Swiss Reinsurance Company - [2013] APO 24

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Swiss Reinsurance Company [2013] APO 24

Patent Application: 2010200771

Title:Computer-based method for assessing competence of an organisation

Patent Applicant:  Swiss Reinsurance Company
Delegate:  Xavier Gisz
Decision Date:  13 March 2013
Hearing Date:  by written submissions made on 17 January 2013
Catchwords:  PATENTS - examiner’s objections – the invention relates to assessing the competence of an organisational unit – the invention is not considered a manner of manufacture – no patentable subject matter disclosed – application refused

Representation: Patent applicant: Spruson & Ferguson

IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2010200771

Title:Computer-based method for assessing competence of an organisation

Patent Applicant: Swiss Reinsurance Company
Date of Decision: 13 March 2013
DECISION
Patent application 2010200771 is refused pursuant to subsection 49(2) of the Act.
REASONS FOR DECISION

This matter concerns examiner’s objections in respect of the application and whether I should exercise the Commissioner’s power to refuse the application under subsection 49(2) of the Patents Act 1990.
Background
Australian patent application 2010200771 is a divisional (i.e. the application was made under the provisions of section 79B) from Australian application 2005239015. The first of six adverse examination reports was issued on 24 June 2011. The final date for acceptance of this application is therefore 24 March 2013. The two outstanding issues raised in the sixth report were: a) the allowability of the proposed amendments of 15 November 2012 and b) the invention not being a ‘manner of manufacture’. The matter was set for hearing and the applicant provided the written submissions on 17 January 2013.
I note that a divisional application of the present application, Australian application 2013200243, was filed on 17 January 2013. That divisional application discloses the same subject matter as the present application. While the option of filing divisional applications in the present circumstances is clearly permitted by the legislation, I share the concerns expressed by the delegates in Network Solutions, LLC [2011] APO 65 at [3], Christopher Gary Parmenter [2011] APO 26 at [71]-[72] and Discovery Holdings Limited [2011] APO 56 at [4], that the practice of filing divisional applications in anticipation of adverse Office decisions appears to be contrary to the public interest in the prompt resolution of patent rights as well as effective use of Patent Office resources.
The specification
The subject matter of the application concerns a computer-based method for assessing competence of an organization.
The specification as filed describes the problems with the existing prior art as follows:
“While there are almost as many methodologies for assessing an organization as there are business consultants, the results provided by these methodologies typically consists in lengthy and complex reports. Generally, reading these reports is time consuming if not difficult. Consequently, the reports are often not read completely and the result of the assessment is not communicated clearly to representatives of the respective organization.
Moreover, based on such reports, it is very difficult to compare objectively assessments of different (competitive/peer) organizations.
Typically, organizations comprise multiple organizational units with different levels and areas of responsibilities and expertise. Generally, conventional methods for assessing competence of an organization fail to produce results, which make possible direct comparison of the competence levels of all organizational units involved.”
The specification as filed provides the object of the invention as follows:
“It is an object of this invention to provide a computer-based method and a computer program product for assessing competence of an organization, which do not have the disadvantages of the prior art. In particular, it is an object of the present invention to provide a computer-based method and a computer program product for assessing competence of an organization comprising multiple organizational units.”
Proposed amendment
The most recent proposed amendments were filed on 15 November 2012. The amendments comprise 26 claims including 5 independent claims. For the purposes of analysing the ‘manner of manufacture’ of the invention it is sufficient to consider the first independent claim which is representative of the defined invention. Claim 1 is as follows:
1. A rule based expert system for automatically rating and assessing the competence levels between organizational units and automatically monitoring specific aspects of an organization by detecting shortcomings and needed improvements, the system comprising a computer processor communicating with a computer memory storing a computer program configured to direct the computer processor to perform a method for assessing competence of an organization comprising multiple organizational units corresponding to different groups of individuals, each said group of individuals performing a different function within the organisation, the method comprising the steps of:
selecting organizational units, wherein a defined set of questions is divided into different subsets, and the different subsets are activated or deactivated individually for the selected organizational units in the computer;
determining a score related to an answer of a question of a subset by means of an automated expert system of the computer by rating the data about the respective answer, wherein a score is assigned to each question of an activated subset by means of the computer, and wherein deactivated subsets are not included in calculating the competence levels of the organizational units,
storing scores, by the computer, the scores corresponding to answers from each of the organizational units in response to a set of questions;
assigning by the computer each of said scores to the respective one of the organizational units and to the respective one of the defined questions, wherein the stored scores are weighted with weighting factors determined by the computer based on the organizational unit and the defined question assigned to the respective score;
determining by the computer total scores for the organizational units, each of the total scores being determined by adding up the weighted scores assigned to the respective organizational unit;
determining by the computer total weighted scores for the organizational units, each of the total weighted scores being determined by adding up weighted maximum scores assigned to the questions for each organizational unit, the weighted maximum scores each depending on the respective organizational unit and the respective question;
determining by the computer the competence levels of the organizational units, scaled to a scale of competence defined by a numerical range of zero to a maximum competence value, by multiplying the maximum competence value by a ratio of the total score determined for the respective organizational unit to the total weighted score determined for the respective organizational unit; and
generating for the automatic monitoring by the computer a graphical representation in one common graph of the competence levels calculated for the organizational units, so that the competence levels, the deficiencies of the competence levels from the maximum competence, and the differences between the competence levels of the organizational units are visualized and assessed by the computer.
Construction of the claims
The principles to be applied in construing a patent specification are well settled in law (Flexible Steel Lacing Company v Beltreco Ltd [2000] FCA 890 at [70] - [81]; (2001) 49 IPR 331 at 347 [70] - [81], Pfizer Overseas Pharmaceuticals v Eli Lilly and Company [2005] FCAFC 224 at [247] - [250]; 68 IPR 1 at 52-54 [247] - [250]). Briefly and most relevantly, the claims, cast in precise language, mark out the legal limits of the monopoly granted by the patent. While the claims are construed in the context of the specification as a whole, it is not legitimate to vary the boundaries of monopoly as fixed by the words of the claim, by adding words or glosses drawn from other parts of the specification. However, if an expression in the claims is unclear or ambiguous, it is permissible to resort to the body of the specification to define or clarify the meaning of words used in the claims (Interlego AG v Toltoys Pty Ltd (1973) 130 CLR 461 at 479).
The last paragraph of independent claim 1 of the amended claims is as follows:
generating for the automatic monitoring by the computer a graphical representation in one common graph of the competence levels calculated for the organizational units, so that the competence levels, the deficiencies of the competence levels from the maximum competence, and the differences between the competence levels of the organizational units are visualized and assessed by the computer.
The examiner noted in the sixth adverse report that the feature of the competence levels being “assessed by the computer” (the last four words of claim 1) is not disclosed in the specification as filed.
The attorney argues in their submissions:
“… [I]t is abundantly clear in the specification that the competence levels are determined or assessed by the computer and not for example by a human.”
It is clear from the description that the system gathers data, performs calculations, and produces a graphical representation of the outcome of the calculations. The purpose of the graphical representations is to make the competence levels “visible at one glance”. However, it is not immediately apparent from the invention described in the filed specification whether the assessment is performed by a person or by a computer, i.e. whether the computer calculations are themselves an assessment.
The attorney argued in their submissions that the phrase “assessed by the computer” should be construed as follows:
