Patent Applicant: MasterCard International Incorporated
[2022] APO 32
•13 May 2022
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
MasterCard International Incorporated [2022] APO 32
Patent Application: 2019261819
Title:Method and system for processing blockchain-based transactions on existing payment networks
Patent Applicant: MasterCard International Incorporated
Delegate:R Subbarayan
Decision Date: 13 May 2022
Hearing Date: Written submissions filed on 30 March 2022
Catchwords: PATENTS – examiner’s objection – processing blockchain transactions on fiat currency payment networks – manner of manufacture – computer implemented invention – does not solve a technical problem or provide a technical solution – business innovation – invention not for a manner of manufacture – application refused
Representation: Patent attorney for the applicant: Spruson & Ferguson
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2019261819
Title:Method and system for processing blockchain-based transactions on existing payment networks
Patent Applicant: MasterCard International Incorporated
Date of Decision: 13 May 2022
DECISION
The claimed invention is not for a manner of manufacture.
Subject to appeal, I refuse the application.
REASONS FOR DECISION
BACKGROUND
Patent application AU 2019261819 in the name of MasterCard International Incorporated (the Applicant) was filed on 8 November 2019 as a divisional application of AU 2016263003 (the Parent) and claims an earliest priority date of 21 May 2015.
A first examination report was issued on 15 January 2021 with the sole objection that the claimed invention is not for a manner of manufacture. The report also noted that investigation into the novelty and inventiveness of the claimed invention is reserved pending resolution of this manner of manufacture objection.
On 17 November 2021, the Applicant requested to be heard in relation to this sole objection.
On 17 February 2022, the Commissioner advised the Applicant that the hearing would be done through written submissions and requested the Applicant to file their written submissions by 31 March 2022.
The Applicant’s written submissions (AWS) for the hearing were filed on 30 March 2022.
I also note that the parent application lapsed after the issuance of 3 adverse examination reports due to a failure to gain acceptance within the relevant period, with lack of manner of manufacture being the main objection raised by the examiner during examination of this application.
The claims of the present application are slightly different to those that were the subject of the manner of manufacture objection in the last examination report issued on the parent application.
SPECIFICATION
The present invention relates to a method and system for authorization of a blockchain-based transaction using traditional payment networks.
The specification starts off by noting problems for the payee in a blockchain transaction arising from the significant time it takes to process a typical blockchain transaction in a blockchain network.
“However, while blockchain currencies can often provide such safety and security for the payer's information, such security may be limited for payees, particularly due to the limitations of the blockchain. For example, it often takes a significant amount of time, around ten minutes, for a blockchain-based transaction to be processed, due to the computer processing time and resources required to verify and update the blockchain. Conversely, traditional fiat payment transactions that are processed using payment networks often have processing times that are measured in nanoseconds. As a result, consumers and merchants that are accustomed to fast transaction times are often either forced to wait a significant amount of time for a blockchain transaction to be conducted, or the payee must rely on the payer's good faith that their transfer will be valid. In such latter instances, the anonymity of the blockchain may leave the payee at a disadvantage, because the inability for the payee to identify the payer may prohibit the payee from utilizing various risk or fraud detection methods. Therefore, many entities, particularly merchants, retailers, service providers, and other purveyors of goods and services, may be wary of accepting blockchain currency for products and participating in blockchain transactions”.[1]
[1] Specification at page 1, line 25 – page 2, line 9
The specification also notes the reluctance of consumers to use blockchain because of the significant differences in transacting using blockchain currencies compared to transacting with fiat currencies.
“In addition, the consumers themselves may often be reluctant to using blockchain currencies. Because blockchain currencies are decentralized and rely on the blockchain to keep track of what accounts have access to what amount of currency, it can be difficult for consumers to adopt, or even understand, blockchain currencies, particularly in relation to well known and understood traditional fiat currencies and accounts. This may be
particularly troublesome for consumers that are accustomed to having financial institutions hold their currency in an account. The nature of blockchain currencies is that the access to any given address to which currency is associated is controlled based on possession of electronic credentials, often referred to as an electronic wallet, e-wallet, or simply "wallet." As such, if the wallet is lost, discarded, or stolen, the associated currency often cannot be recovered by the rightful owner and may be used without their knowledge and permission. Furthermore, because of the anonymous nature of the blockchain, the consumer may be unable to prove their identity and ownership of a wallet, and thereby have little recourse if their wallet and/or associated currency is stolen”.[2][2] Specification at page 2, lines 10-26
The present invention addresses “a need to improve on the storage and processing of transactions that utilize blockchain currencies”.[3]
[3] Specification at page 2, lines 27-28
The solution presented by the present invention is to integrate traditional payment systems with blockchain systems.
