Google LLC - [2018] APO 13

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Google LLC [2018] APO 13

Patent Application: 2014381712

Title:Advertisement Price Discounting

Patent Applicant:  Google LLC
Delegate:  M. G. Kraefft
Decision Date:  21 February 2018
Hearing Date:  Written submissions filed on 21 December 2017

Catchwords: PATENTS – examiner’s objection – whether invention is a manner of manufacture – auctioning advertisement spots – bidding based on cost per user action – discounting cost to auction winner to price based on bid of second-placed bidder – problem of attributing user action to any of multiple advertisement spots – discounting costs to advertisement purchaser for advertisement spots to a level encompassing all advertisement spot purchases – application not for manner of manufacture – no patentable subject matter – application refused.

Representation: Patent attorney for the applicant: Pizzeys.

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2014381712

Title:Advertisement Price Discounting

Patent Applicant: Google LLC
Date of Decision: 21 February 2018
DECISION
The present application is not for a manner of manufacture. Thus, the application is not directed to patentable subject matter.
The application is refused.
REASONS FOR DECISION
BACKGROUND

Google Inc filed patent application 2014381712 on 7 February 2014 as an international application under the Patent Cooperation Treaty (“PCT”). The international application is designated PCT/US2014/015429. The earliest priority date is 7 February 2014.
Application 2014381712 has been subjected to three examination reports. The remaining objection, consistently raised in all reports, is that the claims do not define a manner of manufacture. Following the first report, the applicant filed a statement of proposed amendments under Section 104 to address the objections raised in that report. Nonetheless the examiner has remained unpersuaded in respect to manner of manufacture. There has been no further proposed Section 104 amendment from the applicant.
After the third report, the applicant requested to be heard. The hearing was conducted by way of written submissions.
On 24 October 2017, Google Inc requested an amendment of the record of the owner’s name. The application is presently proceeding in the name of Google LLC (“the applicant”).
While the final date for acceptance of the application was 3 January 2018, patent sub-regulation 13.4(1)(g) may be available to extend the time for gaining acceptance to 3 months from the date of the present decision.
SPECIFICATION
The specification states that the present disclosure relates generally to advertisement pricing. More particularly, the disclosure relates to discounting costs for conversions to advertisement purchasers based on a level at which the advertisement purchasers would have received the same advertising distribution results associated with the conversions.
Many actions of users following exposure to an advertisement may qualify as conversions. Paragraph [0015] of the specification provides examples. Actions may be fulfilled by a purchase at a merchant location, a purchase at an online store, a physical appearance at a merchant location, a completion of a survey, or any other suitable action.
As background, the specification describes conventional systems where online and other advertisement distributors use second-price discounting to advertisement purchasers. An advertisement distribution system conducts auctions based on bids from advertisement purchaser systems for an advertisement spot or group of spots. Paragraph [0016] provides examples of advertisement spots. They may be available on a web page, in an email to one or more users, or location-based alerts or advertisements to a mobile device. The advertisement purchaser systems may bid on advertisement spots based on cost per view, cost per action, cost per conversion, cost per click, etc.
In a cost per action bid, the advertisement purchaser system pays the advertisement distribution system for each instance of an action by users. For example, if an advertisement purchaser system is a merchant, the merchant may pay the advertisement distribution system for each user that completes a survey, completes an online checkout from the merchant’s e-commerce system, or any suitable action. In certain embodiments, the advertisement distribution system discounts the cost to an auction winner to a price based on the bid of the second-placed bidder.