“If however the term “assessed” is found to be the basis of this objection, it is submitted that the term "assessed by the computer" could simply be replaced by the term "determined by the computer" or the like.”
The word ‘assess’ is relevantly defined in the Macquarie Dictionary:
4. to measure or evaluate.
Thus the word ‘assess’ can mean either a methodical process such as measuring or a conscious process such as evaluation or judgement. In the context in which the word is used, it is clear that the word ‘assess’ is a methodical process and thus I am satisfied that the phrase “assessed by the computer” should be construed as “determined by the computer”.
Allowability of amendments
Section 102 of the Patents Act covers the allowance of amendments. Subsections 102(1) relevantly states:
(1) An amendment of a complete specification is not allowable if, as a result of the amendment, the specification would claim matter not in substance disclosed in the specification as filed.
For an amended claim to claim matter in substance disclosed in the specification as filed, that claim must in effect be fairly based on the specification as filed. The Federal Court has accepted the principle of “a real and reasonably clear disclosure” for testing an amended claim against the original disclosure. See for example RGC Mineral Sands Pty Ltd v Wimmera Industrial Minerals Pty Ltd, 42 IPR 353.
In light of the claim construction of the claims in the paragraphs above, I am satisfied that the feature of competence levels being assessed (i.e. determined) by the computer is in substance disclosed in the specification as filed. Consequently the proposed amendments are considered allowable.
Manner of manufacture
Relevant law
Subsection 18(1)(a) provides that an invention is a patentable invention if, so far as claimed in any claim, it is “a manner of manufacture within the meaning of section 6 of the Statute of Monopolies”. The concept of manner of manufacture has developed over time, and is not readily reduced to a simple formula. The leading consideration of manner of manufacture is the decision of the High Court in National Research Development Corporation v Commissioner of Patents [1959] HCA 67, 102 CLR 252. The Court made the observation (at [14], 269) that it is necessary to look at the concept of what is patentable:
"The inquiry which the definition demands is an inquiry into the scope of the permissible subject matter of letters patent and grants of privilege protected by the section. It is an inquiry not into the meaning of a word so much as into the breadth of the concept which the law has developed by its consideration of the text and purpose of the Statute of Monopolies. … 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?' "
The existing case law provides examples of various subject matter that does, and does not, constitute a manner of manufacture. In National Research Development Corporation (hereafter referred to simply as NRDC) a method for eradicating weeds was held to be patentable subject matter. The Court laid down the well known requirement that a process must produce “an artificially created state of affairs” in order to be held patentable (at [25], 277). This formulation has been applied by the Federal Court in a number of cases. Of note is Grant v Commissioner of Patents [2006] FCAFC 120, 234 ALR 230 where the court at [30], 237 referred to "any artificial state of affairs, in the sense of a concrete, tangible, physical, or observable effect". Further, the effect produced must be "material" (NRDC at [22], 275) or a "useful effect" (International Business Machines Corporation v Commissioner of Patents [1991] FCA 625, 105 ALR 388 at [14], 394). In CCOM (supra), the Federal Court in further referring to the NRDC (supra), summarised the requirement of manner of manufacture as "a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the field of economic endeavour". The Court observed in Grant at [26] that “The fact that a method may be called a business method does not prevent it being properly the subject of letters patent; see Catuity at [125]–[126]”. Most recently, Research Affiliates LLC v Commissioner of Patents [2013] FCA 71 found that the mere utilisation of a computer in an invention does not, in itself, confer patentability.
Analysis
The invention
The description as filed states in the background of the invention:
“For any organization, be it an institution in the service industry, in the manufacturing industry, or in the government, knowing its competence level is essential for determining areas of deficiencies and opportunities for improvement, for assessing compatibility with partners, or for comparisons with competitors. The term "competence" relates to sufficiency and adequacy of quality, expertise, skill, and sophistication in various aspects of an organization including aspects relating to management of resources and know-how, aspects relating to management of documentation and information, and aspects relating to processes, workflows, and organizational set-up.”
The main steps involved in calculating the competence is found in the following excerpts from the description:
“In step S5, one or more defined questions are provided as output. In user interface 6, the questions are provided in the form of text displayed in text fields 661. In the example of Figure 3, multiple questions are displayed concurrently in scroll window 66. Scroll window 66 is controlled by means of scroll bar 67. The questions could also be provided in the form of audible spoken text. The questions are stored in memory 12 or on a data carrier inserted in computer 1. As is illustrated in Table 1, each question includes an identification q₁, q₂, ... q_n and content t₁, t₂, …, t_n. The content t₁, t₂, …, t_n includes alphanumeric text data, audio data, or encoded speech information.”
“In step S6, answers are received for each of the questions provided as output in step S5. For example, the questions are received by a human interviewer. The answers could also be received and stored by computer 1 in the form of data. For example, answer date includes text entered into an input field (not illustrated) of user interface 6, or audio or encoded speech information entered by means of a microphone, audio processor, and speech processor.”
“In step S7, the answers received in step S6 are rated. In user interface 6, for answers received in step S6, scores ranging from low ("1 ") to high ("5") can be assigned manually to the respective questions. In the example of Figure 3, scores are entered by clicking one of the radio buttons 65 assigned to the questions. For example, the answer received for the question listed at the top of scroll window 66 was rated with a medium ("3") score. Answer data stored by computer 1 in step S5 could also be rated automatically by the computer 1, for example by means of a rules based expert system.”
“In step S8, computer 1 stores the scores assigned to answers received for specific questions in memory 12. As is illustrated in Table 2, each score is assigned to the question q₁, q₂, ..., q_n for which the particular answer was received. Moreover, information for identification of the person p_i, p₂, ... , p_n providing the answer and the organizational unit represented by that person is assigned to each score.”
“In step 511, computer 1 calculates and stores the total score for the organizational unit selected in step 53. The total score of an organizational unit is calculated in computer 1 by adding up all scores assigned in step S8 to the organizational unit.”
“The competence level of the organizational unit is calculated in computer 1 by scaling the total score of the organizational unit calculated in step S11 to a scale of competence ranging from zero to maximum competence (e.g. 0-100).”
Does the utilisation of a computer confer patentability?
The submissions state:
“The invention, upon a fair reading of the specification, is about use of the computer to automate calculation and weighting of scores for assessment of an organisation’s competence by human intervention.
…
Concerning the claimed invention, a man skilled in the art would never follow the process steps, as given by the features of the independent claim 1, for assessing the competence level of an organization unit, unless the steps were intended for use with computer means.”
I can see nothing in the specification that indicates the process could not be performed by a human. Although such a process would be laborious, there is nothing intrinsically impossible about doing so. The questionnaires could be completed on paper and the scores weighted and the competence levels calculated by hand. The representation of the data as graphs could be drawn with pen and paper.
In Research Affiliates (supra) it was stated at 70 and 72:
“The method of the claimed invention does not involve a specific effect being generated by the computer. The mere use of a computer necessarily carries with it the writing of information into the computer's memory. There is a stark contrast between a computer-generated curve, or a representation of Chinese characters, or the writing of particular information on a smart card, on the one hand, and the quite unspecific index, on the other. There is no practical application in the method of the claimed invention for the improved use of computers. The effect of the implementation of the method is not to improve the operation of or effect of the use of the computer.
…
The implementation of the method of the claimed invention by means of a computer, at the level articulated in claim 1, is no more than the modem equivalent of writing down the index on pieces of paper. On the face of the Specification, there is no patentable invention in the fact that the claimed method is implemented by means of a computer. The Specification asserts a patentable invention, not in the use of the computer, but in the particular series of steps that give rise to the generation of the index. Those steps could readily have been carried out manually. The aspect of computer implementation is nothing more than the use of a computer for a purpose for which it is suitable. That does not confer patentability.”