“….the use of traditional payment networks and payment systems technologies in combination with blockchain currencies may provide consumers and merchants the benefits of the decentralized blockchain while still maintaining security of account information and provide a strong defense against fraud and theft.”[4]
[4] Specification at page 3, lines 1-5
The following consistory statement of the invention is then given.
“A method for authorizing a blockchain-based transaction includes: receiving, by a receiving device, a transaction request, wherein the transaction request includes at least a network identifier associated with a blockchain network, a transaction amount, and one of: a public key and an address identifier; generating, by a processing device, an address identifier using at least the public key included in the received transaction request and one or more hashing algorithms if the received transaction request does not include an address identifier; generating, by the processing device, a transaction message, wherein the transaction message is formatted based on one or more standards and includes a plurality of data elements, including at least a first data element configured to store a transaction amount and a second data element reserved for private use, and the first data element
includes a zero value and the second data element includes at least (i) the network identifier or an encoded value based on the network identifier, (ii) the address identifier, and (iii) the transaction amount; and transmitting, by a transmitting device, the transaction message to a financial institution using a payment network”.[5][5] Specification at page 3, lines 9-25
A consistory statement for a system of the invention with the same features as the method is also present.
Preferred embodiments of the invention are then described with reference to a number of drawings. Figure 1 that is reproduced below shows a high-level system architecture of the invention.
The system 100 comprises a blockchain network 106, computing device 102 of a payer who is a participant in the blockchain network, computing device 104 of a payee who is also a participant in the blockchain network, a traditional fiat currency payment network 108 having a processor 110, an issuer 112 associated with the payer and an acquirer 114 associated with the payee.
A description of an issuer and an acquirer is given as follows.
“The payer 102 may be associated with an issuer 112. The issuer 112, discussed in more detail below, may be a computing system of a financial institution, such as an issuing bank, that issues one or more transaction accounts to the payer 102. The transaction accounts may include one or more fiat currency transaction accounts, one or more blockchain currency transaction accounts, one or more combined currency transaction
accounts, or any combination thereof. For example, the payer 102 may have a transaction account with the issuer 112 for both fiat and blockchain currency, and an additional fiat currency transaction account.The payee 104 may be associated with an acquirer 114. The acquirer 114 may be a computing system of a financial institution, such as an acquiring bank, that issues one or more transaction accounts to the payee 104. The acquirer 114 may be the equivalent of the issuer 112, but with respect to the payee 104 rather than the payer 102. In some instances, the issuer 112 and the acquirer 114 may be the same financial institution. For example, the issuer 112 may provide transaction accounts to both the payer 102 and the payee 104”.[6]
[6] Specification at page 8, lines 11-27
The following passages from the specification provide a good description of how the invention works.
“The payer 102 may conduct a blockchain transaction with the payee 104. As part of the blockchain transaction, the payee 104 may generate a destination address for receipt of payment of blockchain currency. The destination address may be generated using an encryption key stored in the computing device of the payee 104. The encryption key may be part of a key pair, such as a public key corresponding to a private key stored in the computing device. In some instances, the payee 104 may provide the public key to the payer 102, and the payer 102 may generate the destination address. A transaction request may then be submitted by the payer 102 for payment of an agreed-upon blockchain currency amount to the destination address provided by the payee 104. In a traditional blockchain transaction, the transaction request may be submitted by the computing device to the blockchain network 106. In the present system 100, the transaction request may be submitted to the processing server 110 of the payment network 108.
The transaction request may be a transaction message and may be formatted based on one or more standards for the governance thereof, such as the International Organization for Standardization's ISO 8583 standard”.[7]
“In some embodiments, the blockchain transaction may be initiated by the processing server 110. In other embodiments, the processing server 110 may provide the transaction message or data included therein to the issuer 112, which may initiate the blockchain transaction, such as after evaluating risk for the transaction, assessing if the payer 102 has sufficient blockchain currency for the transaction, and etc., as discussed below.
