Network Solutions, LLC
[2011] APO 65
•19 August 2011
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Network Solutions, LLC [2011] APO 65
Patent Application 2005250809
Title:Certified offer service for domain names
Patent Applicant: Network Solutions, LLC
Delegate: P M Spann - Deputy Commissioner of Patents
Decision Date: 19 August 2011
Hearing Date: Heard by written submissions
Catchwords: PATENTS – examiner’s objections – method of purchasing domain names – construction of claims to a “computer implemented method” – whether a manner of manufacture – method and medium storing instructions to perform the method not patentable – no patentable subject matter disclosed – application refused.
Representation: Patent applicant: Mr M Ward, patent attorney, Shelston IP, Sydney
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2005250809
Title:Certified offer service for domain names
Patent Applicant: Network Solutions, LLC
Date of Decision: 19 August 2011
DECISION
Patent application 2005250809 is refused pursuant to subsection 49(2) of the Act.
REASONS FOR DECISION
This matter concerns examiner’s objections in respect of the application and whether I should exercise the Commissioner’s power to refuse the application under subsection 49(2) of the Patents Act 1990.
Background
Patent application 2005250809 is a PCT application. It was filed as an international application under the Patent Cooperation Treaty (PCT/US2005/017115) on 16 May 2005 and claims priority from US patent application 10/854,221, filed on 27 May 2004. Following entry to the national phase it has been the subject of five adverse examination reports, each including objections that the subject matter claimed is not a manner of manufacture. Three statements of proposed amendments have been filed but, since the examiner’s objections were maintained, the matter was set for hearing. The applicant has relied on written submissions which I will refer to as relevant in my findings below.
For the benefit of interested third parties I note that a divisional application of the present application was filed on 23 May 2011 (2011202381) claiming the same subject matter. This means that despite this, or any future decision in relation to this application, or the outcome of any appeal of my decision, the status of any rights that might arise from the subject matter of this application will remain undetermined pending examination of the divisional application (and indeed any further divisional filed before the determination of that application). While the option of filing divisional applications in the present circumstances is clearly permitted by the legislation and may well serve the interests of the applicant, I share the concerns expressed by the delegates in Christopher Gary Parmenter [2011] APO 26 at [71]-[72] and Discovery Holdings Limited [2011] APO 56 at [4], that the practice of filing divisional applications in anticipation of adverse Office decisions appears to be contrary to the public interest in the prompt resolution of patent rights as well as effective use of Patent Office resources.
The patent specification
The subject matter of the application concerns the purchasing of internet domain names. The specification however says very little, if anything, about any prior art or problem or difficulty said to be addressed. It rather describes in fairly general terms a method of brokering the purchase of an internet domain name which is registered to another person (the registrant). This involves a number of steps including the user searching for a suitable domain name and making an offer, the ability to seek an appraisal of the domain name value from a third party service provider, the verification of a financial instrument by the provider to ensure the offer can be funded, the generation of messages to the parties to the proposed transaction, including the registrant and the registrant accepting or making a counter offer.
In the embodiment described, this process utilises what are common features of electronic commence including a web server, interfaces to allow data to be entered by the user and registrant, a database for storing the data and electronic messaging to notify the parties of the offer and counter offer. While not entirely clear from the description, there appears to be general support in the specification as filed for software operating on a computer to manage the purchasing system including potentially the steps of estimating the value of the domain name, certifying the availability of funds and transferring funds if the offer to purchase is accepted.
The claims as originally filed included two main sets of claims. The first related to a method for domain name purchase that was not limited to any particular means of implementation, whether by computer or otherwise. The second set of claims however related to a medium storing instructions adapted to be executed by a processor to perform the steps of the method generally as indicated above. Claim 1 of the specification as filed is in the following terms:
A method for purchasing a domain name registration, comprising:
receiving from a user a offer message indicating a domain name and an offer amount, wherein the domain name is registered to a registrant distinct from the user;
certifying that the user has access to funds that are at least sufficient to pay the offer amount; and
if the offer amount is successfully certified, then sending to the registrant an offer to purchase the domain name registration from the registrant.
