Steven Michener v the Sporting Exchange
[2008] APO 26
•26 September 2008
ABSTRACTS OF DECISIONS
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Application : No. 785337 in the name of THE SPORTING EXCHANGE
Title: BETTING EXCHANGE SYSTEM
Action: Opposition thereto by STEVEN MICHENER
Decision: Issued 26 September 2008
Abstract
The application was opposed on the grounds that it lacked novelty and was obvious.
The submissions by the opponent were more philosophical in nature and did not address the evidentiary issues required to establish lack of novelty and inventive step.
The opposition was dismissed with costs.
PATENTS ACT 1990
DECISION OF A DELEGATE OF THE COMMISSIONER OF PATENTS
Re:Patent Application No. 785337 by THE SPORTING EXCHANGE and opposition under s 59 of the Patents Act 1990 by STEVEN MICHENER
BACKGROUND
Australian patent application 40851/01 was filed on 15 March 2001 by the patent applicant, The Sporting Exchange Ltd (herein after referred to as Sporting Exchange). This application claimed convention priority from United Kingdom application 0008530.8 that was filed on 6 April 2000. Acceptance of the application was advertised on 18 January 2007 with a notice of opposition being filed on 16 April 2007 by Steven Michener. The statement of grounds and particulars was filed on 18 July 2007 with the evidence-in-support being completed on 18 November 2007. After a number of extensions of time, the Sporting Exchange advised on 27 March 2008 that it was not filing any evidence-in-answer.
A hearing on the matter was set down on 8 July 2008 at Canberra. Sporting Exchange was represented by Ben Fitzpatrick, counsel and the opponent, Steven Michener represented himself.
EVIDENCE
The evidence consists of a statutory declaration by Steven Michener dated 18 October 2007. It was accompanied with 8 attachments;
- Attachment 1: front bibliographic page from AU 785337
- Attachment 2: copy of the statement of grounds and particulars
- Attachment 3: front bibliographic page of Australian patent 738724
- Attachment 4: front bibliographic page of Australian patent 780942
- Attachment 5: analysis of the patent application claims
- Attachment 6: Email from Professor Nelson D. Forrest. Member, Board of Directors, Iowa Electronic Market
- Attachment 7: abstract of an article “Anatomy of an Experimental Political Stock Market”, Forsythe et al, The American Economic Review, Vol 82, No. 5 (Dec 1992), pp. 1142-1161
- Attachment 8: Romans and Gladiators: an application of implied betting in ancient times.
There were also a number of appendices filed;
- Appendix AA: copy of the opposed application, 785337 B2 (THE SPORTING EXCHANGE) 23 October 2001, priority date 6 April 2000
- Appendix BB: copy of AU 738724 C (KOHIS et al), 13 July 2000, priority date 11 January 1999
- Appendix CC: copy of AU 780942 B2 (EVENTS MARKET PTY LTD), 22 January 2001, priority date 6 July 1999
- Appendix DD: copy of the article entitled “Anatomy of an Experimental Political Stock Market”
DECISION
The application is entitled “betting exchange system” and allows a plurality of user to bet against one another.
The system comprises a server which is configured:
(a) to receive over a communication network a plurality of bet requests backing a given outcome, each backing bet request specifying a price and a size at which an originator of the request is prepared to bet that the given outcome will occur;
(b) to receive over a communications network a plurality of bet requests laying the given outcome, each laying bet request specifying a price and a size at which an originator of the request is prepared to bet that the given outcome will not occur;
(c) to aggregate backing bet requests specifying the same price;
(d) to aggregate laying bet requests specifying the same price;
(e) to automatically match a received backing bet request with individual or aggregated laying bet requests to complete a betting transaction; and
(f) to automatically match a received laying bet request with individual or aggregated backing bet requests to complete a betting transaction.
A method of operating a betting exchange system and a computer program comprising the same set of features is also claimed.
Steven Michener alleged lack of novelty and inventive step in view of Australian patents 738724 and 780942 and that the invention was obvious in view of the common general knowledge of an “implied bid”. In particular, Steven Michener alleged that
“…all the processes and / or systems would be obvious to a non-inventive worker in the art of financial and wagering markets and / or systems, possessing a background knowledge of quantitative methods and computer technology, and contemplating the problem of efficiently automating common option trading or wagering practices: and that all of the claimed invented transaction methods or technologies are in common practice in one form or another. Consider for example: If I say to you I am prepared to accept odds of 3 to 2, that implies you are offered odds of 2 to 3. Such “implied bids” are referred to throughout the specification and claims but are not innovative or inventive.”