For instance, as discussed in more detail below, the issuer 112 may manage fractional reserves of fiat and blockchain currency, which may include the storage of currencies associated with the payer 102. The issuer 112 may store a transaction account of blockchain currency associated with the payer 102 such that, when a transaction is attempted by the payer 102, the issuer 112 may verify the available funds of the payer 102 prior to initiating the blockchain transaction, which may be before submitting the transaction message to the processing server 110 and/or before submitting a transaction request to the blockchain network 106.
In another example, the issuer 112 may assess a risk for the transaction based on an evaluation provided by the processing server 110 or performed by the issuer 112, such as based on the payer's available funds, credit history, or other fraud, sanction, and/or risk considerations that will be apparent to persons having skill in the relevant art. In some embodiments, the acquirer 114 may assess a risk for the transaction prior to processing by the blockchain network 106. For instance, the acquirer 114 may evaluate the reliability of the payer 102, an expectation of fraud, etc. based on data provided by the issuer 112, processing server 110, or third party entity, as discussed in more detail below”.[8]
[7] Specification at page 8, line 28 – page 9, line 11
[8] Specification at page 11, lines 3-28
Figure 4 that is reproduced below illustrates a process 400 for the authorization of a
blockchain transaction by a traditional payment network using the system 100. The corresponding description is also reproduced.
“In step 402, the processing server 110 of the payment network 108 may generate a transaction message for a blockchain transaction. As discussed above, the transaction message may be formatted based on one or more standards and include a plurality of data elements, including at least a first data element configured to store a transaction amount and a second data element reserved for private use. The first data element may store a zero amount and the second data element may store a blockchain network identifier, a transaction amount of blockchain currency, and an address identifier associated with a payee 104.
In step 404, the transmitting unit 206 of the processing server 110 may transmit the transaction message to the issuer 112 via the payment network 108. The receiving unit 302 of the issuer 112 may receive the transaction message using associated protocols, and, in step 406, the processing unit 304 of the issuer 112 may check for authorization of the blockchain transaction. Authorization may be based on, for example, sufficient funding of the payer 102, such as based on a stored currency amount, based on a blockchain currency amount associated with a transaction identifier associated with the payer 102, etc., or other criteria that will be apparent to persons having skill in the relevant art. The processing unit 304 may generate an authorization response based on the determination, such as an authorization response that indicates approval or denial of the transaction.
In step 408, the transmitting unit 306 of the issuer may transmit the authorization response message to the processing server 110 via the payment network 108. The receiving unit 202 of the processing server 110 may receive the authorization response, which may be a transaction message formatted based on the one or more standards and transmitted using associated protocols, and, in step 410, the processing unit 204 of the processing server 110 may evaluate the response code. Evaluation of the response code may include, for example, checking for approval or denial, checking for a reference identifier (e.g., referring to a corresponding blockchain transaction, such as a transaction identifier), verifying transaction details, etc.
In step 412, the transmitting unit 206 of the processing server 110 may forward the response message on to the acquirer 114 via the payment network 108 and protocols associated with the transmission of transaction messages. In step 414, the issuer 112 may conduct the blockchain transaction, such as by submitting, using the transmitting unit 306, a transaction request to the appropriate blockchain network 106 using the details included in the data element reserved for private use in the received transaction message. In some instances, the issuer 112 may receive a transaction identifier from the blockchain network 106, and the processing unit 304 may include the transaction identifier in the authorization response message provided to the processing server 110, such as in a data element configured to store a reference identifier. In such instances, step 414 may be performed prior to steps 408 through 412. In step 416, the acquirer 114 may verify that the blockchain transaction has occurred, such as by verifying the receipt of blockchain currency, validating the transaction using the transaction identifier, etc”.[9]
[9] Specification at page 22, line 24 – page 24, line 6
In relation to the computer system required to work the invention, the specification notes as follows.