In response to the examiner’s objections a number of amendments were proposed, most significantly, the qualification of the method as “computer implemented”. Claim 1 as proposed to be amended in its most recent form reads as follows:
A computer-implemented method for purchasing a domain name registration, comprising:
receiving from a user data indicative of an offer message indicating a domain name and an offer amount, wherein the domain name is registered to a registrant distinct from the user;
certifying that the user has access to funds that are at least sufficient to pay the offer amount;
generating certification data; and
if the certification data indicates that the offer amount has been successfully certified, then processing the data relating to the offer message thereby to send to the registrant an offer to purchase the domain name registration from the registrant.”
Claim 16 is to:
“16. A medium storing instructions adapted to be executed by a processor to perform a method according to any preceding claim.”
It will be seen that while the subject of the method claims has now been amended to be “A computer implemented method”, the steps of the method defined are not specifically limited to computer implementation. In this regard the response filed by the applicant on 13 April 2011 indicates a view that “the computer is used throughout the method”. However the recent submissions filed for the purpose of this decision seem inconsistent with that by suggesting that the sending of a message might be achieved other than electronically. Regardless, unlike in the US (see Netflix, Inc v Blockbuster, Inc C 06-02361 WHA (N.D. Cal February 20, 2007), in which the same phrase was found to be limiting), prosecution history is not an appropriate basis for claims construction in Australia. This was pointed out by a Full Court of the Federal Court in Re Prestige Group (Australia) Pty Ltd v Dart Industries Inc [1990] FCA 281 at [37]. Therefore I am required to apply the normal rules of claims construction which in Kimberly-Clark Australia Pty Limited v Multigate Medical Products Pty Limited [2011] FCAFC 86 were summarised in the following way:
“The principles guiding construction are not significantly different from those applicable to the construction of any other written instrument. Ordinary words should be given their ordinary meaning unless a person skilled in the relevant art would, in the context of the claims, give a special meaning or unless the complete specification ascribes a special meaning to the words of the claim. Expert evidence may be given in support of a claim that a word has a technical meaning. However, in the absence of a special technical meaning, expert evidence is not determinative of the construction of the claims. As meaning may vary with context, it is necessary, with any question of construction, to read the whole of the relevant instrument, whether or not there is any apparent ambiguity in the language to be construed. Ultimately, however, it is the claims that are to be construed, and the context provided by the complete specification cannot limit, vary or qualify the clear meaning of the claims.”
On this basis I am of the view that the mere specification of “a computer implemented method” as the subject of the claims does not mean that each and every step of the method must be carried out by a computer. There is nothing in the context of the specification that requires that limitation, but rather it tends to suggest that individual steps can be carried out in a number of ways including by manual intervention, independently of whether or not other steps are carried out on a computer. I take the plain meaning of the claim subject “a computer implemented method” to be that the method subsequently defined is implemented with the assistance of a computer in relation to one or more steps. For this reason, where the subject of a claim is a computer implemented method, it is usual for the claim to expressly indicate when particular steps are carried out in a computer. Alternatively it may be clearly inherent that a step is computer implemented. In the present case however the limitation to computer implementation has not been expressly defined for any step and most if not all steps defined in the claims are capable of implementation by means other than by computer. Therefore for the purpose of these reasons I will not read that limitation into the claims. However, given my finding below, this is not critical to the outcome in this case.
The examiner’s objections
10.The examiner’s most recent objection, based on the specification as proposed to be amended, is that:
“The application is not for a manner of manufacture within the meaning of paragraph 18(1)(a) of the Patents Act because the subject matter of claims 1-18 represents nothing more than a scheme, considered to be not patentable.”
11.The examiner states in the explanation for the objection that:
“… the mere use of computer throughout all of the steps of the claimed method does not contribute to fulfil the requirement of manner of manufacture. As mentioned in the previous report, in the claimed method the computer is merely used to receive an offer message, to check (i.e. certify) whether the user has sufficient funds and to send an offer to purchase if the user has sufficient funds. I consider the use of computer to perform all of these steps as merely incidental to the inventive concept of the alleged invention.