The facts in this situation are closely analogous to those in Research Affiliates, and thus a similar conclusion is drawn; the mere utilisation of the computer in the invention does not, in itself, confer patentability.
Does the invention have utility in a field of economic endeavour?
An invention is a manner of manufacture if "a mode or manner of achieving an end result which is an artificially created state of affairs of utility in the field of economic endeavour" as expressed in CCOM (supra).
The end result of the invention is providing information about the competence level of the organisational units. The purpose of this information is best articulated at page 5 lines 7 to 9:
“Without the necessity of reading a written report, deficiencies of the competence levels and differences in the competence levels of different organizations and their organizational units are visible at one glance.”
I consider that the end result of the invention (and the mode or manner of achieving it) does not have direct utility in a field of economic endeavour. Instead, the competence level is merely information presented (as a graphical representation) for review by a person. The information does not necessitate action or have a direct effect on how the organisation is managed.
The facts in the present case are closely analogous to those in Research Affiliates (supra) where it was stated at paragraph 71:
“The case propounded by Research Affiliates depends upon the proposition that information of economic significance, once entered into or produced by means of a computer, becomes an economically valuable artificially created state of affairs, and thus patentable. That proposition must be rejected.”
Similarly to Research Affiliates, the fact that the information produced may be used in the management of a business does not necessarily imply the invention has utility in a field of economic endeavour. In this case, there is simply an insufficient connection between the determination of a ‘competence level’ and its economic significance. Consequently, the invention does not meet the requisite level of utility in a field of economic endeavour.
Does the system provide a ‘concrete, tangible, physical, or observable effect’?
The end result of the invention is in the quantification of the ‘competence level’. The lack of objectivity in determining the competence of an organizational unit in the prior art is alluded to in the description as filed which states at page 2, lines 24 to 25:
“… [T]here are almost as many methodologies for assessing an organization as there are business consultants…”

