Steven John Grant - [2004] APO 11

OFFICIAL NOTICE
DECISION OF A DEPUTY COMMISSIONER OF PATENTS
Innovation Patent : No. 2003100074 in the name of Steven John Grant

Title: Asset Protection Method

Action: Examiner’s objections regarding subject matter

Decision: Issued 26 May 2004
Abstract

· The method of the patent does not relate to protecting an asset in any physical sense – such as by building a moat or protective wall around a building. Rather the protection being afforded is against loss of ownership as a result of a legal liability, taking advantage of aspects of the law.

· It is noteworthy that the method would inherently cease to be capable of performance if Parliament were to change the law in certain ways – not because the method might be ‘contrary to law’ as per s.101B(2)(d), but because the ‘law’ which provides the basis for the invention would (unlike natural law) no longer exist.

· Certain publications preceding the filing date by 6 months were not available to anticipate the invention as they came about as a result of disclosure by the inventor – and hence qualified for the so-called ‘grace period’ exclusion.

· The traditional concept of a ‘mere scheme or plan for doing business’, in so far as it relates to subject matter issues, is not an additional exclusion from patentability over the principles set out in the NRDC decision. While it may be a convenient way of indicating subject matter that may not be a manner of manufacture, the true scope of a subject matter exclusion must be determined by reference to the NRDC principles.

· The law of Australia is the creation of Parliament and the common law, and is presumed to be fully known to all. All laws are artificial in the sense that they are the creation of Parliament or the courts. Legal 'loopholes' may not be consistent with the original intent of Parliament, but they are no more than aspects of the law that have not been previously publicised. They are inherently part of the law, and cannot give rise to an artificially created state of affairs any more than the application of any other part of Australian law.

· Claimed invention does not result in an artificially created state of affairs, and is therefore not for a manner of manufacture. Innovation patent revoked.
PATENTS ACT 1990
DECISION OF A DEPUTY COMMISSIONER OF PATENTS
Re:Innovation Patent No. 2003100074 in the name of Steven John Grant, and examiner’s objections regarding subject matter.

