Elot, Inc. - [2017] APO 55

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Elot, Inc.[2017] APO 55

Patent:2002236547

Title:A system and a method for operating on-line state lottery games

Patentee:  Elot, Inc.
Delegate:  Dr V. Z. Kolev
Decision Date:  7 November 2017
Hearing Date:  Written submissions filed on 7 June 2017

Catchwords: PATENTS – hearing with respect to Examiner’s objection during re-examination – whether the claimed invention is a manner of manufacture – governmental lottery play over an electronic network – networked computer system – approach to determining the substance of the claimed invention – the substance of the invention is in the specific rules governing the information receiving, generation, recording, and exchange between the levels in a known three-level lottery system to facilitate the governmental lottery play – the claimed invention is not a manner of manufacture – patent revoked

Representation: Patent attorney for the Patentee: FPA Patent Attorneys Pty Ltd

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent:2002236547

Title:A system and a method for operating on-line state lottery games

Patentee: Elot, Inc.
Date of Decision: 7 November 2017
DECISION
The invention claimed in all of the claims is not a manner of manufacture. Having reviewed the specification, I do not consider it appropriate to provide an opportunity to amend as, in the circumstances of the case, it will serve no useful purpose. I revoke Australian patent 2002236547.
REASONS FOR DECISION

Throughout this decision, unless explicitly stated otherwise, any reference to an Act or a section, subsection, etc. of an Act refers to the Patents Act 1990 (the Act), and any reference to Regulations or a specific regulation refers to the Patents Regulations 1991 (the Regulations).
Background
The matter relates to Australian patent 2002236547 (the Patent) in the name of Elot, Inc. (the Patentee). The Patent was granted on 25 October 2007. Prior to the grant of the Patent, a divisional application 2007221934 (the Divisional Application) was filed on 10 October 2007.
The Divisional Application
The Divisional Application was accepted on 18 March 2009 and subsequently opposed by Jumbo Interactive Ltd and by New South Wales Lotteries Corp on multiple grounds including that the claimed invention is not a manner of manufacture.
The matter was heard and on 28 October 2011 a Delegate issued the decision Jumbo Interactive Ltd & New South Wales Lotteries Corp v Elot, Inc. [2011] APO 82 (the Original Decision, or OD) stating that “[t]he oppositions are successful on the ground that the claims do not define a manner of manufacture”. All other grounds were found unsuccessful. In addition, the Delegate noted:
“While I am unsure whether there is patentable subject matter in the specification, I allow Elot, Inc 60 days from the date of this decision to propose suitable amendments.”
On 3 January 2012, the Patentee (in their capacity of the Applicant for the Divisional Application) proposed amendments and filed supporting submissions in an attempt to overcome the Delegate’s finding in the Original Decision. The amendments were allowed on 13 August 2012 and the matter was set for a hearing for a final determination of the opposition. After hearing the matter, on 18 April 2013 the Delegate issued the decision Jumbo Interactive Ltd & New South Wales Lotteries Corp v Elot, Inc. [2013] APO 28 (the Final Determination, or FD), which at [31] stated:
“The invention as defined in the amended claims is not a manner of manufacture. I am of the opinion that there is nothing that could be added to the claims that would overcome this finding. I therefore make the final determination that patent application 2007221934 [the Divisional Application] is refused.”
The Final Determination was not appealed. As already mentioned, the Patent served as a first (or first-mentioned) application, within the meaning of section 79B, with respect to the refused Divisional Application (in other words, it is the “parent” of the Divisional Application), hence the Commissioner considered it appropriate to re-examine the Patent.
The re-examination of the Patent
The first re-examination report was issued on 9 July 2013 with the sole objection that “[c]laims 1-20 [i.e. all claims] do not define a manner of manufacture within the meaning of Section 18(1)(a) of the Patents Act 1990”. Referring to the above quoted paragraph [31] of the Final Determination, the report argued that:
“The description filed in the present application [the Patent] is substantially the same as the description of the divisional application. The Delegate found that there is no matter in the divisional application that could be claimed to define an invention with a manner of manufacture. Therefore, it logically follows that there is no matter in the present application [the Patent] that could define an invention with a matter [sic] of manufacture (including the claims as presently defined).”
In their response of 9 September 2013, the Patentee submitted that:
“The only objection raised in the report was that the claims do not define a manner of manufacture. The sole basis for raising this objection was the final determination on the divisional application.
The final determination relied heavily on the reasoning of the Federal Court in the Research Affiliates case. The recent decision of RPL Central Ply Ltd v Commissioner of Patents [2013] FCA 871 (30 August 2013) appears to have relevantly clarified the law.
The patentee here makes no concession similar to that referred to in paragraphs 166 to 172 of RPL Central case. The patentee maintains that the computer is an essential part of the claimed invention in this patent. The patentee requests reconsideration of the objection in light of the RPL Central decision.”
On 15 October 2013, a Delegate wrote to the Patentee:
“The Commissioner notes that both the Research Affiliates and RPL decisions are under appeal to the Full Federal Court. The Commissioner proposes to take no further action in relation to the re-examination of this patent until after those appeals have been decided, in the expectation that this will clarify the law.”
Following the conclusion of the above mentioned Federal Court proceedings, in which the Full Court found that, in both cases, the claimed invention was not a manner of manufacture, another re-examination report was issued on 7 June 2016, again including the sole objection that:
“Claims 1-20 [i.e. all claims] do not define a manner of manufacture within the meaning of Section 18(1)(a) of the Patents Act 1990. From reading your application [the Patent] as a whole the substance of the alleged invention relates to a scheme for playing lottery games via an electronic network. This is not patentable subject matter.
Although the claims involve the use of various computer hardware and electronic networks, this does not change the substance of the alleged invention. Consequently, as per Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 and Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177, the alleged invention is not a manner of manufacture.”