“FIG. 14 illustrates a computer system 1400 in which embodiments of the present disclosure, or portions thereof, may be implemented as computer-readable code. For example, the processing server 110 and issuer 112 of FIG. 1 may be implemented in the computer system 1400 using hardware, software, firmware, non-transitory computer readable media having instructions stored thereon, or a combination thereof and may be implemented in one or more computer systems or other processing systems. Hardware, software, or any combination thereof may embody modules and components used to implement the methods of FIGS. 4, 5, and 7-13.
If programmable logic is used, such logic may execute on a commercially available processing platform or a special purpose device. A person having ordinary skill in the art may appreciate that embodiments of the disclosed subject matter can be practiced with various computer system configurations, including multi-core multiprocessor systems, minicomputers, mainframe computers, computers linked or clustered with distributed functions, as well as pervasive or miniature computers that may be embedded into virtually any device. For instance, at least one processor device and a memory may be used to implement the above described embodiments”.[10]
“Processor device 1404 may be a special purpose or a general purpose processor device. The processor device 1404 may be connected to a communications infrastructure 1406, such as a bus, message queue, network, multi-core message-passing scheme, etc. The network may be any network suitable for performing the functions as disclosed herein and may include a local area network (LAN), a wide area network (WAN), a wireless network (e.g., WiFi), a mobile communication network, a satellite network, the Internet, fiber optic, coaxial cable, infrared, radio frequency (RF), or any combination thereof. Other suitable network types and configurations will be apparent to persons having skill in the relevant art. The computer system 1400 may also include a main memory 1408 (e.g., random access memory, read-only memory, etc.), and may also include a secondary memory 1410. The secondary memory 1410 may include the hard disk drive 1412 and a removable storage drive 1414, such as a floppy disk drive, a magnetic tape drive, an optical disk drive, a flash memory, etc”.[11]
[10] Specification at page 42, line 20 – page 43, line 5
[11] Specification at page 43, line 43, line 23 – page 44, line 3
The specification as proposed to be amended ends with 14 claims of which independent claims 1 and 8 read as follows:
1. A method for authorizing a blockchain-based transaction, comprising: receiving, by a receiving device, a transaction request for a blockchain transaction, wherein the transaction request includes at least a network identifier associated with a blockchain network, a non-fiat transaction amount of currency associated with the blockchain network, and one of: a public key and an address identifier;
generating, by a processing device, an address identifier using at least the public key included in the received transaction request and one or more hashing and/or encoding algorithms if the received transaction request does not include an address identifier, wherein the address identifier indicates a destination address for a non-fiat blockchain currency associated with the blockchain network;
generating, by the processing device, a transaction message, wherein the transaction message is formatted based on an ISO 8583 standard governing the interchange of fiat-based transaction messages and includes a plurality of data elements, including at least a first data element specified in the ISO 8583 standard for storing a transaction amount in a fiat-based currency, a second data element specified in the ISO 8583 standard as reserved for private use, and a third data element specified in the ISO 8583 standard for storing a personal account number; and
the first data element includes a zero value indicating that the transaction request is for non-fiat currency associated with the blockchain network, the second data element includes at least (i) the network identifier associated with the blockchain network or an encoded value based on the network identifier associated with the blockchain network, (ii) the address identifier, and (iii) the non-fiat transaction amount of currency associated with the blockchain network, and the third data element includes an account identifier and a processing code indicative of a non-fiat currency transaction; and
transmitting, by a transmitting device, the transaction message formatted based on the ISO 8583 standard to an issuing financial institution via payment rails of a payment network that is configured for ISO 8583 standard messaging based on an association between the issuing financial institution and the account identifier; and
receiving, by the receiving device, a return transaction message formatted based on the ISO 8583 standard from the issuing financial institution using the payment network that is configured for ISO 8583 standard messaging, wherein the return transaction message includes a data element configured to store a response code indicative of an authorization determination that is based on the non-fiat transaction amount of currency associated with the blockchain network.