It is apparent from the Grant v Commissioner of Patents [2006] FCAFC 120 decision that it is the useful product or effect of the method considered as a whole that must result in an artificially created state of affairs, in the sense of a concrete, tangible, physical, or observable effect. The mere use of a physical form or device in the method, or a physical effect or transformation that arises incidentally or indirectly in its operation is not sufficient to change the fundamental character of the subject matter claimed. [Emphasis added]
12.Consequently the examiner is of the view that the claims are not drawn to a manner of manufacture, whether the steps of the method are computer implemented or not.
The Applicants submissions
13.The applicant provided substantive submissions during the prosecution of the application and perhaps, understandably, the submissions for the purpose of hearing are reasonably brief. While also disagreeing with the examiner’s understanding of the decision in Grant v Commissioner of Patents [2006] FCAFC 120, the main point appears to be reflected in the following extracts:
“3.1 Claim 1 of the subject application defines a method culminating with the following step:
if the certification data indicates that the offer amount has been successfully certified, then processing the data relating to the offer message thereby to send to the registrant an offer to purchase the domain name registration from the registrant.
3.2 Claim 16 defines a medium storing instructions adapted to be executed by a processor.”
“4.1 As noted, the method of claim 1 culminates in a step including processing data thereby to send a message. We respectfully submit that the sending of a message, in whatever form (electronic or otherwise) constitutes, in the very words of Grant, a physical phenomenon or effect resulting from the working of a method. In fact, we cannot see any logical explanation as to how the sending of a message could be construed as anything other than physical.
4.2 Furthermore, under the NRDC test, we respectfully submit that the sending of a message results in an artificially created state of affairs. Once again, we fail to see any logical explanation as to how the sending of a message could result in anything other than an artificially created state of affairs (it is most certainly not naturally occurring).”
“5.1 As noted, claim 16 defines a physical medium. A physical medium is by its very nature a manner of manufacture.
5.2 The Delegate is asked to identify any legal precedent (i.e. other than recent APO decisions) that identifies a situation where a physical medium was regarded as failing the requirements of Section 18(1)(a). We specifically note that the Grant decision was concerned solely with the patentability of methods, and hence cannot be used as a basis to uphold an objection to claim that defines a physical medium.”
Manner of manufacture
14.I find the method claims as filed and as proposed to be amended are not directed to a manner of manufacture. In terms of Grant they do not involve an artificially created state of affairs, in the sense of a concrete, tangible, physical, or observable effect.
15.Mr Ward submits substantially that the sending of a message and a medium storing instructions are physical things so, therefore, what is claimed is a manner of manufacture and asserts there is no authority for a contrary view. I believe however that his submissions misunderstand the Full Court’s decision in Grant and the decision of the High Court in National Research and Development Corporation v Commissioner of Patents [1959] HCA 67. In my view neither Grant nor any other judicial authority provides a basis for finding that what would otherwise be considered a mere scheme or abstract plan is patentable solely because it involves, or results in the manipulation or change in, a physical thing. A physical thing characterised only by “intellectual information” clearly remains non-patentable subject matter. One need only review the authorities cited by the Full Court in Grant and the consideration including paragraph [29] to appreciate that. It should also be understood that the nature of Mr Grant’s method did not require the Court to arrive at any new principle that might assist the applicant in this case. It was devoid in the Court’s view of any physical effect. However it is relevant to the present matter that the Court came to this decision taking into account Mr Grant’s submission (recorded at [28]) that:
“ if the documents constituting the trust, making the gift, detailing the loan or recording the mortgage are produced by computer, that test would be satisfied, as would a requirement for a ‘physical phenomenon’.”
It seems to me that if the Court was of the opinion that either the mere operation of the method in a computer or, more specifically, the recording of a mortgage in a physical form resulted in a manner of manufacture it would not have dismissed Mr Grant’s method in such an unequivocal way.