BACKGROUND

Innovation Patent 2003100074 was filed on 7 Feb 2003. Subsequent to grant, the applicant requested examination of the patent. The examiner has objected inter alia that the invention is not for a manner of manufacture under s.6 of the statute of Monopolies. Following several examination reports, the patentee asked to be heard. The hearing took place on 21 May 2004, with the patentee being represented by Mr P Williams, Patent Attorney of Griffith Hack (Brisbane), who appeared by telephone.
The subject matter of the application is a method for protecting an asset. The description notes how ‘Some owners of assets place the assets at risk as a consequence of their occupations or business activities. Examples include company directors and professionals with potential exposure to claims for professional negligence.’ It then describes the method of the patent to protect an asset against such risks, using a trust, loan and security. [I interpose here to note that the method does not relate to protecting an asset in any physical sense – such as by building a moat or protective wall around a building. Rather the protection being afforded is against a loss of ownership as a result of a legal liability.] Claim 1 of the patent, as presently proposed to be amended, is as follows:
1.   An asset protection method for protecting an asset owned by an owner, the method comprising the steps of:
(a)    Establishing a trust having a trustee,
(b)   The owner making a gift of a sum of money to the trust,
(c)    The trustee making a loan of said sum of money from the trust to the owner, and
(d)   The trustee securing the loan by taking a charge for said sum of money over the asset.
There are 3 other independent claims, which vary from claim 1 in manners such as specifying that the asset is real property located in Australia; the trust being a non-offshore trust; specifying a mortgage rather than a charge; not requiring equivalence of the gift, loan, and charge; and the trustee being controlled by the owner. There is also one dependant claim, adding to claims 2 to 4 the additional requirement that the trust has no default beneficiaries.
One of the notable aspects of this invention is that it does not entail the application of any ‘natural’ law. The present invention resides in the ‘discovery’ that the effects of certain laws can be avoided by the pre-emptive taking of appropriate steps in accordance with other laws. [In this regard, I note the invention does not apparently contravene s.101B(2)(d) – contrary to law.] The invention does not relate to any discovery or utilisation of any natural law, but resides in the domain of legal law. The effect of this patent is to reserve to the patentee the exclusive right to use certain laws of Australia in a particular way.
It is also noteworthy that the method would inherently cease to be capable of performance if Parliament were to change the law in certain ways – not because the method might be ‘contrary to law’ as per s.101B(2)(d), but because the ‘law’ which provides the basis for the invention would (unlike natural law) no longer exist.
After the first report was issued, the Commissioner received a letter from the Queensland Law Society, ‘formally’ lodging an objection to the issue of a certificate of Examination ‘on a preliminary basis’, asserting that the claimed method was commonly known as ‘Gift and Loan Back’. They also attached a copy of a letter received by a member of the society from the law firm of Grants Lawyers (of which the patentee is apparently a principal). The letter states that the Patent is currently under examination, and ‘following certification of the Patent, this firm will seek to enforce the Patent against a number of firms throughout Australia which have used the patented method.’
After the third examination report issued, the Commissioner received a s.28 notice filed by Pizzeys Patent and Trade Mark Attorneys. The notice asserts lack of novelty and innovativeness, and cites 3 documents in support – Notes of seminar delivered on 6 August 2002 by Neal Dallas of McCullough Robertson Lawyers; Notes of a seminar delivered by Doherty Partners, Barristers and Solicitors in August 2002; and a newsletter published by McCullough Robertson Lawyers in September 2002
The s.28 material was forwarded to the patentee on 23 February 2004. On 26 February 2004 the examiner issued a ‘supplementary’ 3^rd examination report – indicating that while the examiner had not considered the documents in detail, prima facie they anticipated the claimed invention. Besides alerting the patentee to the Commissioner’s views of these documents, this also had the effect of resetting the time for certification of the patent – from 8 March 2004 to 26 May 2004 [reg 9A.4(e)].
The objections maintained by the examiner relate to an assertion that claims 3 and 4 were a mere collocation of integers; that the invention claimed by all claims was a mere scheme or plan for doing business and therefor not patentable; and anticipation by the material supplied under the s.28 notices. At the hearing, and following submissions on the issue, I advised the attorney that I did not consider the objection relating to collocation was sustainable – and that no further consideration would be given to that issue.
THE S.28 MATERIAL, AND THE GRACE PERIOD
The 3 documents supplied under s.28 each provide a method of protecting an asset that prima facie is exactly the same as the method described and claimed in the patent. The documents are asserted to have been published some 6 months before the earliest priority date for the patent. Prima facie the claims lack novelty on the basis of these publications.
Shortly before the hearing, the patentee filed a statutory declaration, to the following effect:
·    The method was developed as a result of a request from a client. He communicated the method to his client on 10 Feb 2002 (which is less than 12 months before the application date);
·    He gave PowerPointÔ presentations on the method to several groups in June 2002. [A copy of that presentation was included with the declaration.] He alleges that at one of those sessions a solicitor from McCullough Robertson Solicitors was present. [Two of the anticipatory documents are sourced from this firm.];
·    In July 2002, his method was referred to in the television news programmes “A Current Affair” and “Today Tonight”; and
·    Some 10 seminars were conducted between April 2002 to February 2003 – with participants (typically doctors) being encouraged to take supplied notes and distribute them to other doctors.
The patentee, by this declaration, is claiming protection from these anticipatory documents by way of the general ‘grace period’ provision available under s.24 and regulation 2.2(1A) and 2.3(1A). Having reviewed the publications, and the material supplied by the patentee, I am satisfied on the material available to me that the criteria of s.24(1)(a) of the Act, and the regulations, are met. In particular, the declaration provides a credible basis for concluding that the method as disclosed in the first and third citations were sourced from the disclosure by the patentee at the seminar which was attended by a solicitor of that firm. And there is a credible explanation for the disclosure of the second paper being sourced from notes distributed at some seminars. [Of course, in opposition or revocation proceedings relevant evidence about the origin of these publications could be admitted which might lead to a different conclusion – but that is outside the scope of a notice under s.28 and my present considerations.]
In reaching this conclusion, I should note that s.24(1)(a) provides for disregarding information made available by the relevant publication – and I take this as including that same information when it is the subject of consequential publication (as is the case here). If that is not the case, the provision would be in effect nugatory. Public disclosures of new information may ordinarily be expected to be communicated to other persons. If the protection afforded by the grace period was limited to the primary disclosure, the secondary ‘publications’ that inevitably arise consequential upon such disclosures would inevitably give rise to anticipation in almost all instances.
On the day of the hearing the Commissioner received a fax from Pizzeys in relation to the s.28 material previously filed by that firm. The fax included a declaration by a Neal Dallas asserting publication of one of the documents in the s.28 notice on 6 August 2004. I have not heard the patentee in respect of this extra matter, as it does not affect my conclusion that the grace period operates in respect of these citations.
Accordingly, I am satisfied that the documents provided in the s.28 notice do not (at least on the basis of the material available to the Commissioner) provide a basis for finding the claimed invention is anticipated. [And of course any issues arising from the operation of s.119(1) to (3) are not for the Commissioner to consider.]
