Luxembourg Holdings Pty Ltd v Michael James Houlihan

OFFICIAL NOTICE
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 727005 in the name of LUXEMBOURG HOLDINGS PTY LTD.

Title: Modified Baccarat Gaming.

Action: Opposition under Section 59 of the Patents Act by MICHAEL JAMES HOULIHAN.

Decision: Issued
Abstract

The alleged invention the subject of the application relates to a modified baccarat game for play in commercial gaming operations such as casinos.
The opposition was successful. All the claims of the application lack an inventive step. Several claims were also found to lack fair basis.
It was also found that the body of the specification was devoid of any subject matter that could be brought into the claims to overcome the findings of lack of inventive step. An opportunity to amend the specification would have been pointless.
The application was refused.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent application 727005 by LUXEMBOURG HOLDINGS PTY LTD, and opposition under Section 59 by MICHAEL JAMES HOULIHAN.

BACKGROUND

Luxembourg Holdings Pty Ltd ("Luxembourg") filed patent application 727005 on 20 March 2000. The application claims priority from an Australian provisional application filed on 16 November 1999. Patent application 727005 was advertised accepted on 30 November 2000.
Michael James Houlihan filed a notice of opposition to the grant of a patent on the application on 28 February 2001. On 28 May 2001 Mr Houlihan filed a statement of grounds and particulars in support of his opposition.
Following two extensions of time Mr Houlihan completed the service of evidence in support on 13 December 2001. Mr Houlihan subsequently made an application to amend the statement of grounds and particulars. The nature of the amendment was only to include extra particulars under the grounds of lack of novelty and inventive step to make the statement consistent with the evidence in support that Mr Houlihan had filed. The amendment was allowed on 8 May 2002.
On 13 March 2002 Luxembourg made a request to amend the specification. This amendment proposed a substantial revision of the claims of the specification. The request to amend was granted, and advertised on 16 May. The request was subsequently allowed unopposed on 27 August 2002. The allowance was advertised and the specification was republished on 3 October 2002. Luxembourg has not served any evidence in answer to this opposition.
On 16 December 2002 Mr Houlihan applied to serve further evidence on Luxembourg. Essentially Mr Houlihan stated the application to serve further evidence is in response to the amendment to the specification made by Luxembourg. The application to serve further evidence was subsequently granted with Luxembourg then being given one month to serve evidence in response. Luxembourg has not served any such evidence.
A hearing was held in Melbourne on 16 May 2003. Mr Allen Evans, patent attorney of Watermark, represented Luxembourg by phone. Ms Virginia Beniac-Brooks, assisted by Mr Robert Kelson, both patent attorneys of Callinan Lawrie, represented Mr Houlihan in person. Mr Charlie Daalder and Mr Mike Sugrue were also present as observers.
SPECIFICATION
The specification states the invention relates to a modified baccarat game for play in commercial gaming operations. Full details of the rules of baccarat may be found in many references. The specification cites for example A.H. Morehead and G. Mott-Smith, 1998, Hoyles Rules of Games, 2^nd revised edition, Penguin Books, Australia. Casino baccarat is played with multiple numbers of regular 52 card packs of cards, shuffled together. The banker (who is a customer, not the house) plays against the player hand. Participants in the game may back either the player hand or the banker.
The modern form of the game may allow for bets to be placed against the house, in effect, by not requiring banker and player bets to be matched. The house achieves its own return by taking a percentage, typically 5%, of winnings achieved by the banker.
The object of the game is to hold two or three cards whose value together is nine, or as near nine as possible, with tens and face cards counting as 0, aces 1 and other cards their face value. Units of ten are not counted so that for example totals of 2, 12 or 22 count as 2. The banker deals two cards to the player hand and to himself. If either total is 9 or 8, the hand wins, unless tied or beaten by the other participant on the first two cards. When the result is not decided in this way, an additional card may be drawn by each participant in accordance with set guidelines known as the table of play.
The specification notes many variants are played to allow more rapid game play, more rapid settlement of bets and to allow increased table turnover. However the level of wagering on each hand is not increased. Playing speed is simply increased. An object of the invention is to provide a modified baccarat game, and table layout, to facilitate an increase in turnover per gaming table.
The invention broadly resides in a baccarat game that takes advantage of the approach to house takings wherein the house takes a higher percentage but only from winning bankers' hands that fulfil a certain characteristic. The invention is characterised in that the house takes side bets, placed before the cards are dealt, against the outcome in which the house percentage is payable.
The specification contains eight claims.