Three more re-examination reports were issued on 19 September 2016, 16 December 2016, and 27 March 2017 with substantially the same objection.
In their responses to the re-examination reports, the Patentee provided their arguments as to why, in their view, the claims are for a manner of manufacture. On 17 November 2016, they also proposed amendments which introduced additional independent claim 21.
Given the apparent lack of progress, the last re-examination report dated 27 March 2017 included the following note:
“My report includes objections that are equivalent to objections raised in previous examination reports. As there has now been several adverse reports in relation to this subject matter, the [Patent] will be referred to a Hearing Officer to consider whether or not to revoke the patent under s101 or to direct amendment under s106. If you wish to be heard on this matter, you have 1 month from the date of this report to request a hearing. Fee item 230 applies.
If you request a hearing you will be contacted regarding the relevant deadlines in due course. Hearings in relation to examination objections are normally by way of written submissions. If you disagree with the Hearing Officer’s decision you may appeal the decision to the Federal Court of Australia.”
Following this last re-examination report, on 28 April 2017 the Patentee requested to be heard. A Delegate decided that it is appropriate for the hearing to be conducted by way of written submissions, which were subsequently filed by the Patentee on 7 June 2017 (the Patentee’s Submissions or PS).
The Patent Specification
For the purpose of this decision, I will consider the specification as if amended by the latest proposed amendment filed on 17 November 2016.
The body of the specification
The “Field of the Invention” is described as:
“The present invention relates to a system and a method for playing lottery games via an electronic network, and more particularly to a system and a method for operating or facilitating on-line state lottery games.” (page 1)
This is followed by the section “Summary of the Invention” which contains a number of consistory clauses broadly corresponding to the claims. Importantly, it is also stated that “[t]he electronic network is the Internet” (page 3, line 24).
In the “Detailed Description of Preferred Embodiments”, it is further explained that:
“The present disclosure describes a lottery agent system for facilitating lottery games which makes it possible to purchase lottery tickets and to play lottery games at player terminals through a communication network. The lottery agent system of the present invention more particularly relates to playing lottery games provided by a governmental entity such as a country, county, state, province or multi-state lottery association (hereafter referred to as ‘state’). The system includes an agent server for interacting with lottery players and lottery administrators of the states to manage and facilitate the state lottery games. For example, lottery players access the agent server via an electronic network such as the Internet to purchase lottery tickets at the player terminals, such as personal computers or lottery terminals, for playing lottery games. The lottery players enter player information, such as names, addresses, ages, and accounts of the lottery players, and ticket information of the lottery tickets to be purchased. The types of games include the traditional periodic games (which draw winning numbers twice a week, weekly or monthly etc.), instant games wherein players learn whether they have won nearly instantaneously, or subscription games.” (page 6, lines 12-25, emphasis added)
“Upon receiving the player and ticket information, the agent server verifies based on the player information of the lottery players that each lottery player satisfies certain criteria required by the state.
After such verification of the lottery players, the agent server sends the ticket information via the Internet to each state lottery administrator which then provides the agent server with security or serial numbers associated with each lottery ticket purchased. The security or serial numbers (hereinafter referred to as ‘serial numbers’) are preferably encrypted numbers. Each ticket sold is assigned a unique serial number by the state.” (page 7, lines 5-13, emphasis added)
“The agent server transmits lottery game data to the player terminals of the lottery players upon confirmation of the purchase of the lottery tickets.
Upon drawing winning numbers, the agent server verifies winning tickets of which ticket numbers match the winning numbers, based on the serial numbers received from the state lottery administrator. The agent server then notifies the lottery players of the verified winning tickets.
The agent server also transmits to the state lottery administrator the ticket information of the winning tickets including the serial numbers associated with the winning tickets. The state lottery administrator verifies the ticket information received from the agent server with the ticket information previously stored in a state database. Upon a successful verification, the state lottery administrator issues claim validation numbers associated with the verified winning tickets for the future claims on lottery awards by winning players. The claim validation numbers issued by the state lottery administrator are stored in the state database and transmitted to the agent server.
The lottery agent system may also include a banking server which interacts with the agent server and the each state lottery administrator and credits an account of each winning player with a winning amount provided by the each state administrator and debits the account for purchase of the lottery tickets.” (page 7, line 15 to page 8, line 7, emphasis added)
“The players purchase lottery on a subscription basis by entering subscription play information such as the lottery numbers, the amount of wager, and the duration or number of plays using the lottery numbers.” (page 7, lines 1-3, emphasis added)
“In the case of instant lottery games, the instant tickets and associated serial numbers are pre-stored in a database at the agent server.” (page 7, lines 13-15, emphasis added)
The description puts certain emphasis on the verification of information:
“Thus, a lottery agent system of the present invention performs a screening and a verification process. Preferably, upon receiving the player and ticket information, the agent server screens each lottery player for satisfaction of criterias [sic] set by the states. Upon purchase of a ticket, the serial number associated with each ticket is stored. Upon a drawing of winning numbers, the agent server verifies winning tickets with the player's information, serial numbers and validation numbers issued by each state administrator and stored in a database of the agent server.” (page 8, lines 8-14)
The system and method are further explained with reference to Figures 1, 2A, 2B, and 3. To assist in understanding the nature of the invention, all of these figures are reproduced below.
Figure 1 represents “a block diagram illustrating a preferred embodiment of a lottery agent system according to the present invention” (page 6, lines 4-5). Item 30 is the agent server, item 40 denotes the state lottery administrator and item 20 denotes the communication network. In addition to the data process unit 39, the agent server has a plurality of program (or software) modules required to achieve the desired functionality. These include “a screening unit 31 for verifying based on the player information that each lottery player satisfies certain criteria required for playing lottery games, an agent database 33 for storing the player and ticket information and serial numbers generated by a state lottery administrator 40, a verification unit 35 for verifying winning tickets based on the ticket information and the serial numbers after a drawing of winning numbers, a game server 37 for storing and providing various types of lottery games” (page 9, lines 3-9).