16.The Full Court’s decision in CCOM Pty Ltd v Jiejing Pty Ltd [1994] FCA 1168 was cited in Grant and remains a leading authority in the field of computer related inventions. It sets out the clear distinction in the development of the law between business, commercial and financial schemes, schemes of operation, and printed sheets and the like, on the one hand, and on the other, a new and useful result achieved in the operation of a computer. It is interesting in this regard that the Court noted at [116] a long established reason for the exclusion of such subject matter in that the “discovery of principles” should not pre-empt all future practical applications of those principles (citing Carpmael, “The law of patents for Inventions” 5th ed., 42-3).
17.This rationale is also present in the law of the United States where one finds a clear prohibition against the patenting of abstract ideas or concepts (including financial transactions or methods per se) which it is recognised would otherwise pre-empt all applications of those ideas (Bilski v. Kappos, 130 S. Ct. 3218, 561 US __). The Supreme Court in Bilski further confirmed a number of its precedents that held that “the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of the formula to a particular technological environment” or adding “insignificant post-solution activity” (Diamond v Diehr [1981] USSC 40; 450 U.S. 175 at 191-192). This goes to the materiality of the distinction between an idea in abstract and its reduction to practical application such that all future practical applications of an idea or concept are not pre-empted. Accordingly in some cases methods involving computer implementation have been found not patentable – see Gottschalk v. Benson, 409 U.S. 63. Also the decision of the US Court of Appeals for the Federal Circuit in CyberSource Corp. v. Retail Decisions, Inc. --- F.3d --- (Fed. Cir. 16 August 2011) and the District Court decision in CLS Bank Int’l v. Alice Corp. Pty. Ltd., No. 07-974, 2011 WL 80207, at *1 (D.D.C. Mar. 9, 2011) which is pending appeal.
18.The recent Cybersource decision is particularly pertinent to this case and involves similar claims. The Court found a method for verifying the validity of a credit card transaction over the internet (claim 3) to be an unpatentable mental process noting that:
“All of claim 3’s method steps can be performed in the human mind, or by a human using a pen and paper. Claim 3 does not limit its scope to any particular fraud detection algorithm, and no algorithms are disclosed in the ’154 patent’s specification. Rather, the broad scope of claim 3 extends to essentially any method of detecting credit card fraud based on information relating past transactions to a particular “Internet address,” even methods that can be performed in the human mind.”
However, to the extent it was argued that the internet was a machine, the Court found that nevertheless the internet was only operating as a source of data and confirmed that data gathering steps could not make “an otherwise non-statutory claim statutory”. It then tuned its attention to the following claim (in the US a Beauregard claim):
“2. A computer readable medium containing program instructions for detecting fraud in a credit card transaction between a consumer and a merchant over the Internet, wherein execution of the program instructions by one or more processors of a computer system causes the one or more processors to carry out the steps of:
a) obtaining credit card information relating to the transactions from the consumer; and
b) verifying the credit card information based upon values of plurality of parameters, in combination with information that identifies the consumer, and that may provide an indication whether the credit card transaction is fraudulent, wherein each value among the plurality of parameters is weighted in the verifying step according to an importance, as determined by the merchant, of that value to the credit card transaction, so as to provide the merchant with a quantifiable indication of whether the credit card transaction is fraudulent,
wherein execution of the program instructions by one or more processors of a computer system causes that one or more processors to carry out the further steps of;
[a] obtaining information about other transactions that have utilized an Internet address that is identified with the credit card transaction;
[b] constructing a map of credit card numbers based upon the other transactions; and
[c] utilizing the map of credit card numbers to determine if the credit card transaction is valid.”
19.The Court indicated in finding the claim invalid:
“As we stated in Bilski, to impart patent-eligibility to an otherwise unpatentable process under the theory that the process is linked to a machine, the use of the machine “must impose meaningful limits on the claim’s scope.” 545 F.3d at 961. In other words, the machine “must play a significant part in permitting the claimed method to be performed.” SiRF Tech., Inc. v. Int’l Trade Comm’n, 601 F.3d 1319, 1333 (Fed. Cir. 2010). Here, the incidental use of a computer to perform the mental process of claim 3 does not impose a sufficiently meaningful limit on the claim’s scope. As such, the “computer readable medium” limitation of claim 2 does not make the otherwise unpatentable method patent-eligible under § 101. See Grams, 888 F.2d at 840–41 (after finding claims unpatentable for being drawn to a mental process, the court found that claim 16’s requirement “that the [same] method be performed with a pro-grammed computer” did not alter the method’s unpatentability under § 101). Abele made clear that the basic character of a process claim drawn to an abstract idea is not changed by claiming only its performance by computers, or by claiming the process embodied in pro-gram instructions on a computer readable medium. Thus, merely claiming a software implementation of a purely mental process that could otherwise be performed without the use of a computer does not satisfy the machine prong of the machine-or-transformation test.