When an advertisement distribution system utilises multiple advertisement spots, attributing a user action or conversion to a particular one of the advertisement spots is difficult. A user may have encountered two or more advertisement spots before performing the conversion action. In such circumstances, it would appear that conventional systems do not allow the advertisement distribution system to discount the cost to the advertisement purchaser system based on the lowest price the advertisement purchasing system could have paid while achieving the same distribution results.
The specification, as proposed to be amended, ends with 20 claims. Claims 1, 11 and 17 are independent claims. These claims read as follows:-
1.A computer-implemented method to discount costs to advertisement purchasers, comprising:
receiving, using one or more computing devices, a bid from an advertisement purchaser, the bid comprising an amount of funds the advertisement purchaser is willing to pay for an action of a user associated with a particular advertisement;
identifying, using the one or more computing devices, a first request associated with a first advertisement spot;
determining, using the one or more computing devices, with respect to the first request, an expected value for each of one or more prospective advertisements, each expected value based on a bid associated with each prospective advertisement;
selecting, using the one or more computing devices, the particular advertisement based on the particular advertisement having the highest expected value for the first request;
facilitating distributing, using the one or more computing devices, the particular advertisement in connection with the first request;
identifying, using the one or more computing devices, a second request associated with a second advertisement spot;
determining, using the one or more computing devices, with respect to the second request, an expected value for each of one or more prospective advertisements, each expected value based on a bid associated with each prospective advertisement;
selecting, using the one or more computing devices, the particular advertisement based on the particular advertisement having the highest expected value for the second request;
facilitating distributing, using the one or more computing devices, the particular advertisement in connection with the second request;
receiving, using the one or more computing devices, an indication that the action has been taken by the user; and
discounting, to the advertisement purchaser, using the one or more computing devices, a cost associated with the action based on the lowest bid at which the particular advertisement could have still been selected in connection with the first and the second requests.
11. A computer program product, comprising:
a non-transitory computer-readable storage device having computer-executable program instructions embodied thereon that when executed by a computer cause the computer to discount costs for conversions to advertisement purchasers, the computer-executable program instructions comprising:
computer-executable program instructions to receive a bid from an advertisement purchaser, the bid comprising an amount of funds the advertisement purchaser is willing to pay for an action of a user associated with a particular advertisement;
computer-executable program instructions to identify a first request associated with a first advertisement spot and a second request associated with a second advertisement spot;
computer-executable program instructions to determine with respect to the first request and the second request, an expected value for each of one or more prospective advertisements, each expected value based on a bid associated with each prospective advertisement;
computer-executable program instructions to select the particular advertisement based on the particular advertisement having the highest expected value for the first request and the second request;
computer-executable program instructions to facilitate distributing the particular advertisement in connection with the first request and the second request;
computer-executable program instructions to receive an indication that the action has been taken by the user; and
computer-executable program instructions to discount, to the advertisement purchaser, a cost associated with the action based on the lowest bid at which the particular advertisement could have still been selected in connection with the first and the second requests.
17. A system to select payment accounts to discount costs for conversions to advertisement purchasers, the system comprising:
a storage resource; and
a processor communicatively coupled to the storage resource, wherein the processor executes application code instructions that are stored in the storage resource and that cause the system to:
receive a bid from an advertisement purchaser, the bid comprising an amount of funds the advertisement purchaser is willing to pay for an action of a user associated with a particular advertisement;