8. A system for authorizing a blockchain-based transaction, comprising:
receiving device configured to receive a transaction request for a blockchain transaction, wherein the transaction request includes at least a network identifier associated with a blockchain network, a non-fiat transaction amount of currency associated with the blockchain network, and one of: a public key and an address identifier;
a processing device configured to generate an address identifier using at least the public key included in the received transaction request and one or more hashing and/or encoding algorithms if the received transaction request does not include an address identifier, wherein the address identifier indicates a destination address for a non-fiat blockchain currency associated with the blockchain network, and
generate a transaction message, wherein
the transaction message is formatted based on an ISO 8583 standard governing the interchange of fiat-based transaction messages and includes a plurality of data elements, including at least a first data element specified in the ISO 8583 standard for storing a transaction amount in a fiat-based currency, a second data element specified in the ISO 8583 standard as reserved for private use, and a third data element specified in the ISO 8583 standard for storing a personal account number, and
the first data element includes a zero value indicating that the transaction request is for non-fiat currency associated with the blockchain network, the second data element includes at least (i) the network identifier associated with the blockchain network or an encoded value based on the network identifier associated with the blockchain network, (ii) the address identifier, and (iii) the non-fiat transaction amount of currency associated with the blockchain network, and the third data element includes an account identifier and a processing code indicative of a non-fiat currency transaction;
a transmitting device configured to transmit the transaction message formatted based on the ISO 8583 standard to an issuing financial institution via payment rails of a payment network that is configured for ISO 8583 standard messaging based on an association between the issuing financial institution and the account identifier; and
the receiving device is further configured to receive a return transaction message formatted based on the ISO 8583 standard from the issuing financial institution using the payment network that is configured for ISO 8583 standard messaging, wherein the return transaction message includes a data element configured to store a response code indicative of an authorization determination that is based on the non-fiat transaction amount of currency associated with the blockchain network.
CASE LAW
The principles of law in respect to manner of manufacture, arising from the High Court decisions in National Research Development Corporation v Commissioner of Patents (“NRDC”), [1959] HCA 67, (1959) 102 CLR 252, and D’Arcy v Myriad Genetics Inc (“Myriad”), [2015] HCA 35, are well-documented in previous office decisions. The authorisation of a case-by-case methodology is also apparent from the High Court decisions.
That case-by-case approach must have regard to the substance of the claimed invention, not simply the form of the claim. As noted by Gageler and Nettle JJ in Myriad 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”.
In Research Affiliates LLC v Commissioner of Patents (“Research Affiliates”), [2014] FCAFC 150, the Full Court of the Federal Court noted a distinction between mere implementation of an abstract idea in a computer and implementation of the idea in a computer that created an improvement in the computer. At [103]:
“... there is a distinction, between mere implementation of an abstract idea in a computer and implementation of an abstract idea in a computer that creates an improvement in the computer”.
Moreover, at [114]:
“The invention set out in the specification is directed to the index itself. The method of the invention is not one that has any artificial or patentable effect other than the implementation of a scheme, which happens to use a computer to effect that implementation. There is no technical contribution to the invention or artificial effect of the invention by reason of the intervention of the inventors”.
In also discussing the requirement for the contribution to be technical, the Full Court in RPL, amongst other things, stated as follows at [99]:
- “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 Aristocrat Technologies Australia Pty Ltd [2016] APO 49 at [35], a delegate of the Commissioner set out the following non-exhaustive summary of the issues to be considered when applying these principles.
- 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.
These seem to represent a well-tested approach to assess patentability for computer implemented inventions. I note that later decisions including Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161, Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86, Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd [2021] FCAFC 202 and Repipe Pty Ltd v Commissioner of Patents [2021] FCAFC 223 have not diverted from this approach in any meaningful way.
THE EXAMINER’S OBJECTION
The examiner’s sole objection reads as follows.
“Claims 1 to 14 do not define a manner of manufacture within the meaning of Section 18(1)(a) of the Patents Act 1990. In general, the principles set out in D'Arcy v Myriad Genetics Inc [2015] HCA 35 (Myriad), Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177 (RPL) and other cases require analysing whether the claimed invention, as a matter of substance rather than form, is suitable subject matter for a patent.
The substance of the claimed invention is to be determined by considering the claimed
invention’s actual or alleged contribution to the art.Factors relevant to consider when identifying the substance of the claimed invention include:
·How does the claimed invention work?
·What problem does it address?
·What is the result of performing the claimed invention?
·What was the state of the art as at the priority date?
·What does the claimed invention add to the state of the art?
·What are the advantages of the claimed invention?