In addition, “[t]he data process unit 39 also communicates control and data signals with the above and other components of the agent server 30. The game server 37 includes a subscription play unit (not shown) for monitoring subscription play and putting in play the subscription lottery numbers for a pre-specified number of draws until expiration of the specified subscription time period” (page 9, lines 9-13).
Figures 2A and 2B represent “flow charts describing a method for operating on-line state lottery games according to the present invention” (page 6, lines 6-7), whereas Figure 3 represents “a flow chart describing a series of steps for claiming awards for winning lottery tickets” (page 6, lines 8-9). In light of the discussion provided above, I do not consider that these figures require further explanations.
The claimed invention
The specification ends with 21 claims of which claims 1, 10, and 21 are independent and reproduced below:
“1. A system for facilitating governmental lottery play over an electronic network, including:
an agent server connected via said electronic network for receiving player and ticket information transmitted from a plurality of player terminals, for transmitting said ticket information to a governmental lottery administrator, and for receiving serial numbers issued by said governmental lottery administrator in association with each lottery ticket;
a database in said agent server for storing said player and ticket information and said serial numbers associated with each lottery ticket; and
a screening unit in said agent server, having criteria required by the governmental lottery administrator pre-stored therein, for verifying that each player satisfies said criteria prior to transmitting said ticket information to said governmental lottery administrator.
10. A method for conducting governmental lottery play over an electronic network, including the steps of:
receiving player and ticket information entered by lottery players;
verifying that said lottery players satisfy criteria required by the governmental entity governing said governmental lottery play;
storing said player and ticket information of said verified lottery players;
receiving serial numbers issued by a governmental entity server, each serial number being associated with each lottery ticket;
receiving winning numbers from said governmental entity server;
determining winning tickets by comparing said winning numbers with ticket numbers entered by said verified lottery players; and
verifying said winning tickets with said serial numbers.
21. A system for facilitating governmental lottery play over an electronic network, including:
an interface device, the interface device configured to provide:
a first communication interface, connected to the electronic network, for communicating with a plurality of player terminals via the electronic network;
a second communication interface, connected to the electronic network, for communicating with a computational system of a governmental lottery administrator;
a database for storing transaction information as between the player terminals and the governmental lottery administrator;
wherein the interface device is further configured to:
receive from the player terminals, through the first communication interface, player and ticket information, and
determine, based on the player information, whether pre-stored criteria required by the governmental lottery administrator is satisfied;
when the pre-stored criteria is satisfied, transmit to the computational system of a governmental lottery administrator, through the second communication interface, said ticket information, whereby the player terminals do not communicate directly with the computational system of a governmental lottery administrator;
receive from the computational system of a governmental lottery administrator serial numbers issued by the governmental lottery administrator in association with each lottery ticket; and then
store, in the database, said player and ticket information and said serial numbers associated with each lottery ticket; and
transmit to a said player terminal, through the first communication interface, one or more serial numbers, the one or more serial numbers selected by the interface device according to a selection criteria of being associated with the player and ticket information received from that player terminal, whereby the player terminals do not communicate directly with the computational system of a governmental lottery administrator.”
Claims 19 and 20 are of the kind often referred to as dependent omnibus claims and are also reproduced below:
“19. The system of any one of claims 1 to 9, substantially as described herein with reference to any of the figures and/ or examples.
20. The method of any one of claims 10 to 18, substantially as described herein with reference to any of the figures and/ or examples.”

The full list of claims is included as Appendix A.
The Objection in the Last Re-examination Report
The last re-examination report dated 27 March 2017 has the sole objection as follows:
“The objection from the previous report is maintained. The [Patentee] has continued to press the point that because the claims are novel and inventive, they are consequently also a manner of manufacture. The [Patentee] argues that no reasoning has been given as to why the features grouped in items 1 and 2 of the response [see below for explanation] are not patentable. I disagree in that in referring the hearing decisions of its divisional application, these factors have been addressed. Item 1 is substantially the same in scope as the agent server claimed in the divisional application. Item 2 has also been addressed in dependent claim 2 of the divisional application. Both were found to lack patentability as I discuss below.
The [Patentee] further argues that the technical effect of improving security is enough to confer patentability. The mere presence of a technical effect is not enough to resolve the question of what is the substance of the invention.
I still consider the invention is related to generic computer implementation and that the substance of the invention still boils down to a mere scheme. The agent server with its database and screening unit, each of these units are used in their normal way. To reiterate the [2011] APO 82 decision [the Original Decision] at [114]: ‘The agent server of the present invention is essentially characterised by the information content of the data it stores. It provides no material advantage to the agent server and, therefore, the agent server does not place a meaningful limit on the claim.’ See further, the requirements outlined in [96] of Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177 which these claims do not fulfil.
Similarly, I reiterate my position regarding claim 21. The [Patentee] argues that the feature of having the agent server act as an intermediary gives patentability to the claim, citing [2016] APO 49 as a similar decision. Again, I consider that this feature is inherent to claim 1, and has merely been placed into functional claim language. The presence of ‘patentable subject matter’ in a claim which in substance is a mere scheme, i.e. also contains non-patentable subject matter, does not render a claim patentable.”
Items 1 and 2 mentioned in the above objection come from the Patentee’s response dated 15 February 2017:
“1. an agent server that is [sic] acts as a remote interface between a governmental lottery administrator's computer system and a plurality of public player terminals (i.e. features A and B discussed in the previous responses); and
2. a screening unit in the agent server that acts as a filter by verifying whether a player satisfies a set of criteria before sending the ticket information to a governmental lottery administrator's computer system (i.e. feature C discussed in the previous responses).”