Claim 1 reads as follows:-
1. A casino baccarat game, of the type wherein:
odds of 1 to 2 are paid when the banker wins with a hand that has a predetermined points value; and
even odds are paid on any other player or banker winning hand,
characterised in that said game further includes means for a participant to make a wager against the house when the banker wins with a hand that has said predetermined points value.
The underlined emphasis above is in the specification.
Claims 2 and 3 are recited below to demonstrate an exemplary points value and the odds paid on the banker winning with a hand with that value.
2. A baccarat game according to claim 1, wherein said predetermined points value is 6.
3.A baccarat game according to claim 2, wherein said wager against the house pays odds of 10:1.
STATEMENT OF GROUNDS AND PARTICULARS
Mr Houlihan's amended statement of grounds and particulars lists the following grounds of opposition. The claimed invention is not for a manner of manufacture, is not novel, and does not involve an inventive step. Furthermore the specification does not fully describe the invention and the claims are not clear, succinct and fairly based on the matter described in the specification. Mr Houlihan provided numerous particulars to support each of these grounds.
EVIDENCE
Mr Houlihan's evidence in support of the opposition consists of statutory declarations by Ms Beniac-Brooks, Mr Andrew MacDonald and Mr Jimmie Ray Kilby.
Ms Beniac-Brooks is the patent attorney handling the opponent's case. She includes several patent and non-patent documents as exhibits together with evidence of publication of this material prior to the priority date of the present application.
At the time of making his declarations Mr MacDonald was chief executive officer of PBL Gaming Operations (Vanuatu), the on-line gaming division of PBL. He has been involved in the gaming industry in Australia since 1978. Mr MacDonald states to have considerable knowledge and experience in operational and regulatory issues relating to the legalised gaming industry in Australia.
Mr MacDonald compares the claimed invention with several of Ms Beniac-Brook's exhibits to conclude the claimed invention could not be regarded as new or inventive.
Mr Kilby held the Boyd Professor of Gaming Chair at the University of Nevada, USA, at the time of making his declaration. He was the faculty instructor of all courses offered by the university relating to casinos and gaming. Mr Kilby also has extensive gaming industry experience as an employee, consultant and educator. While his employment and consultancy work appears to pertain largely to the USA, particularly Nevada, and also to Puerto Rico, Mr Kilby has nonetheless conducted numerous training programs around the world, including Australia. He claims to be aware of the levels of knowledge and skill of individuals in the gaming industry in various parts of the world.
Mr Kilby discusses several modifications of the game of baccarat and presents evidence of at least a "No Commission" version of baccarat being played in South America before the priority date of the present application.
A subsequent declaration from Ms Beniac-Brooks includes the original Spanish language document corresponding to a translation relied on by Mr Kilby.
The opponent's further evidence includes a further declaration from Mr MacDonald supposedly addressing the specification as amended by Luxembourg during the opposition proceedings.
With Mr Evans' consent, Ms Beniac-Brooks also played a short video at the hearing of the rules of baccarat, how the game is played and how bets are made. Mr Evans received and viewed a copy of the video prior to the hearing. A copy of the video was also retained for the Patent Office record.
DESCRIPTION OF THE INVENTION, CLARITY AND FAIR BASIS OF CLAIMS
Ms Beniac-Brooks noted the amendments made by the applicant during the opposition. She stated the descriptive part of the specification is inconsistent with the claims as amended as there is no consistory statement in the description that is similar to the amended claim 1. On the other hand the Welch Perrin and Co Pty Ltd v Worrel decision, (1961-1962) 106 CLR 588 at 612, states that a consistory clause is not an essential part of the body of a specification. Its purpose may be met by the claims themselves.
In the present case the broadest claim, that is claim 1, defines a casino baccarat game where specific odds are payable for two particular outcomes and a wager can be made against the house when the banker wins with a hand that has a predetermined points value. This is broadly consistent with the body of the specification as a whole and would appear to serve the purpose of a consistory clause. I find no fault with the specification on this point.
Ms Beniac-Brooks submitted an essential feature of the invention that is not claimed is that side bets are placed before cards are dealt. She referred to the foot of page 3 of the specification. There is an explicit statement that the house takes side bets before cards are dealt.
Mr Evans submitted the claims are valid as they stand since a wager cannot be made other than before the play of a card.
It is correct that the feature of wagering before cards are dealt is not explicitly claimed. It is also clear though that a wager cannot be made after the event. Consequently for the game of baccarat the passage referred to by Ms Beniac-Brooks appears to be a statement of the obvious. The passage may thus appear to be unnecessary in the claims.