The claims relate to a method/system 'for authorizing a blockchain-based transaction' where a request is received with particular information (network identifier, transaction amount and an address identifier), that information is placed into an ISO 8538 format message and is transmitted via payment rails for approval by return transaction message in the same format.
I consider that the substance of the invention lies in the use of the specific message format
and network for the transmission of data associated with the process of approving a
blockchain transaction.In RPL [099], the Full Federal Court indicated several factors relevant to consider when
determining whether a claimed invention as a matter of substance relates to patentable
subject matter. These included:·Is the contribution to the claimed invention technical in nature?
·Does the claimed invention solve a “technical” problem within the computer or outside the computer?
·Does the claimed invention result in an improvement in the functioning of the computer, irrespective of the data being processed?
·Does the claimed invention merely require generic computer implementation?
·Is the computer merely the intermediary, configured to carry out the method, but adding nothing to the substance of the idea?
In weighing up the variety of factors which indicate what the substance of the claimed
invention is and whether or not the claimed invention as a matter of substance relates to
patentable subject matter, I have concluded that your claimed invention, as a matter of
substance, does not relate to patentable subject matter.The use of ISO 8538 messages is no more than the use of a known message format in
standard ways to transmit data that is, in the context of the format and the network, arbitrary. Fields that have specific requirements (e.g. the first field for storing the amount of fiat currency to be transferred) are populated according to those requirements and fields that support arbitrary data that are used to send arbitrary data. No improvement to either the format or the payment network is evident from such use.Given this the claims define, as a matter of substance, a scheme (authorising a blockchain
transaction), where technological apparatus is used for no more than its known capacity to
process and communicate specific information. Such an invention is not subject matter
suitable for a patent”.CONSIDERATION
The Substance of the Invention
The Applicant has disagreed with the examiner’s assessment that the substance of the invention merely lies in the use of ISO 8538 messages for transmission of data in a blockchain network. They have instead submitted that the substance of the invention is a hybrid blockchain system in which known existing payment systems based on the ISO 8583 standard (designed for fiat-based transactions) are leveraged in a new and inventive way to facilitate blockchain-based transactions such that the risk assessment of the blockchain transaction can be performed faster or in real time while still providing the privacy and security advantages associated with using blockchain technology.
As discussed earlier, the specification notes problems arising from the significant length of time it takes to authorise and complete a typical blockchain transaction. The present invention integrates traditional fiat currency payment transaction infrastructure that use the ISO 8538 messaging format with a blockchain system such that the traditional fiat currency payment transaction infrastructure will communicate with banking institutions associated with the payer and the payee to gain authorisation for the blockchain currency payment similar to the process used for fiat currency payments and then provide this authorisation to the blockchain network to process and finalise the blockchain currency payment in the blockchain network. This authorisation process will be significantly faster than the blockchain getting authorisation for the payment within the blockchain network using the traditional practice of gaining consensus approval from within the blockchain network.
In my view, this use of traditional fiat currency payment transaction infrastructure to authorise the blockchain transaction is at the heart of the invention. This is what distinguishes the present invention from traditional blockchain transactions. There is nothing in the specification or the examiner’s objection to suggest that the use of traditional payment systems in a blockchain was part of the common general knowledge in the art. I therefore agree with the Applicant’s assessment of the substance of the invention as it better captures the essence of the claimed invention.
On the face of it, the substance of the invention appears to be nothing more than an abstract scheme that integrates a well-known fiat currency electronic payment system that uses the ISO 8583 message formatting standard with a well-known blockchain system to enable faster blockchain transaction authorisation. It appears to be more of a business innovation rather than a technical innovation.
However, as the invention is clearly a computer implemented invention, I need to go through the considerations that I have identified earlier to see whether the present invention can be considered as an improvement in computer technology.
Does the invention as claimed solve a technical problem in the computer or outside the computer?