identify a first request associated with a first advertisement spot and a second request associated with a second advertisement spot;
determine, with respect to the first request and the second request, an expected value for each of one or more prospective advertisements, each expected value based on a bid associated with each prospective advertisement;
select the particular advertisement based on the particular advertisement having the highest expected value for the first request and the second request;
facilitate distributing the particular advertisement in connection with the first request and the second request;
receive an indication that the action has been taken by the user; and
discount, to the advertisement purchaser, a cost associated with the action based on the lowest bid at which the particular advertisement could have still been selected in connection with the first and the second requests.
APPLICABLE LAW
The present application is governed by the Patents Act 1990 (“the Act”) as amended by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (“the Raising the Bar Act”). Amendments to sections 7, 40 and 49 of the Act apply to the present case as a consequence of Schedule 1, items 55(1)(d) and 55(4)(a), and Schedule 6, item 133(7)(d) of the Raising the Bar Act. The application was filed after 15 April 2013.
Thus the standard of proof that applies in the present case is the balance of probabilities. I must accept the application if satisfied on the balance of probabilities that the application complies with the Act. If I am not so satisfied, then I can refuse the application.
Section 18 of the Patents Act 1990 relevantly provides that:-
(1)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; and …
In National Research Development Corporation v Commissioner of Patents (“NRDC”), [1959] HCA 67, (1959) 102 CLR 252, the High Court provided a statement of the law in this regard. At page 275, “… a process, to fall within the limits of patentability which the context of the Statute of Monopolies has supplied, must be one that offers some advantage which is material, in the sense that the process belongs to a useful art as distinct from a fine art …- that its value to the country is in the field of economic endeavour”. In discussing the “vendible product” proposition put forward by Morton J in Re G.E.C’s Application, (1942) 60 RPC 1, the High Court in NRDC upheld the validity of a patent for the use of previously unknown properties of a known chemical to effect a new purpose. At page 277:-
“The effect produced by the appellant’s method exhibits the two essential qualities upon which “product” and “vendible” seem designed to insist. It is a “product” because it consists in an artificially created state of affairs, discernible by observing over a period the growth of weeds and crops respectively on sown land on which the method has been put into practice. And the significance of the product is economic; for it provides a remarkable advantage … for one of the most elemental activities by which man has served his material needs, the cultivation of the soil for the production of its fruits.”
The High Court though was not laying down a precise formulation that can be applied unthinkingly. In D’Arcy v Myriad Genetics Inc (“Myriad”), [2015] HCA 35, at [23]:-
“This Court in NRDC did not prescribe a well-defined pathway for the development of the concept of “manner of manufacture” in its application to unimagined technologies with unimagined characteristics and implications. Rather, it authorised a case-by-case methodology.”
That case-by-case approach must have regard to the substance of the claimed invention, not simply the form of the claim. The point was made succinctly in the Myriad case by Gageler and Nettle JJ. At [144]:-
“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 Commissioner of Patents v RPL Central Pty Ltd (“RPL”), [2015] FCAFC 177, the Full Court of the Federal Court stated the same thing in the context of an invention that was in substance a scheme. At [96]:-
“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.”
Moreover at [98]:-
“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”.
The Full Court of the Federal Court in RPL then detailed a number of considerations relevant to the determination and coming from earlier decisions of the Court. Summarising from [99] of RPL:-
- It is necessary to ascertain whether the contribution to the claimed invention is technical in nature.
- One consideration is whether the invention solves a “technical” problem within the computer or outside the computer, or whether it results in an improvement in the functioning of the computer, irrespective of the data being processed.