A discussion of the wagering event appears to be warranted. The specification appears to equate a side bet with an insurance bet. See, for example, the last two sentences on page 3. That is, the side bet is a form of insurance additional to or alternatively to a main bet. From the evidence presented in this opposition it appears others in the industry view insurance bets a little differently in the sense of being one of many types of side bets where a bet can be placed on a second outcome when a first outcome is already known. This type of wager is not specifically discussed in detail in the body of the specification. While from the specification it appears this may not be the applicant's understanding of an insurance bet, the present claims include, in their scope, a subsequent wager on an outcome after the first card is dealt and shown but before the second card is dealt. The passage on page 3 of the specification referred to by Ms Beniac-Brooks does not explicitly state whether the side bet must be made before any or before all of the cards are dealt. From the specification as a whole though, the applicant appears to contemplate side bets being made before any of the cards are dealt in each game.
Claims 1-7 are silent on this point and, consequently, are not fairly based.
The term, "when", in the second last line of claim 1, may suggest that a wager can be made against the house after the banker wins with a hand of a predetermined points value. However as noted above, this would be nonsensical and not appear to be contemplated by the applicant. In the context of the summary of the invention on page 3, the specification as a whole, and the parties' discussion of the application at the hearing, the ability to make a wager against the house on the banker winning with a hand of the predetermined points value would appear to be the correct meaning. I find claim 1 is clear given this purposive construction.
On a point of consistency within the description I noted at the hearing a number of discrepancies between the description of the table layout at the top of page 6, particularly in respect to reference numerals, compared with the illustrations in Figure 1. Mr Evans conceded these errors. He submitted it would be appropriate to allow the applicant an opportunity to further amend the specification to overcome these errors.
Ms Beniac-Brooks stated a number of points raised in Mr Houlihan's statement of grounds and particulars have not been addressed by the applicant's amendment of the claims. She submitted that since the applicant amended the claims during the opposition and chose not to address all the points, the applicant must now be estopped from addressing those deficiencies by further amendment.
Section 104 (1) provides the basis for an applicant to amend the specification. There is nothing in this section that limits the number or type of amendments that an applicant can make to a specification. There is also nothing that suggests allowance of a subsequent amendment is conditional upon a previous amendment in any way. I am not aware of any basis that precludes a patent applicant being given a further opportunity to amend to cover opposition points that were not addressed by a previous amendment. The Exxon Chemical Patents Inc v Lubrizol Corporation decision, (1998) 41 IPR 126, dealt with an issue of whether a party was estopped from opposing an extension of time for another party to serve evidence because the first party had not opposed previous equivalent requests for extensions of time. In that decision the hearing officer found a party who chooses not to object to an extension of time does not relinquish the right under the corresponding regulations to subsequently object to a further extension of time. I think the same principle applies in the present case. Luxembourg's choice, in the first instance, not to amend on a particular point does not relinquish its right under Section 104(1) to make a subsequent amendment on that point.
NOVELTY
Whether Two Documents Could Be Treated As A Single Source Of Information
To sustain submissions of lack of novelty Ms Beniac-Brooks essentially relied on cross-references between two patent documents, US 5362064 and US 5979896. The former was published well before the priority date of the present application. The latter was published seven days (that is, 9 November 1999) before the priority date. Both patent documents are part of the prior art base.
Section 7(1)(b) of the Patents Act relevantly provides that prior art information made publicly available in two or more related documents can be used if the relationship between the documents is such that a person skilled in the relevant art would treat them as a single source of information.
Column 4 line 55 onwards of US 5979896 refers to US 5362064 in the following terms.
"… we devised a modified baccarat game as disclosed in U.S. Pat. No. 5,362,064 issued Nov. 8, 1994 the disclosure of which is hereby incorporated by reference."
The remainder of the paragraph discusses the disclosure in that patent of designating certain banker and player hand outcomes as "bar" hands for players' wager on the banker.
Ms Beniac-Brooks referred to the Nicaro Holdings Pty Ltd v Martin Engineering Co decision, 16 IPR 545, to submit the above cross-reference is sufficient to meet the conditions of Section 7(1)(b). She also noted Mr MacDonald treated the documents as a single source of information.
Mr Evans submitted the two documents could not be treated as a single source of information, despite the cross-reference in them, because they address the problem of the prior art, of simplifying the house collecting its commission, in different ways. He stated the earlier patent addresses the problem by converting some banker's hands that would otherwise be winning hands into losing hands (that is, the payout is "barred") and the house takes the wager. Mr Evans said the later patent addresses the problem by reducing the payment on some winning banker's hands.
The Nicaro (supra) decision discusses the cross-reference between two patents (the Matson patents). Lockhart J. noted as follows:
"The later Matson patent refers as part of the "Background of the Invention" to the earlier Matson patent in these terms: "A representative prior US patent is that to C G Matson No 3504786, and consider also the art cited in that patent.""
