Legal Research
Cases
Research Affiliates, LLC.

Research Affiliates, LLC.

Case [2010] APO 31 17 December 2010

Patentable Subject Matter

Manner of Manufacture

Statutory Interpretation

Intellectual Property Law

No judgment structure available for this case.

Type to search within this case.

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2005213293.

Title: Valuation Indifferent Non-Capitalization Weighted Index and Portfolio.
Patent Applicant: Research Affiliates, LLC.

Delegate:  M. G. Kraefft
Decision Date:            17 December 2010
Hearing Date:              29 October 2010
Catchwords:                PATENTS – maintenance of examiner’s objection – alleged invention for constructing a non-capitalization weighted portfolio of assets – whether a manner of manufacture – business method or system – application refused.

Representation: Applicant: Mr Matthew Ward, patent attorney of Shelston IP, assisted by Ms Tam Huynh, also of Shelston IP.

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Innovation Patent: 2005213293.

Title: Valuation Indifferent Non-Capitalization Weighted Index and Portfolio.
Patent Applicant: Research Affiliates, LLC.

Decision Date: 17 December 2010
DECISION
Claims 1-19 are not for a manner of manufacture and consequently do not comply with subsection 18(1)(a) of the Patents Act.
There is also nothing of substance in the specification as a whole from which claims to patentable subject matter could be drafted.
The application is refused.
REASONS FOR DECISION

Robert D. Arnott filed patent application 2005213293 on 27 January 2005. The Patent Office had issued five examination reports during the examination stage. Throughout these reports, the examiner had maintained an objection that the claims of the application are not for a manner of manufacture. Mr Arnott had proposed amendments under Section 104 of the Patents Act to the description and claims during the examination stage. However the issue of whether the claims are for a manner of manufacture had remained unresolved.
Consequently the matter was set for a hearing.
An assignment of the application has also taken place. The Patent Office recorded the assignment on 17 November 2010. The application is now proceeding in the name of Research Affiliates, LLC.
SPECIFICATION
The specification describes the invention as pertaining to investment in securities and more specifically to the construction and use of passive portfolios and indexes. The indexes that are built are used as a basis to purchase securities for a portfolio. The specification describes passive portfolio management where the securities in a portfolio duplicate those that make up the index as distinct from active portfolio management where securities are selected for a portfolio individually.
The specification states that, conventionally, passive portfolios are built based on an index weighted using one of market capitalization weighting, equal weighting and share price weighting. Some disadvantages of using these weightings are outlined in the specification. For example, the disadvantages of market capitalization weighting derive from any under-valued securities being under-weighted in the index and related portfolios, while any over-valued securities are over-weighted. Also, portfolios based on market capitalization weighting follow every market (or segment) bubble up and every market crash down.
The alleged invention is described as a new method, system and computer program product for passive investing that is based on indexes which are built with metrics other than market capitalization weighting, share price weighting or equal weighting. Examples of the metrics used are various financial data of the company issuing securities such as book value, sales, revenue, earnings,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Research Affiliates, LLC.

Details

AGLC: Research Affiliates, LLC. [2010] APO 31
Case: [2010] APO 31
Decision Date: 17 December 2010

CaseChat Overview and Summary

Research Affiliates, LLC, filed an application for an Australian innovation patent for a "Valuation Indifferent Non-Capitalization Weighted Index and Portfolio." The application was examined by the Australian Patent Office, which maintained an objection that the claims were not for a manner of manufacture, contrary to the requirements of subsection 18(1)(a) of the Patents Act 1990 (Cth). The applicant proposed amendments to the claims and description during the examination stage, but the objection remained unresolved. The matter was set for a hearing before Delegate Kraefft.

The key legal issue was whether the invention claimed in the application was a manner of manufacture as required by subsection 18(1)(a). The applicant argued that the claims defined a method with sufficient physical effect in the form of a change in information in a part of a machine. The delegate considered the relevant case law, which required a new and useful effect, or physical phenomenon, resulting from the working of a method for it to be patentable. The delegate found that the claims essentially defined a scheme without the requisite physical effect, amounting to little more than data manipulation to operate the investment scheme.

The delegate concluded that claims 1-19 did not define a manner of manufacture and therefore did not comply with subsection 18(1)(a). The invention was described as a passive investment scheme with no substantive physical effect beyond the operation of the scheme itself. The application was refused.

The delegate refused the application for an Australian innovation patent for "Valuation Indifferent Non-Capitalization Weighted Index and Portfolio." The claims did not define a manner of manufacture as required by the Patents Act and the relevant case law. The invention amounted to little more than data manipulation to operate an investment scheme without the requisite physical effect. The application did not disclose suitable claims to define patentable subject matter.

Orders