I am not satisfied that the invention provides a more objective measure of competence levels than that of the prior art. The utilisation of an algorithm in the system implies the result can be determined in a repeatable manner, however it does not necessarily imply or guarantee the objectivity of the result.

The standard for patentability articulated in Grant (supra) was that the invention in a method patent must produce an ‘artificial state of affairs’ that is a concrete, tangible, physical, or observable effect. Although the present invention is directed to system rather than a method, Grant (supra) is clearly relevant since the present invention is essentially a (generic) computing device for performing a particular method.
The result of the invention, the determination of a ‘competence level’, is plainly not a concrete, tangible, or physical effect. I consider the paucity of information about the objectivity of the output of the invention (i.e. the ‘competence level’) to be suggestive that the invention does not provide a genuinely ‘observable effect’ since objectivity is an intrinsic requirement of something being observable.
Manner of manufacture conclusion
I have considered three lines of enquiry regarding the patentability of the invention. These lines of enquiry all indicate that the invention is not a manner of manufacture. Firstly, the utilisation of the computer in the system does not, in itself, confer patentability. Secondly, the result of the invention (the information presented to a person) does not have a requisite level of utility in an economic field of endeavour. Thirdly, the uncertainty about whether the output of the invention is objective suggests the invention does not provide an ‘observable effect’. Overall, I am not satisfied that the invention provides a manner of manufacture.
Conclusion
I have found that there are lawful grounds for objection to the present patent application. In particular, the invention defined in the claims of the proposed amendment is not considered a manner of manufacture.
Furthermore, I consider that no patentable subject matter is disclosed in the specification such that a further opportunity for the applicant to propose amendments would not serve any useful purpose.
Consequently, pursuant to subsection 49(2) of the Act, I refuse the application.
If the applicant wishes to appeal this decision, they may do so to the Federal Court within 21 days of the date of this decision, pursuant to section 51 of the Act.
Xavier Gisz
Delegate of the Commissioner of Patents