Also in the "Background of the Invention" in the earlier Matson patent, two other US patents are referred to (a Sinden patent and a Reiter patent). Lockhart J. concluded the reference in the later Matson patent to the earlier Matson patent did not disclose a cross-reference merely as a shorthand means of incorporating disclosure of any of the essential integers in the invention disclosed in the Martin patent. Nor by referring to the earlier Matson patent (with its cross-reference to the Sinden and Reiter patents) is there disclosure of any essential integers of the invention of the Martin patent.
Gummow J., with whom Jenkinson J. agreed, similarly did not regard the reference to the earlier Matson patent as sufficiently connecting all the contents thereof to the later Matson patent. Gummow J. further noted the discussion about the Reiter patent in the earlier Matson patent taught away not towards the Reiter patent as disclosing something which does not recognise a need to be met by the earlier Matson patent.
In the present case US patent 5979896 refers to earlier US patent 5362064 as disclosing a modified baccarat game that overcomes drawbacks associated with the complexity of collection of the house commission and the complexity of third card draw rules. The later patent then briefly describes that the earlier patent discloses designating certain banker and player hand outcomes as "bar" hands for players' wager on the banker. On the other hand column 5 lines 1-24 of the later patent discuss certain problems with designating certain hands as "bars", amongst other problems with modified baccarat games. One problem is the complexity and the limited flexibility in selecting barring outcomes. Furthermore when certain outcomes are selected as barred hands, the vigorish is determined and cannot be adjusted.
In this light the later patent describes a further invention where the casino selects certain winning banker hands and pays a reduced amount on those hands. This is clearly an alternative to the modified baccarat game discussed in the earlier patent, and appears to be specifically designed to overcome the drawbacks identified about the game disclosed in the earlier patent. As in the Nicaro (supra) case, it appears in the present case that the later US patent teaches away from not towards the earlier US patent.
The later patent may state the earlier patent is incorporated by reference. Mr MacDonald states he read the two patents as a single source of information only because of this cross-reference. On the other hand, in reading the later patent as a whole, that reference appears to direct the reader to refer to the earlier patent mainly to gain a full appreciation of the need to develop a further modified form of baccarat along the lines of the later patent.

Ms Beniac-Brooks sought to further link the two patents by stating that column 5 lines 30-50 of the later patent clearly contemplate the side bet options of the earlier patent. On the other hand the reference to the earlier patent at this point reinforces the later patent as disclosing a modified Baccarat game from that disclosed in the earlier patent. In respect to the method of the later patent the above-mentioned passage essentially discusses selected bank winning hands where the casino selects a reduced payout rather than discussing specific side bet options from another source. There is nothing in the later patent to suggest the game disclosed therein is built from or to be combined with the game disclosed in the earlier patent. The two patents disclose distinct alternatives of modified baccarat games.
I think it is inappropriate to treat the two patents as a single source of information.
Whether There Is Novelty Over The Prior Art Documents Individually
It was generally accepted by both parties at the hearing that the nature of the claimed invention related to a type of baccarat game commonly known as "no-commission" baccarat. That is, the house does not take any commission on bank hand wins as in conventional baccarat. Rather the house retains its profitability by other means such as no payouts or reduced payouts on certain outcomes.
Mr Evans accepted the later US patent 5979896 disclosed the preamble of claim 1 of the claimed invention. The paragraph bridging columns 6 and 7 of the US patent describes the provision of a game where the casino chooses to pay 1:2 (or 50%) on bank winning wagers where the bank wins with a 5. Furthermore the paragraph discusses the vigorish that would be provided assuming all other rules of conventional baccarat are observed. The 1:1 payoff for all other winning outcomes is specifically mentioned. These disclosures are equivalent to the preamble of claim 1 of the present application. There is however no clear disclosure in this US patent of the characterising part of claim 1, namely the further means for a participant to make a wager against the house when the banker wins with a hand that has the predetermined points value. The specification describes this feature as the house taking side bets against the outcome in which the house percentage is payable.
Ms Beniac-Brooks submitted the earlier US patent 5362064 discloses various side bet options, one of particular relevance being mentioned at column 18 lines 33 - 35. That passage states that side bets may be taken on a winning hand total. That is, the numerical total of the cards of the winning hand.
Mr Evans submitted this disclosure still fell short of disclosing the characterising part of the claimed invention. He noted there are no clear and unmistakable directions in the earlier patent that side bets are taken on the total of the banker's winning hand being a predetermined value. I agree. A side bet on the numerical total of any winning hand is not the same as a side bet on the numerical total of the banker's winning hand.
