) For the purposes of this Act, an invention is taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to the person skilled in the art in light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim, whether that knowledge is considered separately or together with the information mentioned in subsection (3).
(3) The information for the purposes of subsection (2) is:
(a) any single piece of prior art information; or
(b) a combination of any 2 or more pieces of prior art information;
being information that the skilled person… could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood, regarded as relevant and, in the case of information mentioned in paragraph (b), combined as mentioned in that paragraph.”
46. While inventiveness requires more than novelty, even a "scintilla of inventiveness" is sufficient, and a step, if otherwise inventive, does not lose its inventiveness because the idea, once conceived, is very simple to put into effect (Winner v Ammar Holdings Pty Ltd 25 IPR 273). The test is objective, so that it is irrelevant whether the invention was a matter of chance or the result of long experimentation and much effort (Winner v Ammar at 294).
47. As a precursor to any inventive step consideration, the state of the common general knowledge in the art has to be established. The common general knowledge is the background knowledge attributable to the person skilled in the art. A widely accepted definition of common general knowledge is that provided by Aickin J in Minnesota Mining and Manufacturing Company and Another v Beiersdorf (Australia) Limited 144 CLR 253 at 292:
"The notion of common general knowledge itself involves the use of that which is known or used by those in the relevant trade. It forms the background knowledge and experience which is available to all in the trade in considering the making of new products, or the making of improvements in old, and it must be treated as being used by an individual as a general body of knowledge."
48. The state of the common general knowledge is a question of fact which must, in general, be determined on the basis of evidence from persons whose background enables them to testify authoritatively as to the common general knowledge in the particular art. Indirect evidence such as widespread publication or admissions made in patent specifications may also serve to indicate something is common general knowledge.
Approach used to assess inventive step
49. There are a number of approaches which the courts have used to assess inventive step. In Wellcome Foundation Ltd v VR Laboratories (Aust) Pty Ltd (1981) 148 CLR 262 at 286,
Aickin J stated:
"The test is whether the hypothetical addressee faced with the same problem would have taken as a matter of routine whatever steps might have led from the prior art to the invention, whether they be the steps of the inventor or not."
50. More recently, the High Court in Aktiebolaget Hassle v Alphapharm Pty Ltd 56 IPR 129 at 142-143 referred with approval to this approach and further held:
"That way of approaching the matter has an affinity with the reformulation of the ‘Cripps question’ by Graham J in Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd [1970] RPC 157. This court had been referred to Olin in the argument in Wellcome Foundation. Graham J had posed the question:
`Would the notional research group at the relevant date in all the circumstances directly be led as a matter of course to try [the claimed invention] in the expectation that it might well produce [the desired result]?'
That approach should be accepted."
51. Two citations were brought against the present application. The first of these - D1 - is a United States patent application by the inventors of the present invention. It discloses a life insurance scheme which also pays a benefit at the time the insured life retires. As a disclosure of the mere existence of life insurance plans it does not appear to have any great bearing on the situation at hand, since it is beyond question that life insurance schemes as such are common general knowledge. Of perhaps greater bearing is that it also points to the fact that it is common general knowledge to include non-standard benefits in insurance plans in order to enhance their marketability.
52. The second citation – D2 – on the face of it is the more telling, since it explicitly refers to insurance of a parent. However, this is in the context of a financial planning method whose purpose is to enable parents (presumably) to finance the college education of offspring. It is quite complex, and because it leans heavily on idiosyncrasies of US tax law and peculiarly American loan facilities such as Fannie Mae it is somewhat impenetrable. Although it seems that any life insurance benefits would effectively pass to the offspring who the financial plan was established to benefit, it diverges from the insurance plan of the present invention in that the beneficiary is not themselves an insured life (although there is reference to the possibility that the plan could incorporate other life insurance policies, but without being more specific).
53. I think that it is an irrefutable fact that it is possible to insure any item or event against any eventuality, provided, of course, that the risk lends itself to actuarial calculation. Furthermore it is commonplace to take out life insurance on oneself and on close relatives generally, and obviously parents fall within that latter category of persons even if it is not actually commonplace to insure them. It is also well known to insure different entities (“house and contents” insurance comes immediately to mind) or events under the one policy. Given this common general knowledge, it would seem that, based on common general knowledge alone, there is no inventive step in exercising an obvious choice in who is included in an insurance plan, and parents of an insured life constitute one such an obvious choice, even if the commercial imperatives in any given case for such a choice are not present.
54. Using an alternative approach, expressed in terms of the requirements of section 7(3)(a) of the Patents Act, D2 constitutes a single item of prior art information which more probably than not could be reasonably expected to have been ascertained, understood and regarded as relevant given that it is a patent document having the same subject matter as the present invention. It is a disclosure of the concept of insuring ones parents. When D2 is read in light of the common general knowledge of personal life insurance as such and the possibilities and advantages of combined coverage of different entities, the present invention would seem obvious and consequently to not involve an inventive step. This also holds for the appended claims as well as the independent claims, because the appended claims simply stipulate various types of insured events to be covered by the insurance plan, all of which are common general knowledge in the art.
Conclusion
55. I have found that there are lawful grounds for objection to the present patent application. In particular I find the claims are not directed to a manner of manufacture and do not involve an inventive step.
56. Furthermore, I consider that no patentable subject matter is disclosed in the specification such that a further opportunity for the applicant to propose amendments would not serve any useful purpose.
57. Consequently, pursuant to subsection 49(2) of the Act, I refuse the application.
E J Knock
Delegate of the Commissioner of Patents
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