Features A, B, and C are described in the Patentee’s response dated 1 August 2016 as:
“A     an agent for receiving serial numbers issued by said governmental lottery administrator in association with each lottery ticket
B     a database in said agent server for storing said player and ticket information and said serial numbers associated with each lottery ticket”
“C     A screening unit in said agent server .. for verifying that each player satisfies said criteria prior to transmitting said ticket information to said government lottery administrator.”
As already mentioned, in the earlier re-examination report issued on 7 June 2016, the Examiner stated:
“From reading your application [the Patent] as a whole the substance of the alleged invention relates to a scheme for playing lottery games via an electronic network. This is not patentable subject matter.
Although the claims involve the use of various computer hardware and electronic networks, this does not change the substance of the alleged invention.”
The Patentee’s Submissions
The Patentee disagrees with the Examiner (emphasis in bold added):
“In the re-examination report the examiner adopts the statement in [2011] APO 82 [the Original Decision] that:
The agent server of the present invention is essentially characterised by the information content of the data it stores. It provides no material advantage to the agent server and, therefore, the agent server does not place a meaningful limit on the claim.
This reasoning presupposes a piece of hardware identifiable as an agent server. It is respectfully submitted that in doing so the examiner has fallen into error, in identifying the wrong starting point for the present invention.
The starting point for the present invention was not considered in [2011] APO 82. There is no discussion of it in the decision, nor was there discussion of it in the submissions. The consideration of the relevant starting point raises new issues that require consideration.” (original underlining)
Accepting that “in identifying the substance of the invention it is permissible to consider what contribution to the art is made by the invention”, the Patentee finds it “instructive to consider the processes by which a contribution to the art may be made” and refers to Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (No 2) [2007] HCA 21 (Lockwood v Doric) (at [59-60]) and AstraZeneca AB v Apotex Pty Ltd [2014] FCAFC 99 at [202-203].
The Patentee also submits that “this contribution [to the art] is identified on the face of the specification read in light of the common general knowledge”, and refers to the common general knowledge discussion at [77-84] of the Original Decision. The Patentee concludes (emphasis in bold added) that:
“It is readily apparent from the description of the common general knowledge that it does not include a system containing an agent server. It also does not include player terminals connected via an electronic network to the agent server. Instead the common general knowledge identified was merely selling terminals connected to a central host computer, that central host computer characterized by being the entity that issues the serial numbers.
…
Against this background a number of errors are apparent in the characterization of the substance of the invention relied on by the examiner.” (original underlining)
These errors are summarised as:
“The agent server of the present invention is essentially characterised by the information content of the data it stores.
…
It provides no material advantage to the agent server and, therefore, the agent server does not place a meaningful limit on the claim.” (original emphasis)
In addition, the Patentee submits that:
“By viewing the problem to be solved from a perspective that presupposes the existence of a system with an agent server, the examiner has impermissibly ignored important processes of invention.
The relevant processes of invention for the patent include all three processes discussed by the High Court [in Lockwood v Doric] and summarized above. In particular:
Firstly, the definition of the problem to be solved or the difficulties to be overcome.
…
Secondly, the choice of the general principle to be applied in solving this problem or overcoming these difficulties
…
Thirdly, the choice of the particular means used” (original emphasis)
The Patentee also expresses their views on the substance and the technical contribution of the claimed invention as well as on the sufficiency of the technical contribution or technical effect to confer patentability. I will discuss some of these as necessary later in this decision.
The Law on Manner of Manufacture
General principles
With respect to manner of manufacture, subsection 18(1) states:
“Subject to subsection (2), an invention is a patentable invention for the purposes of a standard patent if the invention, so far as claimed in any claim:
(a) is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies;…”
The High Court’s decision National Research Development Corporation v Commissioner of Patents [1959] HCA 67 (NRDC) is considered seminal case law on the issue of manner of manufacture. While some later Court decisions further elaborated on the issue, three recent decisions, listed below, clarified the current legal position on manner of manufacture:
·Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 (Research Affiliates);
·Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177 (RPL); and
·D’Arcy v Myriad Genetics Inc [2015] HCA 35 (Myriad).
I note that the Original Decision and the Final Determination were issued on 28 October 2011 and 18 April 2013, respectively. Therefore in deciding the issue of manner of manufacture, the Delegate did not have the benefit of any of the above recent Court decisions, although in his Final Determination, the Delegate relied on the single Judge decision Research Affiliates LLC v Commissioner of Patents [2013] FCA 71, which was later upheld on appeal by the Full Court in Research Affiliates listed above.
A detailed analysis of the relevant case law in light of the above recent decisions was provided by a Delegate (now the Deputy Commissioner) in Aristocrat Technologies Australia Pty Limited [2016] APO 49 (Aristocrat) at [28-34]. I do not consider it necessary to reiterate the Delegate’s analysis, however I will emphasise the importance placed on considering the claimed invention as a matter of substance on a case-by-case basis:
“… the High Court [in NRDC] was not laying down a precise formulation that can be applied unthinkingly:
‘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.’
That case-by-case approach must have regard to the substance of the claimed invention, not simply the form of the claim. The point is made most succinctly by Gageler and Nettle JJ in the Myriad case:
‘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.’
In [RPL] the Full Court of the Federal Court said the same thing in the context of an invention that was in substance a scheme:
‘A claimed invention must be examined to ascertain whether it is in substance a scheme or plan or whether it can broadly be described as an improvement in computer technology. The basis for the analysis starts with the fact that a business method, or mere scheme, is not, per se, patentable. The fact that it is a scheme or business method does not exclude it from properly being the subject of letters patent, but it must be more than that. There must be more than an abstract idea; it must involve the creation of an artificial state of affairs where the computer is integral to the invention, rather than a mere tool in which the invention is performed. Where the claimed invention is to a computerised business method, the invention must lie in that computerisation. It is not a patentable invention simply to “put” a business method “into” a computer to implement the business method using the computer for its well-known and understood functions.