I conclude that, even if it were permissible to treat the two US patents as a single source of information, the claimed invention is novel over these two patents.
Ms Beniac-Brooks did not discuss any other documentation in respect to novelty. I am satisfied there is no other documentation in evidence that challenges the novelty of the claimed invention.
INVENTIVE STEP
Ms Beniac-Brooks cited the Wellcome Foundation Ltd v VR Laboratories (Aust.) Pty Ltd decision, (1981) 148 CLR 262 at 286, to state the following. An appropriate test for inventive step is whether a person skilled in that field, and faced with the same problem, would have taken as a matter of routine whatever steps might have led from the prior art to the invention.
Person Skilled in the Field
Ms Beniac-Brooks referred to the specification to describe the problem of the prior art as one of little incentive for participants to increase the level of wager in no-commission baccarat. She also referred to Mr MacDonald's evidence to list the persons skilled in this art as those directly involved in casino card game operations, namely floor managers, games trainers, pit bosses or casino managers.
Mr Evans cited Queensland Casino Gaming Rule 1999, SL No.150 of 1999, Schedule 1 - Baccarat, from Mr MacDonald's declaration, to submit the appropriate person skilled in the field is one who directly uses the invention, namely only a dealer. In support Mr Evans referred to Sections 15 onwards of the above schedule of the gaming rule. Those sections discuss the functions and rules applying to a dealer. Mr Evans subsequently accepted a floor manager would also be an appropriate person skilled in this field. He disagreed that casino managers are such skilled persons as the roles of casino managers may be very diverse in different establishments and unrelated specifically to the game of baccarat.
The above schedule of the Queensland Casino Gaming Rule 1999 (commencement date of 1 July 1999, and before the priority date of the application) is an extensive schedule related to the rules of baccarat including the 'no commission' form of the game. Several sections of the schedule apply to the dealer, as noted by Mr Evans. Other sections apply to floor managers (section 14), pit bosses (sections 14 and 15) and casino operators (section 20). Section 13 relates to 'no commission' baccarat and also applies to the casino operator.
Furthermore, contrary to Mr Evans' assertion that the person skilled in the field is only one who uses the invention, the Wellcome (supra) case identifies the ordinary person skilled in the field depending on the nature of the problem identified in the specification. The American Cyanamid Company v Ethicon Limited decision, [1979] RPC 215 at 245, identifies the skilled addressee primarily from the following. The nature of the invention, the nature and size of the industry concerned, and the way it is organised for the purposes of conducting research into and producing and marketing its products. In this light the user of the invention, in the present case, appears to be too narrow a view of the ordinary person skilled in the field. The considerations of the problem identified in the specification, the nature and size of the industry and its research, production and marketing activities require a broader range of people than only casino floor operators to be considered as appropriate ordinary persons skilled in the field. I accept Mr MacDonald's statements that the ordinary persons skilled in this field are those that are directly involved in casino card game operations, namely floor managers, games trainers, pit bosses or casino managers.
Mr Evans cited the academic positions and backgrounds of the opponent's declarants, Mr MacDonald and Mr Kilby, to state they were over-qualified to be ordinary persons skilled in this field. Mr MacDonald has been co-moderator of a programme of study at the University of Nevada and Mr Kilby has been a professor at the university. On the other hand both declarants also have had concurrent experience and held concurrent positions in casino operations and casino management at various casinos. I conclude both declarants qualify as appropriate persons skilled in the field.
Common General Knowledge
Ms Beniac-Brooks cited a number of sources to submit various elements of casino gaming were common general knowledge at the priority date of the present application. She referred to Mr MacDonald's discussion of two particular books. The author of the books is a Mr John Scarne. The first (extract in exhibit VAB-6 of Ms Beniac-Brooks' declaration) is titled, "Scarne's Encyclopedia of Games", and evidence from Ms Beniac-Brooks shows the book was publicly available in IP Australia's library from 4 June 1979. The second (extract in exhibit VAB-7) is titled, "Scarne's New Complete Guide to Gambling", and evidence from Ms Beniac-Brooks shows this book was also publicly available in Australia in June 1979, specifically from Newcastle Region Library, NSW.
Mr MacDonald refers to the introductory chapter, written by the publishers, of the second book, and points out the extensive commendations made of Mr Scarne. Mr MacDonald consequently states he regards both books as representative of the body of knowledge held by people directly involved in casino card game operations since well before the priority date of the present application. Mr Kilby draws attention to a discussion of the background to baccarat in a later 1986 edition of the second book.
