Venkat Thandra and Ahmed Farouk Shaaban
[2021] APO 42
•28 October 2021
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Venkat Thandra and Ahmed Farouk Shaaban [2021] APO 42
Patent Application: 2015284127
Title:Improved system and method for allocating value to timekeeper work
Patent Applicant: Venkat Thandra and Ahmed Farouk Shaaban
Delegate:Dr S. J. Smith
Decision Date: 28 October 2021
Hearing Date: Written submissions filed on 20 May 2021
Catchwords: PATENTS – examiner’s objection – manner of manufacture – business innovation – no patentable subject matter identified in specification – application refused
Representation: Patent attorney for the applicant: Murray Trento & Associates Pty Ltd
IP AUSTRALIA
AUSTRALIAN PATENT OFFICE
Patent Application: 2015284127
Title:Improved system and method for allocating value to timekeeper work
Patent Applicant: Venkat Thandra and Ahmed Farouk Shaaban
Date of Decision: 28 October 2021
DECISION
The claimed invention is not for a manner of manufacture.
I refuse the application.
REASONS FOR DECISION
Background
Patent application 2015284127 (the application) in the name of Venkat Thandra and Ahmed Farouk Shaaban (together, the applicant) was filed on 30 June 2015 under the provisions of the Patent Cooperation Treaty. The application claims priority from US 61/998,577, filed on 30 June 2014, and US 14/756,685, filed on 29 June 2015.
Examination was requested on 9 May 2019. A first examination report was issued on 24 February 2020 raising objections of lack of manner of manufacture and inventive step. A response to the examination report was filed on 29 January 2021, and a second examination report, maintaining only the objection of lack of manner of manufacture, was issued on 1 February 2021. On 18 February 2021 the applicant asked to be heard in relation to the outstanding objection.
Because the application was filed after 15 April 2013 it is governed by the Patents Act 1990 (the Act) as amended by the Intellectual Property Laws Amendment (Raising the Bar) Act 2012. Accordingly, the standard of proof that applies to the examination of the present application is the balance of probabilities – if satisfied on the balance of probabilities that the application complies with the Act I must accept the application.[1] If I am not so satisfied, then I can refuse the application.[2]
[1] Section 49 of the Act as amended.
[2] The Explanatory Memorandum, Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 at page 54.
Pursuant to regulation 13.4(1)(g) when the Commissioner gives an applicant an opportunity to be heard in relation to an examiner’s objection and issues a written decision, the period for gaining acceptance of the application may be extended until three months from the date the decision is issued. Of course, this regulation is of no relevance if the application is refused.
The specification
Amendments to the specification were proposed on 29 January 2021. No objection has been raised to the allowability of the amendments. In this decision I am considering the specification as proposed to be amended, and references to the specification are to the specification as proposed to be amended.
The specification relates to improved billing and timekeeping systems and references a multitude of prior art billing and timekeeping systems as the background of the invention. The invention is particularly described as consisting of “an improved system and method for billing and collections for allocating value of time and work billed by timekeepers according to weighted values assigned to their work which were created according to a predetermined set of rules” and an object of the invention is identified as:
“to provide an improved System and Method for normalizing or leveraging the value of Time billed for Timekeepers for the purpose of profit sharing at the end of each fiscal year which utilizes as a factor, the number of billed and collected hours by each timekeeper that are then assigned to a client originating partner.”
It is explained that:
“At most professional firms, there are Timekeepers who bring clients into the firm, and therefore their hours are more valuable than those that do not. Further, some clients always pay on time and 100% of the bill, while others may take an average of 60 or more days to pay, and then they want to have discounts of up to 25% or more. Those are not very valuable clients. Other clients do not cooperate in litigation, do not show up to meetings when asked, their depositions have to be often rescheduled, they do not produce documents when asked, and all of these types of behaviors can contribute significantly to the risk a law firm undertakes when representing such a client.
By implementing a system of profitability for partners of the firm based upon client promptness in payment and profitability, the firm can encourage all its employees to tend to work on those clients that pay 100% of their bill in a timely manner for the most profitable of matters. It will discourage working on clients that take a long time to pay (e.g. 90 days or more), and it can also discourage working on difficult clients that are likely to be sanctioned in court, or are likely to sue for malpractice.”
A preferred embodiment is described as follows:
“In one preferred embodiment of the present invention, the Timekeeper Leverage Ratio may be automatically calculated by the system by merely keeping track of certain facts regarding each client. For example a client, can be rated on a 10 point system, with 10 being the highest rating a client may have. Clients rated a 10 will have twice the value of the average client rated a five which is average and for which 50% of the firms (sic) clients will either be above or below. Clients rated a 10 will have double the value over other clients who are average or normal in their behaviors and payments. Timekeepers that generate above average profitability in large volumes of highly profitable work, will be given the highest values for determining their leverage and share of the firm’s profits at year’s end. Conversely, Timekeepers that have clients who pay late, or do not pay at all, or who constantly cut the bills, will have low client ratings and will poorly share in the firm’s profit at years end.”