Is the mere implementation of an abstract idea in a well-known machine sufficient to render patentable subject matter? Is the artificial effect that arises, because information is stored in RAM and there is communication over the Internet or wifi, sufficient? Does any physical effect give rise to a manner of manufacture? Are the mere presence of an artificial effect and economic utility, without more, sufficient to determine manner of manufacture?
It is not a question of stating precise guidelines but of deciding, in each case, whether the claimed invention, as a matter of substance not form, is properly the subject of a patent.’” (Aristocrat at [30-32], original emphasis, reference(s) omitted)
Following his detailed analysis of the relevant case law, the Delegate helpfully provided, at [35] of the Aristocrat decision, a summary of the matters to be considered in determining whether the invention is a manner of manufacture:
“I conclude that it is relevant to consider a range of matters. Without seeking to be exhaustive, these include:
•there must be more than an abstract idea, mere scheme or mere intellectual information;
•is the contribution of the claimed invention technical in nature;
•does the invention solve a technical problem within the computer or outside the computer;
•does the invention result in improvement in the functioning of the computer, irrespective of the data being processed;
•does the application of the method produce a practical and useful result;
•can it be broadly described as an improvement in computer technology;
•does the method merely require generic computer implementation;
•is the computer merely an intermediary or tool for performing the method while adding nothing of substance to the idea;
•is there ingenuity in the way in which the computer is utilised;
•does the invention involve steps that are foreign to the normal use of computers; and
•does the invention lie in the generation, presentation or arrangement of intellectual information.”
I note that the Aristocrat decision was also concerned with a computer implemented invention, hence I consider the Delegate’s analysis highly relevant to the present decision.
In summary, for the purpose of deciding the issue of manner of manufacture, the claimed invention is to be considered in terms of the inventor’s contribution as a matter of substance regardless of the specific form in which the claims are drafted. It follows that properly identifying the substance of the claimed invention is a critically important step for determining whether the claimed invention is a manner of manufacture.
The approach to determining the substance of the invention
Relevantly to this opposition, in Research Affiliates, the Full Court discussed the approach taken by the UK Court of Appeal in Aerotel Ltd v Telco Holdings Ltd; Macrossan’s Application [2006] EWCA Civ 1371; [2007] 1 All ER 225 (Aerotel):
“Aerotel sets out an approach, in four steps:
1. properly construe the claim;
2. identify the actual contribution;
3. ask whether it falls solely within the excluded subject matter; and
4. check whether the actual or alleged contribution is actually technical in nature.
The second step requires the court to consider what the inventor ‘has really added to human knowledge’, looking at substance and not form. According to the third step, if the contribution identified consisted of excluded subject matter as such, it would be excluded and it would be unnecessary to progress to the fourth step.” (Research Affiliates at [29-30], original emphasis)
Although the UK section 1 and the European article 52 are different to the Australian subsection 18(1) in that the UK and European law uses the concept of excluded subject matter, this difference appears related to the later phase of the inquiry, after the substance of the invention or the inventor’s contribution to the art has been identified. As far as analysing the claimed invention by elevating the substance over the form in determining the inventor’s contribution, the law appears consistent. I also note that the Aerotel decision was discussed in Research Affiliates without a clear indication that the approach taken in Aerotel (including the approach to determining the inventor’s contribution) is inconsistent with the Australian law; in fact, the opposite conclusion could be reached based on paragraphs [36] and [59] of Research Affiliates. I consider the approach to determining the inventor’s contribution of Aerotel as quoted in Research Affiliates, and expressed succinctly in the first and second points above, highly persuasive.
I note that a reference to the above quoted four-step approach of Aerotel was also made in several recent decisions of the Australian Patent Office, including Konami Gaming, Inc. [2016] APO 46 (see e.g. [29]), Bally Technologies ANZ Pty Ltd [2017] APO 14 (see e.g. [38]), and Todd Martin [2017] APO 33 (see e.g. [22] and [35]).
The Aerotel decision was also previously relied upon by the Patentee as discussed in the Final Determination at [26-30], where the Delegate considered that “[o]f the claims that are presented in the decision, it is the claims of Mr Macrossan that are more similar to the claims of the present application” (at [29]), and concluded:
“While this claim is directed to a method, it defines the method in the sense of a ‘data processing system’ (cf. ‘computer processing apparatus’ of the present application) having certain features (i.e. a processor and storage means) which allow it to carry out certain functions. The Aerotel decision found that these claims were not directed to patentable subject matter. So, to that extent, my decision would appear to be consistent with Aerotel.” (FD at [30])
In light of the above discussion, for the purpose of my analysis of the Patent, I will adopt the Aerotel approach to identifying the substance of the invention.
The Patentee does not appear to disagree with the importance of considering the claimed invention as a matter of substance, however on the issue of determining the substance of the invention, the Patentee states:
“It is accepted that in identifying the substance of the invention it is permissible to consider what contribution to the art is made by the invention. It is respectfully submitted that this contribution is identified on the face of the specification read in light of the common general knowledge.”
I consider that while this approach may well identify what the Patentee considers the substance of their invention (or the alleged contribution), this would inevitably be somewhat subjective and dependent on the drafting style of the specification. I agree with the Patentee to the extent that, in some cases, reading the specification in light of the common general knowledge may be sufficient to reveal that even the alleged contribution (generally broader than the actual contribution) is not within the realm of patentable subject matter and hence one does not need to look any further.
However, it is important to note that, in the above quotation from Research Affiliates, the Full Court stated that “[t]he second step [‘identify the actual contribution’] requires the court to consider what the inventor ‘has really added to human knowledge’, looking at substance and not form” (emphasis in bold added). I have no reasons to consider that the term “human knowledge” is to be interpreted as limited to the common general knowledge in the particular art. Hence following the Aerotel approach to determine the inventor’s contribution, I should not limit my consideration to the advancements made by the inventor with respect to the common general knowledge. In determining the inventor’s actual contribution, I need to consider the state of the art at the priority date, in other words, what was known in the art including with respect to specific pieces of prior art information. I consider that this is the only way in which I could determine “what the inventor ‘has really added to human knowledge’” (emphasis in bold added).