The British Acoustic Films Ltd v Nettlefold Productions decision, (1936) 53 RPC 221 at page 250, considered whether material disclosed in publications would constitute common general knowledge in the art. This decision held that:
“a piece of particular knowledge as disclosed in a scientific paper does not become common general knowledge merely because it is widely read, and still less merely because it is widely circulated. Such a piece of knowledge only becomes common general knowledge when it is generally known and accepted without question by those who are engaged in the particular art.”
The General Tire & Rubber Company v Firestone Tyre & Rubber Company Ltd decision, (1972) 89 RPC 457 at page 483, regarded the words “accepted without question” as putting the position rather high. This decision held the words, “generally regarded as a good basis for further action”, would be more appropriate.
The extensive coverage of card games and gambling in the extracts, filed in evidence, of Mr Scarne's books, and the credentials placed on Mr Scarne by the second book's publishers suggest a high regard in the gaming industry of the information conveyed in these books. Certainly the introductory chapter, referred to above, suggests a universal regard of these books in the USA.
It may be argued this does not necessarily mean the books were generally regarded as representative of the body of knowledge in Australia at the priority date of the present application. Mr MacDonald has extensive experience in Australia and comments that he regards the books as representative of the body of knowledge in the field without specifically mentioning Australia. Mr Kilby's experience is predominantly in the USA with significant experience also conducting training seminars in other countries including Australia. Likewise, Mr Kilby does not specifically comment on the regard of the Scarne books in Australia.
Elsewhere in their declarations Mr MacDonald and Mr Kilby discuss the dissemination of information internationally in this industry. Mr MacDonald discusses the use of web sites, seminars, conventions and conferences to disseminate information on casino gaming. He also states that floor managers, dealers, games trainers, pit bosses and casino managers both from Australia and overseas would often have accessed appropriate web sites and attended seminars, conventions and conferences before the priority date of the application to keep up to date with changes in the industry. Mr Kilby similarly discusses the use of the Internet and conferences for the rapid dissemination of information and exchange of experiences in the industry internationally. He specifically states the knowledge of gaming professionals in the USA and other countries would be equivalent to the knowledge of such professionals in Australia.
Similar circumstances were stated to exist in the mining industry. See Dyno Nobel Asia Pacific Ltd v Orica Australia Pty Ltd, 47 IPR 257 at 304. In that decision it was noted there was much in the evidence suggesting that art is international in that information is distributed globally. There were major national and international conferences. It was inferred that information in the USA generally became known quite quickly in Australia.
In the present case the evidence of Mr MacDonald and Mr Kilby likewise suggests the field of casino gaming is international with ready dissemination of information globally. The Scarne books appeared to be universally regarded with some authority in the USA before the priority date of the present application. Mr MacDonald regards the books as generally representative of the body of knowledge in this field. I see little reason to form a different view of the regard of the Scarne books in Australia as opposed to the USA before the priority date. I conclude the information in the Scarne books would have been common general knowledge to those involved in casino card game operations in Australia before the priority date of the present application.
Ms Beniac-Brooks submitted it was very common before the priority date of the application for casino games, including baccarat, to have side bets to allow participants to wager on particular outcomes.
Mr MacDonald notes the Scarne books disclose a version of baccarat called Scarney Baccarat that was developed by Mr Scarne before 1974. That game has betting spaces on the baccarat table enabling a player to place a side bet on the game. The exhibit VAB-6, page 301, of the first book states for example that a bet placed on a space marked 5 means that the player is betting that the dealer, on the next turn of play, will hold a count of 5 with his first two dealt cards.
Mr MacDonald cites a further publication from 1965 that discusses side bets in baccarat. US 5362064, discussed earlier, discloses more than a dozen side bet options in baccarat such as same colour/same suit, combined hand totals, and matched pairs or triplets. Mr MacDonald also states other card games have for many years had side bets, and cites Blackjack as enabling a side bet called "insurance" where, when the dealer's face-up card is an ace, players may make an insurance bet against the dealer subsequently receiving a ten and obtaining a Blackjack.
Mr Kilby states he has been aware of various modifications of baccarat in the years well before the priority date of the application. One example he gives is where one can create a separate wager on the value of the first card. Mr Kilby states the true odds for baccarat are well understood so offering anything less creates an opportunity for another side bet.
The above discussion highlights the universal use of side bets in various forms and in various casino games over several years prior to the priority date of the present application. I am prepared to accept the use of side bets in baccarat was common general knowledge in Australia before the priority date of the application.
Whether There Is An Inventive Step
Ms Beniac-Brooks submitted the outcome of side bets being common general knowledge in Australia combined with the disclosures of "no commission" baccarat in US 5979896 and US 5362064 rendered the claims of the present application as obvious.