Trading concept
In his submissions, Steven Michener referred to a trading concept as a form of binary option and that the opposed application was merely an application of this well known principle.
“The trading concept presented in the subject patent may be categorised as trading in binary options. A binary option is simply a particular form contract whereby a payment is made to one party or another depending on the outcome of a certain event.”
10. Steven Michener alleged that this trading concept is well known, an early example of which is the Iowa Electronic Market that is described in the Forsythe article (supra). He indicated the application under opposition was merely an application of this well known principle combined with obvious technological enhancements.
11. He explained that the concept of an “implied bid” was also a form of binary contract and his submissions on the “implied bid” also included the trading concept.
Implied Bid
12. The concept of an implied bid is central to Michener’s arguments. At the hearing, he explained it in terms of an equation.
“6 + x =10 implies that x=4”
13. Steven Michener explained that if someone is betting $6 that an event occurs then someone else is betting $4 that the event doesn’t occur. He explained that various terms could be used to explain the same concept and that these alternative expressions can be found in the cited documents.
14. Steven Michener indicated that the coupon system of AU 780942 and the bundles of the Iowa Electronic Market referred to in the Forsythe article (supra) are examples of this language.
Technical Enhancements
15. Steven Michener submitted that the technical enhancements possessed no inventive merit.
that the concept of an “implied bid’ was well known and that implementation of this concept required no inventiveness.
Michener explained that there are thousand of electronic options markets around the world.
That means of transmission or recording electronic data is not important as far as the evidence is concerned.
That the means of matching bids is not inventive. Practically all exchanges assume this.
There may be some smart coding in some of the patent proponents computer software…but no technical enhancements are evident for the patent description
The systems described by the subject patent application are simply a prescription of an agreement between the parties to make certain payments to each other based on the outcome of an event, the financial inputs of each person and their required return, whether expressed directly or implied.
The claims have no basis in inventiveness and in any event the underlying concepts have been well set out in previously cited patents.
Novelty
16. In response to Steven Michener’s submissions, Sporting Exchange argued that the publication dates of the two documents cited AU 738724, and AU 738724 post dated the priority date of the application. Consequently, only section 7(c) applies. This provision of the Patents Act 1990 relates to “whole of contents” and the definition of prior art base is governed by the provisions of Schedule 1 which provides;
prior art information means:
“... information contained in a published specification filed in respect of a complete application where:
a)if the information is, or were to be, the subject of a claim of the specification, the claim has, or would have, a priority date earlier than that of the claim under consideration; and
b)the specification was published after the priority date of the claim under consideration; and
c)the information was contained in the specification on its filing date and when it was published ... “
17. Sporting Exchange submitted that none of these enlivening provisions were adduced by evidence and that even if adduced the documents failed to disclose the claimed invention.
18. While Steven Michener provided an analysis in attachment 8 of his evidence, the analysis lacked depth and merely recited his position that implied bids are known and that the specification under opposition merely implemented this concept. While Steven Michener was praiseworthy of the patent applicant and their system, he maintained throughout the hearing that Sporting Exchange merely provided a technical solution to a known concept and that the technical solution did not provide a quantum of novelty to the invention.
19. Furthermore, the analysis provided by Steven Michener did not specifically address the features of the claims. His position was more philosophical in nature in that the fundament concept underlying the invention was known rather than the invention as defined in the claims lacked novelty.
20. The test for determining whether an invention lacks novelty is the "reverse infringement test" as set out in Meyers Taylor Pty Ltd v Vicarr Industries Ltd, (1977) CLR 228 at page 235 (see also 13 ALR 605 at page 611), where Aickin J stated:
"The basic test for anticipation or want of novelty is the same as that for infringement and generally one can properly ask oneself whether the alleged anticipation would, if the patent were valid, constitute an infringement."
21. Infringement of a claim occurs where "each and every one of the essential integers" of that claim have been taken. See e.g. Rodi and Wienenberger AG v Henry Showell Ltd, (1969) RPC 367 at page 391.
22. As Sporting Exchange pointed out there must be clear and unmistakeable directions to do what the applicant has done.
"To anticipate the patentees claim, the prior publication must contain clear and unmistakable directions to do what the patentee claims to have invented ... A signpost, however clear, upon the road to the patentee's invention will not suffice. The prior inventor must be clearly shown to have planted his flag at the precise destination before the patentee." General Tire & Rubber Co, (1972) RPC 457 at pages 485, 486.