- Does the claimed method merely require generic computer implementation?
- Is the computer merely the intermediary, configured to carry out the method using a computer readable medium containing program code for performing the method, but adding nothing to the substance of the idea?
In Aerotel Ltd v Telco Holdings Ltd; Macrossan’s Application, [2006] EWCA Civ 1371; [2007] RPC 7, the England and Wales Court of Appeal outlined a four-step “technical effect” approach in respect to the question of excluded subject matter under UK law. At [40]:-
“(1) properly construe the claim
(2)identify the actual contribution;
(3)ask whether it falls solely within the excluded subject matter;
(4)check whether the actual or alleged contribution is actually technical in nature.”
In addressing the second step, Jacob L.J. stated at [43]:-
“The second step – identify the contribution – is said to be more problematical. How do you assess the contribution? Mr Birss submits the test is workable – it is an exercise in judgment probably involving the problem said to be solved, how the invention works, what its advantages are. What has the inventor really added to human knowledge perhaps best sums up the exercise. The formulation involves looking at substance not form – which is surely what the legislator intended.”
As discussed in McCormick & Company, Incorporated, [2017] APO 62, viewed as a whole, this is entirely consistent with the approach of the High Court in Myriad. It is clear in Myriad that the majority did not restrict their enquiry to the face of the specification, but had regard to the primer in forming their view of the substance of the invention.
As explained at [39] of Myriad, the parties agreed on a primer of scientific matters setting out aspects of the structure and functions of DNA, the nucleotides which make it up, and the gene sequences which they form that determine the production of the various proteins which generate bodily tissues and fluids. The primer was taken to embody the scientific background comprising the common general knowledge, or at least relevant prior art.
At [130] of Myriad, Gageler and Nettle JJ referred to the law as requiring “ingenuity that adds to the sum of human knowledge”, and considered what the applicant had invented in comparison to the existing state of knowledge (Myriad at [137] and [146]). At [267] of Myriad, Gordon J also noted that the patentee did not “create, make or alter” the specific mutations and polymorphisms.
Thus, as concluded at [54] in McCormick, it is legitimate to consider the prior art to assess the actual contribution to the art, and thus determine the substance of the invention.
SUBMISSIONS
In the first instance, the applicant noted the issue when an advertisement distribution system utilises multiple advertisement spots. The ability to attribute a user action or conversion to a particular advertisement spot is difficult as a user may have encountered two or more advertisement spots before performing the conversion action. Accordingly, the applicant put the problem as follows. The problem associated with conventional systems in an online environment is the inability to process relevant data to determine which of the advertisement spots contributed to the conversion, so as to discount the cost of the advertisement. The applicant outlined this as a problem that relates to advertising in an online or electronic environment, that is, an industrial science, and is therefore a technical problem.
Secondly the applicant stated the advertisement distribution system, as defined in the current claims, discounts the advertisement spots to the advertisement purchaser to a level that encompasses all of the advertisement spot purchases. In an online or electronic environment, the applicant stated this contribution is technical in nature.
The applicant further outlined aspects of the method in which the system discounts the advertisement spots to the purchaser to a level encompassing all of the advertisement spot purchases, and argued the invention met the summary points found in Aristocrat Technologies Australia Pty Ltd, [2016] APO 49. For convenience, those points may be found at Annex A at the end of this decision.
In directly responding to the examiner’s third report, the applicant referenced the NRDC and RPL decisions in arguing the patentability of the presently claimed invention. The applicant described the claims as defining a specific solution for discounting advertisement spots to the purchaser to a level encompassing all of the advertisement spot purchases. The applicant thus stated that, at the very least, the substance of the invention is an application of a method where part of the method is the application and operation of the method in a physical device.