Mr Evans submitted that the argument that because "no commission" baccarat was known, side bets were known, therefore the combination of the specific form of "no commission" baccarat and the specific form of side bet in the claimed invention is obvious, is untenable. He said this is the 'ex post facto' analysis warned against in Minnesota Mining and Manufacturing Co v Beiersdorf (Australia) Ltd, (1980) 144 CLR 253.
I have noted earlier that US 5979896 discloses the preamble to claim 1 of the present application. That is, a casino baccarat game where odds of 1:2 are paid on bank winning wagers where the bank wins with a 5, and even odds are paid for all other winning outcomes. The characterising feature in claim 1 of enabling a wager against the house when the banker wins with a hand of the predetermined points value is not specifically disclosed in this US patent. I have earlier found that both of the Scarne books were common general knowledge in Australia at the priority date of the present application. Consequently the disclosures in these books may be combined with that of US 5979896. The Scarne books at pages 301 (exhibit VAB-6) and 488 (exhibit VAB-7), respectively, disclose the ability in Scarney Baccarat for a player to place side bets on the numerical total of the dealer's first two dealt cards on the next turn of play. The player can place side bets on the dealer's totals of 5, 6, 7, 8 or 9. Page 480 of the second book also states the dealer in Scarney Baccarat functions as the banker.
Mr Evans submitted the difference between the characterising part of claim 1 of the application and the disclosures in the Scarne books is that the former claims the wager can be made when the banker wins with a hand of a predetermined value. Ms Beniac-Brooks acknowledged this difference but submitted that a concurrent banker win may ordinarily happen often. On the other hand it is irrelevant whether or how often the outcome is a concurrent win to the banker. The issue is whether there is inventiveness in enabling a wager on a banker win with a particular total as opposed to a wager on the banker merely holding the particular total.
The Allsop Inc v Bintang Ltd decision, (1989) 15 IPR 686 at 701, describes the standard to be met for inventiveness to be present. Although a simple idea may be inventive, it is essential for validity that there be inventiveness. There is a requirement that the subject matter sought to be patented must be beyond the skill of the calling. The Allsop (supra) decision also cited, at 701, the R D Werner & Co Inc v Bailey Aluminium Products Pty Ltd decision, (1989) 13 IPR 513 at 523. In that decision Lockhart J stated there must be some difficulty overcome, some barrier crossed.
In the present case many variations of side bets are presented in the evidence. The Scarne books disclose the ability to bet on particular totals in Scarney Baccarat. The above-mentioned US 5362064 discloses a similar side bet option in baccarat on the numerical total of the cards of a winning hand (either banker or other player hand) as one of more than a dozen side bet options. I have also found earlier that side bets in baccarat were common general knowledge in Australia before the priority date of the application.
In this light I find the enabling of various side bet options in 'no commission' baccarat would have presented itself at the priority date to the person skilled in the art, faced with the problem of facilitating an increase in the level of wagering per gaming table. The claimed solution was one of many side bet options available. There has also been no practical difficulty demonstrated, either in the specification or in evidence, in implementing the particular claimed solution. I conclude the claimed feature of offering a side bet in 'no commission' baccarat on a banker winning with a hand of a predetermined points value was not a feature beyond the skill of the calling nor did it overcome any real difficulty.
It may be argued the disclosure in US 5979896 of odds of 1:2 being paid on a banker win with a predetermined points value together with the Scarne disclosure of making a side bet on the dealer holding a hand of a predetermined value is distinct from the claimed invention. The predetermined points values in each of the prior art cases may be different. The present specification stresses the significance of the interrelationship of payouts at reduced odds in the main event, together with the claimed side bet option, both on a banker win with a hand of the same predetermined value. This side bet is a bet against the house percentage being payable (last paragraph on page 4). On the other hand this is merely a coincident selection of the same predetermined points value on which reduced odds in the main event are paid and a side bet is paid.
I note that a side bet on the banker holding a value of 5 yields a common predetermined value across both US 5979896 and the Scarne disclosures, the latter enabling side bets on banker hand values of 5 to 9. The only difference then between the claimed invention and the US patent and Scarne prior art is that the Scarne disclosures do not mention side bet options on the banker winning, as discussed above, with a total of 5.

I conclude claim 1 of the present application does not have an inventive step over US 5979896 when combined with the common general knowledge in Australia of the Scarne disclosures, or the common general knowledge in Australia of side bets in baccarat generally.