MANNER OF MANUFACTURE – MERE SCHEMES AND PLANS
The examiner has objected that the patent was for no more than a ‘mere scheme or plan for doing business’, citing the old case of Cooper’s Application (1902) 19 RPC 53. At the hearing the attorney argued that the claims were not directed to a ‘mere’ scheme or plan. He argued that the characteristic of a ‘mere’ scheme or plan was a concept without any means of putting it into effect. In this regard, he argued that the present method clearly provides the means for putting the method onto effect. Accordingly it was not a ‘mere’ scheme or plan, and therefore is not excluded from patentability.
Most precedent decisions relating to ‘mere scheme or plan for doing business’ are quite old, and generally pre-date the High Court’s decision in National Research and Development Corporation (1959) 102 CLR 252 (NRDC). Illustrative cases are ESP's Application (1945) 62 RPC 87, W's Application (1914) 31 RPC 141, CM's Application (1944) 61 RPC 63, T's Application (1920) 37 RPC 109, and Hiller's Application [1969] RPC 267. There have also been a number of decisions of the Patent Office, such as Mobil Oil Corp's Application (1973) 43 AOJP 1282, and Texas Instruments Incorporated (1968) AOJP 2846.
The concept continues to gain some reference in patent law – as in the Manual of Practice and Procedure of the Patent Office, and as in peripheral comments in some court decisions (for example, see para 128 of Welcome v Catuity 51 IPR 327.) However, I am very conscious of the historical development of patent law, with the steady codification during the 20^th century of all aspects of manner of manufacture other than subject matter. My reading of the above precedent cases suggests care must be exercised to distinguish subject matter issues from (in particular) the issue of lack of inventive step, as well as those cases that are unsustainable in the current understanding of the NRDC criteria. It may well be that the concept of ‘mere scheme or plan’ continues to have relevance as a convenient way of referring to certain categories of subject matter that do not constitute a manner of manufacture. But I do not think the exclusion exists as an entity in its own right in addition to the NRDC criteria. Any determination of subject matter excluded by this criterion needs to be done in the context of the principles set out in NRDC. A proper determination of the scope cannot be achieved by way of an analysis of the phrase itself, nor a detailed analysis of the line of UK precedent that gave rise to this phrase.
MANNER OF MANUFACTURE – SUBJECT MATTER
This invention raises directly the question of whether there are any limits on subject matter for the grant of a patent. In particular, can a patent properly be granted in a situation that involves no discovery of a law of nature, or application of technology in any manner or form. In the context of the NRDC decision, the attorney argues that the present method creates an artificial state of affairs, and is clearly of economic utility in practical affairs – and is therefore patentable subject matter. And, he agues, the absence of any technology in any manner or form is not relevant.
The arguments of the attorney are based on the following passage from the NRDC decision:
The effect produced by the appellant's method exhibits the two essential qualities upon which "product" and "vendible" seem designed to insist. It is a "product" because it consists in an artificially created state of affairs, discernible by observing over a period the growth of weeds and crops respectively on sown land on which the method has been put into practice. And the significance of the product is economic; for it provides a remarkable advantage, indeed to the lay mind a sensational advantage, for one of the most elemental activities by which man has served his material needs, the cultivation of the soil for the production of its fruits.
I do not think that there can be any argument about the present method being of economic utility – clearly there are many professional advisers in society charged with looking after their client’s assets by making full use of the law. But does the present method result in an ‘artificially created state of affairs’?
In considering this issue, it is noteworthy to recall that the purpose of the Statute of Monopolies was to generally abolish crown monopolies. The concept of patents for inventions arises as an exception to the general abolition of monopolies. And this exception was characterised as being in respect of ‘manners of new manufacture’. In understanding this concept, the High Court exhorted:
It is therefore a mistake, and a mistake likely to lead to an incorrect conclusion, to treat the question whether a given process or product is within the definition as if that question could be restated in the form: "Is this a manner (or kind) of manufacture?" It is a mistake which tends to limit one's thinking by reference to the idea of making tangible goods by hand or by machine, because "manufacture" as a word of everyday speech generally conveys that idea. The right question is: "Is this a proper subject of letters patent according to the principles which have been developed for the application of s. 6 of the Statute of Monopolies?"
An important development in the interpretation of 'manner of manufacture' was Morton J’s ‘vendible product’ rules. For many years these rules provided primary guidance as to the meaning of the phrase. However those rules were interpreted in an unnecessarily restrictive way, leading the High Court to say:
It is, we think, only by understanding the word "product" as covering every end produced, and treating the word "vendible" as pointing only to the requirement of utility in practical affairs, that the language of Morton J.'s "rule" may be accepted as wide enough to convey the broad idea which the long line of decisions on the subject has shown to be comprehended by the Statute.
And, in respect of processes:
….. the tenor of the passage seems to be that what is meant by a "product" in relation to a process is only something in which the new and useful effect may be observed. Sufficient authority has been cited to show that the "something" need not be a "thing" in the sense of an article; it may be any physical phenomenon in which the effect, be it creation or merely alteration, may be observed: a building (for example), a tract or stratum of land, an explosion, an electrical oscillation. It is, we think, only by understanding the word "product" as covering every end produced, and treating the word "vendible" as pointing only to the requirement of utility in practical affairs, that the language of Morton J.'s "rule" may be accepted as wide enough to convey the broad idea which the long line of decisions on the subject has shown to be comprehended by the Statute.
But does this mean that there are no limits to what might be patentable subject matter? The history of the development of the concept of manner of manufacture has consistently involved either the discovery of laws of nature or the application of technology based on the laws of nature. The present invention is fundamentally different in that there is no new law of nature, and there is no application of technology (in the broadest possible sense of the word) to implement the method of the invention. Rather the invention is a discovery in relation to the laws of Australia, useful in the affairs of the populace.
The NRDC case requires there be an 'artificially created state of affairs' in order for something to qualify as proper subject matter for the grant of a patent. I do not think that this is the case in the present patent. The invention resides in the law of Australia. That law is the creation of Parliament, and of the courts through common law. At one level one could say that all laws are 'artificial' in that it they are the creation of Parliament or of the courts. Beyond that, the law must be taken as being a deliberate intention of the legislature to provide governance of the population at large. I think it must be taken that the legislature has enacted the law in full knowledge of all its consequences, and in particular the interaction with other laws of the Commonwealth, including the common law. It might be said from time-to-time that there are 'legal loopholes' that allow for activities that might not be consistent with the original intent of Parliament. But that is not the point. I think the highest one can treat those is that they are aspects of the law that had not previously been publicised. They are inherently part of the law, and their application cannot give rise to an artificially created state of affairs any more than the application of any other part of Australian law.