That purely mental processes can be unpatentable, even when performed by a computer, was precisely the holding of the Supreme Court in Gottschalk v. Benson. ”
Also:
“This is entirely unlike cases where, as a practical matter, the use of a computer is required to perform the claimed method. For example, in SiRF Tech., we found that claims to a “method for calculating an absolute position of a GPS receiver and an absolute time of reception of satellite signals” recited patent-eligible subject matter. 601 F.3d at 1331. The court noted that we were “not dealing with . . . a method that [could] be performed without a machine” and that there was “no evidence . . . that the calculations [could] be performed entirely in the human mind.” Id. at 1333. To the contrary, we found it was “clear that the methods at issue could not be performed without the use of a GPS receiver.” Id. at 1332.
Similarly, in Research Corp. Techs. v. Microsoft Corp., 627 F.3d 859 (Fed. Cir. 2010), we upheld the patentability of a claimed method “for rendering a halftone image of a digital image by comparing, pixel by pixel, the digital image against a blue noise mask.” Id. at 868. Because the method required the manipulation of computer data structures (e.g., the pixels of a digital image and a two-dimensional array known as a mask) and the output of a modified computer data structure (a halftoned digital image), the method could not, as a practical matter, be performed entirely in a human’s mind.
In contrast, it is clear in the present case that one could mentally perform the fraud detection method that underlies both claims 2 and 3 of the ’154 patent, as the method consists of only the general approach of obtaining information about credit card transactions utilizing an Internet address and then using that information in some undefined manner to determine if the credit card transaction is valid. Because claims 2 and 3 attempt to capture unpatentable mental processes (i.e., abstract ideas), they are invalid under § 101.”
20.The commonality in approach with the US in relation to abstract ideas has been noted by Australian Courts (eg Grant at [21]-[24]) and, to the extent that a rule of materiality may not have been explicitly expressed in Australia, I nevertheless consider it to be an inherent requirement of the law which otherwise would elevate form over substance to the point of absurdity. It arises in the requirement that a patentable invention “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” (NRDC at [22] citing with approval Re Virginia-Carolina Chemical Corporation's Application (1958) RPC 35) or, for example, from the requirement for a “useful effect” as emphasised in International Business Machines Corporation v Commissioner of Patents [1991] FCA 625 at [14]. For this reason in Invention Pathways Pty Ltd [2010] APO 10 I stated that:
“In applying the decision in Grant I therefore consider that the “concrete effect or phenomenon or manifestation or transformation” referred to must be one that is significant both in that it is concrete but also that it is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way. Consequently while the step of building a house involves a concrete physical effect it is peripheral to the method of acquiring a house and indeed could hardly be said to characterise the subject matter of the method such that it is considered an artificially created state of affairs. I consider the same to apply to a business scheme implemented in some part by computer and do not believe the patentability of such a method can arise solely from the fact that, in a general sense, it is implemented in or with the assistance of a computer or utilises some part [of] a computer or other physical device in a[n] incidental way.”
21.Consequently, regardless of the mention of computer implementation, I consider what the applicant seeks to claim in this application is a commercial or financial scheme (as opposed to a patentable business method). The effect of what is claimed is not the same as the inventions considered in IBM (drawing a smooth curve on a computer screen), CCOM (computer processing apparatus for assembling text in Chinese language characters) or in Welcome Real-Time SA v Catuity Inc [2001] FCA 445 (process for operation of a smart card in a loyalty program). It results in the generation of a message characterised by intellectual information or, more generally, the transfer of ownership of a domain name. These, as I have indicated, are not useful effects of the type apparent from the authorities.