The Applicant has submitted that the problem the claimed invention seeks to address a technological problem existing in the realm of computing networks, specifically blockchain processing networks and that more specifically, the “slow processing time in a blockchain transaction, which creates vulnerability (to both the payer and payee) for fraud, is a technical problem”.[12]
[12] AWS at page 3
However, I am not convinced. The problem that the claimed invention seeks to address relates to the significant time it takes to authorise and process transactions involving blockchain currencies in a typical blockchain system. This delay between the time a transaction request is sent and the time the transaction is authorised is due to the inherent limitations of the blockchain network, notably the block size, which is typically hard coded at 1MB and the block generation time, which is dependent on the complexity of the hashing puzzle. These limitations are not because of any technical limitations of the computer system per se, but rather due to the administrative rules and coding built into the blockchain network. The claimed invention does not solve a technical problem within the computer.
Does the invention as claimed provide a technical solution?
The Applicant has submitted that the invention as claimed provides for a technical solution to a technical problem.
“The claims are directed to a technical solution that solves a technological problem existing in the realm of computing networks, specifically blockchain processing networks. More specifically, as discussed in the Background section of the specification, blockchain networks have a significant processing time and utilize traditional, often very unsecured, networks in the exchange of messages related thereto. By adapting transaction messages to be able to convey the data necessary for blockchain transactions, the more secure and faster communication infrastructure traditionally used in standard payment transactions can be leveraged to solve some of the problems of traditional blockchain networks. At the same time, by utilizing existing standards, the adaptation recited in the present claims can be implemented without requiring significant modifications to payment networks, payment rails, and associated infrastructure”.[13]
“The advantages of the present invention are achieved by the transaction message that is based on an ISO 8583 format but configured specifically with various data elements for a blockchain based transaction. The transaction message is transmitted using the payment rails of a payment network that is configured for ISO 8583 messaging to an issuing financial institution, which sends a return transaction message to the receiving device storing a response code indicative of an authorisation determination. The features of the method and system according to claims 1 and 11 respectively, including the configuration data elements of the transaction message that is formatted based on the ISO 8583 standard, is a technical solution to the problems identified in the Background to the invention section above”.[14]
“The claims particularize the interaction between the blockchain and payment networks as the claims take advantage of the processing and routing of payment networks through the
standardized data elements and how they are used. This is through two aspects: the zero-value transaction amount, which enables the payment rails to be used and standard processes performed without the need to move any currency around (so no settlement needs to be performed and processing can be done faster), and inclusion of the account identifier, which provides information for routing the message to the proper issuer. Blockchains traditionally operate without any issuing institutions, and so blockchains are not configured to perform any routing or involvement of financial institutions. Use of a more traditional network, such as the Internet, would require the internet device to be able to route transaction messages to issuing financial institutions, which are not traditionally connected to the Internet for transaction processing (thus requiring additional onboarding for every issuer involved), and require account information being made available to all of these devices (which issuers and customers alike would be wary of doing). Conversely, in the claimed solution, account information is stored in a transaction message and transmitted via payment rails, which are trusted and secure. Likewise, issuers are already accustomed to receiving transaction messaging via payment rails, which means they can adapt to the solution with minimal changes to their internal systems and networking”.[15][13] AWS at page 5
[14] AWS at page 5
[15] AWS at page 7
It is clear that the Applicant is of the view that adapting the payment authorising system of fiat currencies that use the ISO 8583 message formatting, for the authorising of transactions in a blockchain system is a technical solution to the problem of the significantly longer time it takes to authorise a typical blockchain transaction. However, I am not convinced.
As discussed earlier, the solution presented by the invention is the integration of a traditional fiat currency transaction authorisation infrastructure with a blockchain network so that the authorisation for a blockchain transaction can be obtained using the fiat currency transaction authorisation infrastructure. Fiat currency transaction authorisation infrastructure that use the ISO 8583 message formatting are common general knowledge in the art and is for example used by leading credit card companies such as Mastercard and Visa. The claimed invention is therefore no more than the integration of a well-known blockchain system with a well-known fiat currency transaction authorisation system. By doing so, the claimed invention does not in any way improve the computer network that is running the blockchain system.
What the invention does is to change the entire character of a typical blockchain network which uses peer to peer transactions with consensus validation within the blockchain by introducing financial institutions of the payer and payee into the transaction process and using them to authorise the transaction based on traditional fiat currency authorisation processes such as checking availability of blockchain currency funds in the payer’s accounts and doing other risk evaluations. The invention involves introducing new players into a blockchain network as well as new procedures involving these new players for authorising a blockchain transaction.