23. No detailed discussion occurred on the relationship between the features of the claimed invention and the citations. The analysis provided in attachment 8 to Steven Michener’s declaration was more over-arching and did not provide a detailed analysis of the citations in relation to the claims. In my view, there was a lack of evidence and argument in relation to this ground of opposition. While the concept of an “implied bid” could be acknowledged as known, this falls far short of providing the required evidentiary standard for demonstrating lack of novelty.
24. In relation to the “enlivening provision” as submitted by Sporting Exchange, I am of the view that there is no need to provide an analysis of these issues as the documents are clearly not relevant for the purposes of assessment of lack of novelty of the claimed invention.
25. The remaining document that Steven Michener relied upon was the Iowa Electronic Market article (the Forsythe article). While this was not raised as a novelty objection, for the sake of completeness, I reviewed it and can only comment that it clearly does not disclose the features of the claimed invention.
26. In my view, Steven Michener has failed to show that the citations deprive the application of novelty. While it may be accepted that the concept of implied bids is known, this does not invalidate every patent application which uses this concept. Consequently, as there are no further documents that are alleged to demonstrate lack of novelty of the claimed invention, the claims possess novelty and I find that this ground of opposition is not made out.
Inventive Step
27. As noted before, the citations were published after the priority date of the claims. From section 7 of The Patents Act 1990 it is clear that these documents are not relevant for the purposes of inventive step.
28. Section 7 provides:
"(2) .... an invention is taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim, whether that knowledge is considered separately or together with the information mentioned in subsection (3).
(3) The information for the purposes of subsection (2) is:
(a) any single piece of prior art information; or
(b) a combination of any 2 or more pieces of prior art information;
being information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood, regarded as relevant and, in the case of information mentioned in paragraph (b), combined as mentioned in that paragraph."
29. The prior art base for inventive step is a subset of the prior art base for novelty. It includes all prior art forming the prior art base for novelty except for Australian patent documents which can only be used for an objection of lack of novelty on a "whole of contents" basis, which is the case here.
30. Therefore, it is not permissible to combine the contents of the Iowa Electronic Market article with the cited patent documents. In view of these documents, the claimed invention possesses an inventive step.
Common General Knowledge
31. The remaining evidence in the opposition relates to the email from Professor Forrest dated 11 October 2007 and the Iowa Electronic Market article (supra).
32. In relation to the use of common general knowledge, the Patents Office Manual of Practice and Procedures states for information that is contained in an article to become common general knowledge it must be “generally known and accepted without question by the bulk of those who are engaged in the particular art”.
"In my judgement it is not sufficient to prove common general knowledge that a particular disclosure is made in an article, or a series of articles, in a scientific journal, no matter how wide the circulation of that journal may be, in the absence of any evidence that the disclosure is accepted generally by those who are engaged in the art to which the disclosure relates. A piece of particular knowledge as disclosed in a scientific paper does not become common general knowledge merely because it is widely read, and still less merely because it is widely circulated. Such a piece of knowledge only becomes common general knowledge when it is generally known and accepted without question by the bulk of those who are engaged in the particular art; in other words, when it becomes part of their common stock of knowledge relating to the art."
and
"It is certainly difficult to appreciate how the use of something which has in fact never been used in a particular art can ever be held to be common general knowledge in the art."
British Acoustic Films Ld v Nettlefold Productions (1936) 53 RPC 221 at page 250, and affirmed in General Tire & Rubber Company v Firestone Tyre and Rubber Company Ltd, (above) with the qualification that "without question" should read "generally regarded as a good basis for further action".
33. There is no evidence that the contents of the email and the Forsyth article (supra) formed part of the common general knowledge in the art in Australia before the priority date of the opposed claims.
34. In relation to the Iowa Electronic Market article, it is my view that while it provides support that the concept of implied bids was well known before the priority date, I note that there are no documents in evidence to which this could be added in arriving at the conclusion that the claimed system, method and computer programs of the invention lacks an inventive step or was obvious. Consequently, I am of the view that this ground of opposition has not been made out.
CONCLUSION
35. In summary, all of the grounds of the opposition have not been established and subject to any appeal, I direct that the application proceed to sealing.
COSTS
36. There are no circumstances that would indicate that a variation of the award should occur. Accordingly, I award costs according to Schedule 8 against the opponent Stephen Arthur Michener.
GM COX
Delegate of the Commissioner of Patents
26 September 2008
Patent attorneys for the applicant : FB Rice & Co Melbourne
Patent attorneys for the opponent : Donna Hall Woodward law Offices, Lower Hutt New Zealand
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