I also note that a direct reference to prior art documents was found helpful in determining the substance of the invention by the Delegate in Aristocrat at [47]. A succinct formulation of the above discussed approach is also present in the Patent Manual of Practice and Procedure of the Australian Patent Office at 2.9.2.2:
“In order to determine the substance, examiners must identify the central underlying invention embodied in the claim, rather than merely consider the literal form of the claim. This is the contribution the claimed invention makes to the art and is determined based on a reading of the specification as a whole and examiners’ understanding of the common general knowledge and prior art.” (emphasis added)
The Substance of the Claimed Invention

I will initially focus my attention to the invention claimed in independent claims 1 and 10.
From the outset, I note that the claim language is rather broad and does not appear to manifestly limit the scope to a computer implementation. For example, it could be argued whether, as worded, claim 10 is limited to a computer implemented method, or if it also includes in its scope an implementation where the defined items of information are simply exchanged by persons over a telephone (i.e. electronic) network. As ultimately this will not affect the outcome of my decision, I do not need to decide the issue conclusively. Regardless of the present scope, it is clear that the claims could be amended to be expressly limited to a computer system and a computer implemented method (e.g. over the Internet), and I will use this interpretation for the purpose of deciding on manner of manufacture. In line with this interpretation, I will consider claim 10 as if defining a method which utilises the system defined in claim 1.
As acknowledged by the Patentee, “[t]he present specification does not have a background specification to assist in the identification of the processes of invention involved in the present case (and no criticism can be leveled at the patent for that reason alone)”. While I agree with the Patentee that there is no statutory requirement for the specification to include background information, such information would have been helpful in understanding what the Patentee considers as their contribution to the art (or the alleged contribution).
The specification describes and claims a system for facilitating governmental lottery play over an electronic network (e.g. such as the Internet) including player terminals connected via the electronic network to an agent server, which in turn is connected via the electronic network to the governmental lottery administrator. For brevity, I will refer to this as a three-level lottery system. This three-level lottery system consists of:
a) the lowest level, consisting of a plurality of computing devices for direct interaction with the individual players (the claims use the term “player terminals” and this term is not limited only to personal computing devices in the players’ possession, but also includes publicly accessible selling terminals and kiosks at specific venues);
b) the highest level, being the computing system of the governmental authority administering the lottery (termed in the claims as “governmental lottery administrator”); and
c) the middle level, being the computing system (termed in the claims as “agent server”) which acts as an intermediary facilitating the information exchange between the lowest level and the highest level as necessary for playing the lottery.
As I already mentioned, in identifying the substance of the invention, I will consider the actual contribution to the art, which can only be done by having regard to the state of the art at the priority date. The state of the art relevant to the Divisional Application, including the common general knowledge at the priority date and relevant prior art documents, was discussed by the Delegate in the Original Decision. Given the degree of similarity between the Divisional Application and the Patent, I consider the Delegate’s discussions highly relevant to my present consideration of the Patent. The Patentee does not appear to disagree, stating that “the Office has had the benefit of expert evidence on the background to the invention and discussed it extensively in paragraphs 77 to 84 of [2011] APO 82 [the Original Decision]”.
In the Original Decision, based on the evidence before him, the Delegate concluded:
“… Hence, the common general knowledge can be said to be:
(i) a plurality of selling terminals for selling lottery tickets connected via an electronic network to a central host computer (see Morrison 2 para 20, Morris 1 para 14)
(ii) the central host computer issuing unique serial numbers for tracking lottery tickets (see Morrison 2 para 20, Morris 2 para 53)
(iii) the central host computer containing a database of tickets (see Morrison 2 para 20)
(iv) subscription lottery tickets that allowed a player to play the same lottery numbers in a number of draws (e.g. week after week) (see Morrison 2 para 20 and 21, Morris 2 several paras)
(v) the subscription lottery tickets including information showing when the subscription ticket would expire (see Morrison 2 para 20)” (OD at [81], emphasis added)
It is clear that the use of an electronic network to connect the computers of different entities for conducting the business of lottery play over the electronic network was part of the common general knowledge in the art. However, the evidence on file did not appear to suggest that the three-level lottery system was part of the common general knowledge.
Since the discussion of the state of the art in the Original Decision also included the analysis of a number of prior art documents filed in evidence by the Opponents, in following the Aerotel approach to establishing the actual contribution made by the inventor, I will take into consideration the disclosures of these documents. However, I must emphasise that the specifics of the case are such that the outcome of my decision would be no different even if I did not have the benefit of these prior art disclosures as it will become apparent later in this decision.
I will limit my consideration to two of the prior art documents discussed by the Delegate, because I consider that these two documents, US 2001/0003100 A1 (US’100) and US 6277026 B1 (US’026), clearly disclose a three-level lottery system.
Figure 15 of US’100 (reproduced below for reference) is an illustration of the disclosed lottery system. With reference to this figure, I consider the PCs 238 and the lottery terminals 202 to represent the lowest level of the system; the combination of the firewall computer 210 and the central station 212 (incorporating items 214, 218, 220, 222, 224, 226, and 228) to represent the middle level of the system; and the state lottery computer 232 to represent the highest level of the system.
Although in his analysis of US’100 the Delegate was mainly concerned with novelty, his conclusions with respect to the functional elements of the disclosed lottery system are not dissimilar to mine:
“It is difficult to see how US’100 discloses the invention claimed. PCs, lottery terminals and telephones are clearly presented as player terminals [i.e. the lowest level]. These are connected to web servers, LANs, firewalls and other servers which are located in what is called a ‘central server’. This server might be equivalent to the agent server of the claims [i.e. the middle level]. It is also clear that a governmental lottery administrator (called a ‘state lottery computer’ in US’100) [i.e. the highest level] can be accessed, but the extent to which it is involved is unclear. US’100 merely has the following to say:
‘A firewall computer 210 limits access to central server 212 and may be used to access a state lottery computer 232 or other remote gaming system.’