The solution presented by the claimed invention is in my view, a business solution that introduces fiat currency authorisation infrastructure to perform authorisation outside of the blockchain network and not a technical solution to the problem of the significant time it takes to authorise a transaction within an existing blockchain network.
While the Applicant has made much of the features that relate to the ISO 8583 formatting such as the first, second and third data elements, this message formatting standard is very much the norm in the field of electronic fiat currency transaction messaging and I fail to see anything technical in adopting the industry standard. Although the ISO 8583 standard has many standard data elements, there are also a few additional fields so that each network can adapt the standard for its own use with custom fields. The data elements defined in the claim are nothing more than that customisation to identify that it is a non-fiat currency transaction, the identity of the blockchain network and the account details. I would not term these data elements as technical features and despite their inclusion the solution remains a business innovation and not a technical innovation.
Does the claimed method require only generic computer implementation?
As noted earlier, the specification states that the system of present invention including the processor, the issuer and the acquirer may be implemented on a computer system using suitable hardware, software, firmware, non-transitory computer having instructions stored thereon, or a combination thereof. The processor can also be a general purpose processor device that can connect to a network using any well-known network infrastructure. There is nothing to the contrary in the Applicant’s submissions as well.
It is therefore clear that the present invention only requires a generic computer system connected to any suitable network for its implementation.
Is there a practical and useful result?
The Applicant has submitted that “the invention yields a practical and useful result in that, for a blockchain-based transaction, risk assessment can be performed faster or real-time (as fast as the risk assessment for fiat-based transaction) while still providing the security and privacy advantages associated with blockchain technology”.[16]
[16] AWS at page 9
The purpose of the claimed method is to significantly reduce the time it take to gain authorisation for a blockchain transaction. This is achieved by integrating a fiat currency authorisation infrastructure into the blockchain and using this infrastructure to gain authorisation for the cryptocurrency transaction. While the blockchain transaction is no more a strict peer to peer transaction, I agree that it still provides a practical and useful result.
Does the invention lie in the generation, presentation or arrangement of intellectual information?
The invention involves the generation and transmission of transaction information using the ISO 8583 format so that based on this information, authorisation for the transaction can be obtained using conventional fiat currency authorisation infrastructure. While there is generation of transaction information, it is not fair to say that the invention lies merely in the generation and arrangement of intellectual information.
Balance of considerations
The present invention relates to blockchains, a computer implemented technology that is not inherently unpatentable.
The problem that the invention seeks to address is due to the administrative rules and coding built into the typical public blockchain network and is not a technical problem within the computer system running the blockchain. The solution provided by the claimed invention is a business innovation that changes the character of a typical public blockchain network by integrating it with a fiat currency transaction authorising infrastructure rather than a technical innovation within the standard blockchain that speeds up the processing of the transaction while maintaining the character of the blockchain.
Although the invention yields a practical and useful result in providing an alternative to the existing methods of authorising a transaction in a blockchain system, that alone is not sufficient to make the invention a patentable invention.
It is also clear that the invention only requires generic computer implementation with suitable programming that is left to a person skilled in the art.
The Applicant has also argued that this invention has similarities to the invention that was the subject of the decision in Advanced New Technologies Co., Ltd. [2021] APO 29 which was found to be a patentable invention, in that both relate to processing of blockchain-based transactions.
While it is true that both broadly relate to processing of blockchain transactions, in that decision, I found that the invention provided a technical solution within the blockchain involving the use of cryptographic techniques to address the issue of breach of privacy information from a node participating in a blockchain transaction. The present invention, on the other hand, is all about providing an alternative business model for authorising blockchain transactions. The present case can be readily distinguished from the Advanced New Technologies Co., Ltd. case.
In my view, the balance of considerations clearly weigh in favour of finding that the claimed invention is not a manner of manufacture.
CONCLUSION
The claimed invention is not for a manner of manufacture. Having reviewed the specification I can see no subject matter that could be made the subject of a valid claim to overcome this finding. Hence, I see no reason to afford the Applicant an opportunity to further amend the claims. In these circumstances it is appropriate to refuse the application.
R Subbarayan
Delegate of the Commissioner of Patents
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