The invention is explained by reference to two examples. Example 1 describes how partners may be ranked and assigned point values based on criteria of hours collected v hours billed, lateness of payments and total collections, and assigned demerits based on client behaviour. The point values can then be used to determine a profit share. Of particular relevance to the invention as claimed is Example 2. As shown in the Table below, Example 2 demonstrates how a profit of approximately $100,000 might be split up between five partners.
The specification explains:
“In Example 2, the partners A to E have been ranked according to their total collections, which was $850,150 and their clients have been ranked according to various criteria found on the internet, including but not limited to: Better Business Bureau rating, Google Business, Yelp, and the like. In addition, the Partner’s AVVO or other lawyer ranking was considered in assessing a Client Leverage. This is but one Billing Entity Factor to use in divvying up the firm’s profits. There are various ways in which to leverage profits, however the most common criteria used in law firms are 1) the strength of the client, whether the client is a fortune 100, fortune 500, and then a client may be ranked by total income for the year and/or total employees. Likewise, the company or firm may find some industries to be more profitable than others. At the time of intake, the system will be provided with the SIC or Standard Industrial Code for the new Client, and the firm can then rank individual or groups of SIC’s to encourage its billing entities to seek out and retain business in those types of industries because they are more profitable to the firm. Similarly, this can also be done with the Activity or Area of Law for the new or existing Client or Matter undertake.”
The treatment of flat fee arrangements is also explained.
The specification goes on to state that:
“Many online systems also rank the credit strength of a particular business entity. In such a situation, the present invention can ping these websites, retrieve information regarding the stability of a business and use that criteria in the normalization or leveraging of a business. For example, the present inventive system can ping Fortune Magazine to determine if the business is ranked in the top 500 businesses and a value can be assigned to leverage based upon that ranking. Further, the present inventive systems can ping Google and Yelp and rate businesses based upon those consumer ratings. If consumers vote a business low, it may have problems with sales or attracting new customers based on those ratings. Likewise, the present inventive system may ping the Better Business Bureau for its ratings of the client.
In such a manner, the present invention utilizes a wide variety of information in order to provide flexibility to a professional firm to encourage its partners to seek out, recruit and maintain the highest quality businesses that are stable and most likely to pay the bill quickly in full each billing cycle.”
The claims
The specification ends with 20 claims. Claim 1, directed to a system, and claim 11, directed to a method, are the only independent claims. Claim 1 reads as follows:
A system including a CPU and data storage, wherein the CPU is operative to:
receive, a Billing Entity ID corresponding to a Billing Entity for a client;
automatically ping a third party website by sending a signal from the CPU to the third party website requesting information from the third party website regarding the stability of the client and retrieve from the third party website the information regarding the stability of the client;
create a predetermined set of rules to calculate a Billing Entity Factor which is proportional to the time collected divided by the time billed by a Billing Entity, and adjust the Billing Entity Factor based on the information regarding the stability of the client; and
determine profit allocation for the Billing Entity based on the adjusted Billing Entity Factor.Claim 11 recites a method in similar terms to the system of claim 1:
A method implemented by a computer including a CPU and data storage, the method including:
receiving, by the CPU, a Billing Entity ID corresponding to a Billing Entity within a company;
logging, by the CPU, the time Billed and the Time Collected by the Billing Entity for a client,
automatically pinging a third party website by sending a signal from the CPU to the third party website requesting information from the third party website regarding the stability of the client and retrieving from the third party website the information regarding the stability of the client;
creating, by the CPU, a predetermined set of rules to calculate a Billing Entity Factor which is proportional to the time collected divided by the time billed by a Billing Entity and adjusting the Billing Entity Factor based on the information regarding the stability of the client; and
determining, by the CPU, profit allocation for the Billing Entity based on the adjusted Billing Entity Factor.No issues with the construction of the claims have been raised during examination, and I am satisfied that in the context of the specification they are sufficiently clear.
Essentially, these claims define a system and method wherein a Billing Entity (e.g. a fee earner within a professional services firm) bills time to a client, a CPU receives the Billing Entity ID corresponding to the Billing Entity for a client and the CPU automatically pings a third party website to request and retrieve information regarding the stability of the client (in the context of the specification I understand stability to refer to financial stability, indicated by, for example, credit strength, Fortune 500 ranking, or consumer ratings). The CPU then creates a predetermined set of rules to calculate a Billing Entity Factor (proportional to the time collected divided by the time billed by the Billing Entity) and adjusts the Billing Entity Factor based on the information regarding the stability of the client. As indicated in the specification, this allows for time spent on more desirable clients to be valued more highly than time spent on less desirable clients. Finally, the CPU determines the profit allocation for the Billing Entity based on the adjusted Billing Entity Factor.