‘Agent 230 may also assist in the administration of kiosk 204 and act as an interface to state lottery computer 232.’
‘Players may participate in a lottery game, either a state sponsored game as accessed through a lottery computer 232 (FIG. 15) or a non-state sponsored lottery game.’
‘9. The remotely accessed lottery system as recited in claim 1, wherein the central station further comprises means for accessing a state sponsored lottery computer for providing state sponsored lottery games to players.’” (OD at [53], emphasis added)
In US’026, the disclosed lottery system is illustrated on Figure 1 (reproduced below for reference). With respect to this document, the Delegate commented:
“US’026 relates to a system which facilitates the sale of lottery tickets over electronic networks in which users [i.e. the lowest level, e.g. items 108 and 110] communicate with a lottery service provider (‘LSP’) [i.e. the middle level] via the Internet. The lottery service provider is coupled to lottery commission systems [i.e. the highest level]. The users send their information to the LSP so that they can purchase a lottery ticket. Once a ticket has been purchased, the LSP generates a secure lottery ticket purchase code. It also generates (and stores) a lottery ticket purchase record including the code, numbers chosen and user details. The LSP also sends a copy of the lottery ticket purchase record to the lottery commission system. The lottery commission system, having received a valid message, will send the LSP a confirmation which is stored in the lottery ticket purchase record in the LSP. The LSP then sends the secure lottery ticket purchase code to the user.” (OD at [42], emphasis added)
The Patentee submits (emphasis in bold added):
“When considered as a whole, the invention includes a completely new structure of computer system, adapted for the purpose of communicating between its respective structural entities certain information and processing and storing information at those entities in a way that facilitates lottery play. The invention is not merely in a standalone general purpose computer processing information, like the inventions considered in Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 and Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177. Instead, the invention provides a new platform by which lotteries may be run – any type of lottery, as the claimed system is independent of the particular lottery information that is being processed by the system (see e.g. the discussion of paragraph 99 of RPL Central below).”
However from the above analysis of the two prior art documents, it is clear that the three-level lottery system for facilitating governmental lottery play over an electronic network was known before the priority date. Therefore, I cannot agree with the Patentee that the claimed invention “includes a completely new structure of computer system, adapted … in a way that facilitates lottery play”. Although the functional diagram and elements of the three-level system for facilitating the governmental lottery play over an electronic network might not have been proven to be part of the common general knowledge, the above prior art analysis clearly demonstrates that they are not “completely new”.
As per the Aerotel approach, the provision of a known three-level lottery system cannot be considered as making an actual contribution to the art, hence I cannot consider that the three-level lottery system including the middle level computing system (i.e. the agent server), in itself, forms part of the substance of the invention. Therefore the substance of the invention must be within the specific functions that each of the three levels performs.
Although these specific functions, being related to information receiving, generation, recording, and exchange between the levels, may well render the claimed invention novel and inventive, I consider that these functions do not go beyond the normal operation of a computer system. This is also confirmed by the generality of the language in which the computer implementation is described in combination with the fact that, in the Original Decision, this level of disclosure was considered sufficient (“PSA” is an abbreviation for “person skilled in the art”):
“In response, Elot [the Patentee] submitted that no expert made any complaint as to the extent of the disclosure and that they fully understood the workings of the invention.
I am inclined to agree with Elot. …
In my opinion, if anything is missing from the specification, it is the commonly used methods that the PSA would use to implement what is being described. The evidence does not establish that there is something missing that would not have been supplied by the PSA as a matter of course.” (OD at [17-18]).
It follows that the computer implementation, in itself, is trivial and cannot be part of the substance of the invention.
The Patentee further submits (emphasis added) that:
“The new platform provides a technical contribution or technical effect of providing increased convenience and accessibility to lottery play (e.g. the system provides for use of player terminals) as well as increased security (e.g. no direct access by player terminals to the government lottery system, while maintaining the association of government issued serial numbers with player tickets). These were conceded by the Delegate as a problem solved by the invention.”
It appears that the Patentee is suggesting that the provision of a three-level lottery system results in the above contribution or effect. However, I note that the same “increased convenience and accessibility to lottery play” and “no direct access by player terminals to the government lottery system” appear to be already provided by the above discussed prior art three-level lottery systems (see e.g. the parts of [67, 74] and claim 9 of US’100 as quoted above in the Delegate’s analysis as well as Figure 1 of US’026). This suggests that providing these effects (whether technical or not) cannot be considered an actual contribution to the art.
Based on the above analysis, I conclude that the substance of the invention is in the specific rules governing the information receiving, generation, recording, and exchange between the levels in the known three-level lottery system for facilitating governmental lottery play.
So far, my consideration was mainly focussed on the invention defined in independent claims 1 and 10. I will now consider the recently proposed independent claim 21.
As mentioned earlier in this decision, claim 21 was introduced with the proposed amendment filed on 17 November 2016 in an attempt to overcome the objection raised and maintained in the re-examination reports. On its face, the claim may appear technical, since it is directed to a system including features like an interface device having communication interfaces and a database. However on proper construction, this is nothing more than a standard computing device, which in claim 1 was referred to as an agent server. Claim 21 also explicitly defines the feature that “the player terminals do not communicate directly with the computational system of a governmental lottery administrator”, however as already mentioned this feature is present in the discussed known three-level lottery systems. I also note that, as quoted above, the Examiner has considered that “this feature is inherent to claim 1, and has merely been placed into functional claim language”. I consider that the substance of the invention defined in claim 21 is no different than the substance of the invention defined in clams 1 and 10, i.e. a new set of rules related to information management in the known networked computer system for facilitating governmental lottery play.