22.While the Court in Grant (at [30]) also pointed out that in Catuity there was not a physically observable end result, it indicated that the method involved the application and operation of the method in a physical device. As apparent from Catuity (at [34]) that application and operation involved substantial interactions between a smart card and point of sale equipment involving the collection and processing of information according to a specified algorithm with the result of the processing step, that is, new information, written to the smart card memory and used to selectively print a coupon based on information in the Behaviour file. In this, the Court cited the UK decisions in International Business Machines Corporation's Application (1980) FSR 564 and Burroughs Corporation's Application [1974] RPC 147 (as did the Courts in IBM and CCOM ) which are authority for the proposition that a method embodied in a computer program that has the effect of controlling a computer to operate in a particular way may be patentable subject matter. In Burroughs it was said that:
"[I]t is not enough to take a narrow and confined look at the `product' produced by a method. Of course, if a method is regarded purely as the conception of an idea, it can always be said that the product of such a method is merely intellectual information. If, however, in practice the method results in a new machine or process or an old machine giving a new and improved result, that fact should in our view be regarded as the `product' or the result of using the method, and cannot be disregarded in considering whether the method is patentable or not."
23.In my view this is not to say that any effect produced in the operation of a computer is to be taken as conferring patentability. Rather, it is premised on the identification of a real substantive effect, “the new and improved result”, achieved in the operation of that apparatus (as apparent from the inventions actually claimed in those cases). This is what distinguishes the subject matter of the application from a mere idea or intellectual information and results in it being considered a practical application of the idea in physical form. As the Court in Burroughs went on to say:
“It is plain that the question of patentability must in every case be considered on the facts before a conclusion can be reached as to whether the claim covers a mere idea or method, or is more than that and results in fact in some improved or modified apparatus, or an old apparatus operating in a novel way, with consequential economic importance or advantages in the field of the useful as opposed to the fine arts.”
Consequently when one returns to the Australian cases one does not find the application of a simple rule in relation to computer related inventions but rather a real consideration of the effect brought about by operation of the computer within the principles articulated in NRDC.
24.Here, even if computer-implemented, the method of claim 1 involves essentially only the collection of data, a non-specific validation step, generating data about the validation step and, based on the state of that data, generating a message. This appears not to claim, achieve or rely on any effect of advantage or utility in the operation of the computer at all but constitutes general steps in the purchasing scheme that could as well be carried out on a paper notebook. The remaining method claims are in a similar vein. Consequently, despite the general suggestion of computer implementation, the substance of what is claimed remains in my view a scheme and, at best, is merely claiming all ways of implementing a non-patentable scheme involving a computer.
25.In relation to claim 16, a “medium storing instructions” is not a manner of manufacture if only characterised by intellectual information. Rather, in the present context, it is patentable when the instructions stored on it are capable of causing a useful effect in the operation of a computer. It is in that way that it becomes "a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the field of economic endeavour." (CCOM at [128]). Given what I have concluded about the scope and nature of the method claims to which claim 16 is appended, it also follows that claim 16 does not define a manner of manufacture.
26.I have considered whether, despite the generality of the specification, it may be possible within the inherent disclosure of embodiments described to frame claims that include or result in specific operations within a computer system, such that they may embody a substantive “concrete, tangible, physical, or observable effect”. They however would need to not merely list the general features of the scheme in a computing context, but reflect the real application and effect of the method in the operation of the computer. Ultimately I do not consider that patentable subject matter has been disclosed. I am also mindful that the applicant has already had numerous opportunities to propose amendments and has filed a divisional application by which it may continue prosecution in relation to the same subject matter. Consequently providing a further opportunity to the applicant to propose amendments is not appropriate and the application should be refused.
Conclusion
27.I have found that there are lawful grounds for objection to the present patent application. In particular, I find the claims are not directed to a manner of manufacture.
28.Furthermore, I do not consider that patentable subject matter has been disclosed in the specification and that consequently the applicant should be refused.
P M Spann
Deputy Commissioner of Patents
4
0