In respect to claim 2 Mr Evans submitted the applicant may rely on the selection patent rules of I.G Farbenindustrie A.G.'s Patents, (1930) 47 RPC 289 at 322 and 323. He said the applicant had identified advantages of choosing a banker winning hand value of a 6 rather than the 5 mentioned in US 5979896 for certain payouts. Mr Evans did not elaborate these supposed advantages. While the specification states this hand value as a preferred implementation, the specification does not elaborate any marked advantages of this choice. In any case, since the selection of the value of 6 is only preferred rather than mandatory (a point reinforced by the selection first appearing in appended claim 2 and not in independent claim 1) there would appear to be nothing significant about the selection. I regard the application as completely failing the selection rules of the I.G. Farbenindustrie decision. Claim 2 does not have an inventive step.
Both of the Scarne disclosures disclose the payment of side bets on dealers' totals of 5, 6, 7, 8 or 9 at odds of 10:1. Claim 3 of the application does not have an inventive step.
In respect to claim 4 I regard the placement of gambling chips in a designated area on a gaming table, to make a wager, was common general knowledge well before the priority date of the application. The paragraph of the specification bridging pages 2 and 3 discusses the use of chips as background art. The addition of these features in claim 4 is not inventive.
The electronic display and networked gaming features added in claims 5-7 are acknowledged in the specification as prior art (page 6 lines 21-27). Claims 5-7 lack an inventive step.
Claim 8 is an omnibus claim appended to any one of the preceding claims, substantially as described with reference to the drawings. The drawings illustrate a table layout suitable for the alleged invention and a flowchart illustrating the wagering and payout steps of the alleged invention.
The table layout is acknowledged at the top of page 6 of the specification as mostly conventional. Further page 6, lines 10-14, discusses table positions for placing side bets and states the areas may be divided for players, or be an open area for any such bets or numerous alternative positions. The applicant appears to acknowledge the table layout may be quite variable. It appears little importance should be attached to the specific table layout of the drawings. In any case the Scarne disclosures illustrate substantially equivalent table arrangements for placing bets. I find the application's illustrated table layout does not save claim 8.
The flowchart of the application simply illustrates, in diagrammatic form, the side bet features of claims 1, 2 and 3. I have found those claims to lack an inventive step.
I conclude claim 8 also lacks an inventive step.
The no-commission baccarat rules disclosed in Schedule 1, Section 13, of the above-mentioned Queensland Casino Gaming Rule are substantially equivalent to the game disclosed in US 5979896 except for the selection of 6 rather than 5 as the predetermined value. The same conclusions on inventive step as above apply with the alleged invention over the Queensland Casino Gaming Rule.
I find all the claims of the application lack an inventive step.
As noted earlier in the novelty discussion, US 5362064 discloses a different 'no-commission' baccarat game, namely the use of "bar" hands, to that of the claimed invention. I conclude this patent is unable to render the claimed invention lacking an inventive step.
Ms Beniac-Brooks mentioned three other patent documents filed in evidence, US 5395119, US 5876283, and AU 25616/97 which is equivalent to WO 97/39810. These documents demonstrate that side betting and/or electronic gaming versions of baccarat were known before the priority date of the present application. However I conclude none of these documents enhance the strength of the relevant prior art against the claimed invention over the citations already discussed.
MANNER OF MANUFACTURE
The NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd decision, (1995) 32 IPR 449, and the Bristol-Myers Squibb Company v FH Faulding & Co Ltd decision, (2000) 46 IPR 553, state the present position in respect to a threshold requirement of inventiveness. The latter case at page 564 appears to affirm the decision in the former case. If, on the basis of what was known, as revealed on the face of the specification, the claimed invention was obvious or did not involve an inventive step, then the threshold requirement for an invention to be apparent on the face of the specification is not met.

100. Ms Beniac-Brooks did not pursue this ground at the hearing. The invention relates to a modified baccarat game for play in commercial gaming operations. The specification suggests the advance made in this field by the present invention is of the house taking side bets against a specific outcome in which the house percentage is payable. I am satisfied the requisite threshold of inventiveness is apparent on the face of the specification.
DECISION
101. I have found all the claims of the application lack an inventive step. Claims 1-7 are also not fairly based. The opposition is successful.
102. Mr Evans submitted that if I found the opposition to succeed then I should allow the applicant an opportunity to propose amendments to overcome the deficiencies noted. As discussed above, the applicant is not estopped from proposing further amendments. On the other hand I am unable to find any subject matter in the body of the specification that is not already claimed and could be brought into the claims to overcome my findings of lack of inventive step. I find an opportunity to amend the specification would be pointless.
103. I refuse the application.
COSTS
104. Both parties essentially submitted that costs should follow the event. I see no reason to depart from this practice. I award costs against Luxembourg.
M. G. Kraefft
Delegate of the Commissioner of Patents
Patent attorneys for the applicant : Watermark, Sydney
Patent attorneys for the opponent : Callinan Lawrie, Melbourne

[2003] APO 38

10 September 2003