Dependent claims (see Appendix A) also do not alter the substance of the invention. The additional features somewhat related to the system itself, i.e. a banking server in communication with a credit card provider e.g. as defined in generic terms in claims 5 and 6, are clearly known. Prior art document US’100 discloses on Figure 15 and at [68] “a bank server 222 for debiting and crediting accounts” which “can access a financial institution or credit card company computer 216”. I also consider that the “electronic commerce server software” of US’026 (see e.g. column 6, lines 5-14) is a banking server which provides “secure commerce capabilities (e.g., secure credit card transactions, secure debit card transactions, electronic check transactions, etc.)”. The rest of the additional features defined in the dependent claims represent mere variations or additions to the above mentioned new set of rules.
Is the Invention a Manner of Manufacture under Paragraph 18(1)(a)
Having regard to the state of the art at the priority date and considering the actual contribution of the inventor, I identified the substance of the invention as a new set of rules governing the information receiving, generation, recording, and exchange between the levels in a known three-level lottery system for facilitating governmental lottery play. I do not consider that this is more than a mere scheme.
The Patentee puts some emphasis on the screening unit verifying that the player is eligible to participate in the lottery by assessing the player information against certain pre-stored criteria. At best, I consider this to represent mere checking by trivial means and enforcing compliance with certain rules which are part of the lottery play scheme, however I also note that this unit merely compares the player information supplied by the player with the stored criteria. For example, there is nothing in the claimed invention that will prevent a 15 year old potential player from pretending to be 21 (or whatever the required minimum age might be) so as to be allowed to participate in the lottery. Therefore even the true enforcing of the lottery rules appears questionable.
With reference to the non-exhaustive list of matters to be considered in deciding on the manner of manufacture (see Aristocrat at [35] as quoted above), I consider that:
·     There is nothing more to the substance of the invention than the mere new scheme of facilitating the governmental lottery play over the electronic network; while the application of the new scheme or method might improve the business organisation of governmental lottery play over the electronic network, it does not produce a practical and useful result outside the realm of business innovation;
·     The new scheme or method merely requires generic computer implementation; there is no ingenuity in the way in which the known computer system is utilised; the invention does not involve steps that are foreign to the normal use of networked computers; and despite the fact that the new scheme appears specifically designed to operate in a networked computer environment, the computer system itself is merely a known intermediary or tool for performing the new scheme while adding nothing of substance to the idea upon which the new scheme is built;
·     There is no indication that the invention results in improvement in the functioning of any of the computers or the computer system; the invention cannot be broadly described as an improvement in the computer technology;
·     I am unable to identify any contribution of the claimed invention which is technical in nature; the invention as a matter of substance does not solve a technical problem within the computer system or outside the computer system, it appears to be concerned with business improvements in the organisation of the governmental lottery play over the electronic network.
Based on the above analysis, I conclude that the invention defined in all claims of the Patent is not a manner of manufacture.
Analysis without References to Prior Art Documents
In the above analysis, to establish the actual contribution to the art, I referred to the state of the art at the priority date, including the disclosures in prior art documents. These prior art documents were considered in the Original Decision and hence were available to me. However, as I mentioned earlier, the outcome of my decision would be no different even without the consideration of these prior art documents.
When an improved business scheme of lottery play is implemented using a well-known generic electronic network (such as the Internet) to create the three-level lottery system mentioned above, this does not actually result in a new computer system or in any significant alteration to the structure of the electronic network itself (or no alteration at all if the computers were already connected to the network as is usually the case). In simpler terms, the fact that the computers of the entities involved in the governmental lottery play are connected to and exchange information via the Internet, does not change the Internet as such.

The normal function of the network is to allow information exchange between the computers connected to it. This information exchange between the connected computers is made possible via a well-known network architecture including a plurality of network servers functioning in accordance with the established standard networking protocols. From a technical perspective, the three levels of the lottery system represent nothing more than known computing devices operating in a normal way and connected to a known network to utilise its standard capabilities in order to exchange information according to specific business rules. The three levels of the three-level lottery system are clearly distinguishable by their specific functionality only within the realm of the scheme for governmental lottery play. In short, the simple computer implementation of the present improved lottery scheme represents nothing more than a mere trivial substitution of the functional elements of the scheme with standard Internet-enabled computing devices.
Conclusion
I have already found that the invention defined in all claims of the Patent is not a manner of manufacture.
Having considered the specification, I do not believe that an allowable amendment could be made that would overcome my finding. I note that similar conclusion was reached by the Delegate in the Final Determination. In addition, in response to several re-examination reports, the Patentee proposed only one amendment which resulted solely in the introduction of the new independent claim 21 discussed above.
I also note that the Patentee recently requested examination on a fifth generation divisional application 2017203857 concerned with a similar subject matter. With respect to the issue of keeping some cases “alive” by repeated filing of divisional applications, the (then) Deputy Commissioner commented in Swiss Reinsurance Company Limited [2017] APO 12 at [4]:
“The applicant however did not request to be heard. It rather filed a further divisional application number 2017201643 pursuing a course of action that, although permitted under the Act, in my view does nothing for the reputation of the patent system and is likely to bring into question the generous availability of divisional applications to the detriment of other users of the system. While the applicant has the right to appeal my decision to the Federal Court, it appears that instead the divisional of this case will very soon be examined and referred to another delegate for determination. It is not clear what benefit the applicant derives from this but is the cause of considerable wastage of Patent Office resources and presumably significant inconvenience for any interested third parties.”
It is likely that the fifth generation divisional application 2017203857 will follow a similar path to that described above.
In light of the above mentioned circumstances of the case, I do not consider appropriate to give the Patentee an additional opportunity to amend, as this would serve no useful purpose.
I revoke Australian patent 2002236547.
Dr V. Z. Kolev
Delegate of the Commissioner of Patents
Appendix A
End of Appendix A