Furthermore, law is the foundation upon which our society is built. It is essential to that purpose that all in society operate according to the same set of rules. Accordingly a fundamental property of law is that it is presumed to be known in its full extent, by all in society – irrespective of any practical issues in ascertaining the law on a particular issue, or of the need for a court to interpret the law. That this is so is well illustrated by the well-known maxim 'ignorance of the law is no excuse.' As such, there can be no room for a discovery (in the patentable sense) within the realm of the laws of Australia, because by definition the law is presumed to be known. Additionally, laws are enacted by Parliament for the governance of the population (unless there is express parliamentary intent to the contrary.) Clearly Parliament and society expects all citizens to obey the full range of the law. I do not believe that it is open (or proper) for the Commissioner of Patents to grant monopoly rights over certain aspects of Australian law. The law is for the populace at large; it is not for the use of one individual to the exclusion of all others who desire to follow the law.
DECISION
The claims of the present Innovation Patent do not involve any discovery of a law of nature, or involve the application of technology in some form or other to perform the process. The discovery leading to the claimed method relates to the laws of Australia. The invention does not result in an artificially created state of affairs - the state of affairs was already present in the laws of Australia. The claimed invention is therefore not for a manner of manufacture within the meaning of s.6 of the Statute of Monopolies, and a ground of revocation has been made out – s.101B(2)(b). Additionally, there is nothing in the description that indicates any basis for amending the claims to overcome this conclusion. In accordance with s.101F, I revoke the Innovation Patent.
The patentee filed divisional innovation patent 2004100174 on 8 March 2004. The divisional patent is in substantially identical terms to the present patent. I think that it is appropriate in the circumstances to make the following observations concerning the future conduct of proceedings in respect to the divisional Innovation Patent:
· The Innovation Patent was granted on 19 March 2004. It appears that examination was not requested by 19 May 2004 (although at this time I cannot entirely exclude the possibility that a request for examination has been filed but not yet entered into the computer systems.) The practical effect of examination not having been requested by 19 May 2004 is that the entitlement to the priority date from the parent application has been lost [Reg. 3.12(1)(d)(ii)]. Consequently, Innovation Patent 2004100174 is prima facie fully anticipated by the present patent. Nevertheless, it will continue to exist on the Register as an uncertified innovation patent, with the constraints of s.129A applying.
· If examination was timely requested, I observe that the doctrine of issue estoppel does not apply to tribunals such as the Commissioner of Patents. Nevertheless, it may be assumed that the present decision will be highly persuasive vis-à-vis the divisional patent.
D Herald
Deputy Commissioner of Patents
Patent attorneys for the patentee : Griffith Hack (Brisbane)