In concluding, the applicant submitted that the principles for determining patentable subject matter, as outlined in Aristocrat, have been met. The claims defining the invention achieve a practical and useful result by improving the way in which discounted costs are automatically applied to advertisement spot purchases. Thus the applicant contended that the claims define a manner of manufacture.
DISCUSSION
Auction - Scheme
The presently claimed invention is directed to a system where an advertisement purchaser bids for advertisement spots with an amount the purchaser is willing to pay for a user action associated with a particular advertisement. Having successfully bid for at least two advertisement spots and where a user has taken an action that qualifies as a conversion associated with the particular advertisement in connection with the advertisement spots, the advertisement purchaser then pays a lesser or discounted amount for the conversion than their winning bids. The embodiments discuss the advertisement distribution system discounting the cost to the auction winner to a price based on the bid of the second-placed bidder. This is analogous to the types of auctions where bidders do not know the bids of their competitors and, as such, the winning bidder pays a margin above the second-placed bidder rather than their actual winning bid. At this point, the alleged invention is clearly in the field related to a scheme for running an auction albeit, more specifically, an auction for advertisement spots.
Problem with Multiple Advertisement Spots
Within this scheme, the applicant identifies a problem, according to the specification, that when an advertisement distribution system utilises multiple advertisement spots, the ability to attribute a user action or conversion to a particular advertisement spot is difficult. A user may have encountered two or more advertisement spots before performing the conversion action. Thus, the problem associated with conventional systems is the inability to determine which of the advertisement spots contributed to the conversion, so as to discount the cost of the advertisement.
As mentioned earlier, user actions may be fulfilled by a purchase at a merchant location, a purchase at an online store, a physical appearance at a merchant location, a completion of a survey, or any other suitable action. It is thus conceivable that a user action, towards any particular merchant or advertiser, is not necessarily associated with any advertisement spot of the merchant or advertiser. Conversely, one, some or all relevant advertisement spots may contribute to the user action. Whatever the case, the problem in the present case appears to relate to the overall difficulty of assessing the effectiveness of marketing or advertising strategies across multiple advertising spots, and attributing advertising costs accordingly. This is a business problem, and not a technical problem.
The applicant’s more narrow description of the problem may appear more favourable to the applicant. The problem of attributing user actions to any particular ones of multiple advertisement spots may be seen as a technical problem in the following sense. User actions, such as online visits, online purchases, or online completions of surveys, cannot be directly identified with multiple particular advertisement spots, such as on web pages, in emails, on smartphones and/or as pop-ups, for example. While there clearly is technology involved in such cases, the interrelationships between the advertisement spots and user actions appear tenuous. In any case, the problem in a broader sense remains one of trying to identify the cause of consumer behaviour. Again this is a business problem and not a technical one. The fact that the alleged invention may be applied in an online or other computing environment does not change the nature of the problem that the alleged invention seeks to address.
Claimed Solution
Perhaps in recognising the difficulty in attributing user actions to any of multiple advertisement spots, the applicant presents the solution simply to discount the costs for advertisement spots to a level that encompasses all advertisement spot purchases. That is, rather than determining which advertisement spot or spots trigger the user action, all relevant advertisement spot purchases are used as the basis for establishing the discounted cost. There is no indication in the specification as to the former. If it were possible, then a method or process for the former may arguably have been a technical solution. The latter though, that is, a decision to simply use all advertisement spot purchases, would appear to be a non-technical solution. Additionally, the latter is only a partial solution to the above-mentioned problem. In the context of the claims, first and second requests are identified by association with first and second advertisement spots, respectively. While the broadest claims do not define the nature of these requests, some dependent claims and the specification, for example at [0016], embody them as requests for bids for advertisement spots or as requests for advertisements. Claims 1, 11 and 17 then further effectively define the establishment of a winning advertisement for each request that is then distributed, and conclude by defining the discounting, to the advertisement purchaser, of the cost associated with a user action based on the lowest bid at which the advertisement could have still been selected in connection with the first and the second requests.
Contribution to the Art
In the discussion of the background in the specification, for example at [0004] and [0005], it may be inferred that conventional systems have operated on the basis of a direct association between a single advertisement spot and a user action. There would appear to be nothing untoward in extending such a system to a system where all advertisement spots, that may drive a user action, are associated with a user action. In this regard, the specification does not suggest any specific computing or programming functions out of the ordinary to achieve that outcome.
For example, the advertisement purchaser, advertisement distribution and advertisement presenter systems, together with the user device and the network connections, as depicted in Figure 1, would appear to have been standard computing arrangements at the relevant time. Paragraph [00100] of the specification, and with reference to Figure 5, describes a module configured to facilitate a computer to perform the various methods and processing functions presented in the application. The module may include one or more sequences of instructions stored as software or firmware in association with a system memory, storage media, or both. The storage media may represent examples of machine or computer readable media on which instructions or code may be stored for execution by a computer processor. This and further detail about the module, the storage media, the processor and their functions, and their interactions via networked environments or other communications technology, appear to relate to completely standard computing technology and application at the relevant time.
Thus, in the present case, the contribution to the art can only reside in the system discounting the cost to the advertisement purchaser for advertisement spots to a level that encompasses all advertisement spot purchases. This is not technical in nature. That outcome is not altered, in the present case, by application in an online or electronic environment.
I conclude the present application is not for a manner of manufacture. Moreover, I cannot see anything in the specification that could be added to the claims that could avoid this finding.
CONCLUSION
I have found the present application is not for a manner of manufacture. Thus, the application is not directed to patentable subject matter.
As there is nothing in the specification that could avoid this finding, I refuse the application.
M. G. Kraefft
Delegate of the Commissioner of Patents
Annex A
After a relatively lengthy consideration of the applicable law in the Aristocrat case, the delegate stated the following at [35].
[35]. “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.