The appended claims define further details of the information used to create the predetermined set of rules to calculate the Billing Entity Factor and identify specific third party websites to be pinged. The complete claim set is reproduced at Annex A.
The objection
The objection of lack of manner of manufacture maintained in the second examination report is the subject of the applicant’s request to be heard and reads as follows:
Claims 1-20 do not define a manner of manufacture within the meaning of Section 18(1)(a) of the Patents Act 1990. From reading your application as a whole the substance of the alleged invention is a scheme for determining profit allocation base (sic) on several computer variables representing generic financial parameters.
Key factors to considering patentable subject matter identified by the Full Court in Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177 at [099] include whether the contribution of 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.”
The present invention solves the problem of establishing generic mapping relationship between the computer variables dubbed “(generic) stability of the client”, “(an unspecified) set of rules”, “Billing entity factor”, “profit allocation” and the use of an generic “adjustment function”. This is not a problem of technical nature.
Given generic description of the computing environment comprising a CPU and “third party website”, supposedly equipped with generic systemic and networking software, I do not consider that your application involves more than a generic utilisation of well-known functions of a computer, including the particular arrangement/combination of functions, and therefore does not involve any invention or ingenuity in any program or operation of a computer, or implementation by a computer to operate the method. Consequently, as per Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 and Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177 the alleged invention is not a manner of manufacture.
Applicant arguments were considered in great detail but were found not persuasive. Claims merely crunch the abstract financial data read into the several computer variables, which are put into an arbitrary correspondence mapping, partially set by an uncharacterized predetermined set of rule, which cannot be construed as anything more than an arbitrary policy set by a financial policy maker.
The integer “billing entity factor” is stated to be proportional to the time collected divided by the time billed by billing entity. However this appears to be nothing more that a convenient parameter representing a credibility of the entity. Moreover the “predetermined set of rules” is not specified (what rules?), so that nothing can actually be calculated.
In conclusion, no problem has been solved (let alone technical) and no system made per prescription of claim 1 could ever be able to execute any calculation, not even a financial one, to produce any meaningful result. Automatically pinging a third party by sending a signal, is a well-known procedure when checking someone (sic) financial viability, so that no technical substance of the invention can be brought in by this part of the claim 1. As explained above, the substance of the invention is in the crunching of the generic financial data, read into different computer variables, loosely organized into an incompletely defined scheme. In fact, the scheme itself looks more like a qualitative, preliminary sketch of what the desired program should do, but without actually achieving that goal.
Similar considerations apply to all other claims.
The law on manner of manufacture
It is a requirement of paragraph 18(1)(a) of the Act that an invention be a manner of manufacture within the meaning of section 6 of the Statute of Monopolies. The classic definition of “manner of manufacture” is set out in National Research Development Corporation v Commissioner of Patents:[3]
“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?’”[4]
[3] [1959] HCA 67; 102 CLR 252 (‘NRDC’).
[4] NRDC at 269, [14].
The High Court went on to set out a test in terms relevant to the facts of that case:
“a process, to fall within the limits of patentability which the context of the Statute of Monopolies has supplied, must be one that offers some advantage which is material, in the sense that the process belongs to a useful art as distinct from a fine art ... that its value to the country is in the field of economic endeavour.”[5]
and
“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.”[6]
[5] NRDC at 275, [22].
[6] NRDC at 277, [25].
However, the High Court has made clear that there is no precise formulation to be applied unthinkingly to answer the question of manner of manufacture:
“This Court in NRDC did not prescribe a well-defined pathway for the development of the concept of ‘manner of manufacture’ in its application to unimagined technologies with unimagined characteristics and implications. Rather, it authorised a case-by-case methodology.”[7]
[7] D’Arcy v Myriad Genetics Inc [2015] HCA 35; 258 CLR 334 at [23] (‘Myriad’).
That case-by-case methodology must have regard to the substance of the claimed invention, and not simply the form of the claim.[8] This point was made succinctly in Myriad by Gageler and Nettle JJ:
“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.”[9]
[8] Myriad at [6], [88].
[9] Myriad at [144].
In Commissioner of Patents v RPL Central Pty Ltd[10] the Full Court of the Federal Court said the same thing in the context of an invention that was in substance a scheme:
“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. Where the claimed invention is to a computerised business method, the invention must lie in that computerisation. It is not a patentable invention simply to ‘put’ a business method ‘into’ a computer to implement the business method using the computer for its well-known and understood functions.
Is the mere implementation of an abstract idea in a well-known machine sufficient to render patentable subject matter? Is the artificial effect that arises, because information is stored in RAM and there is communication over the Internet or wifi, sufficient? Does any physical effect give rise to a manner of manufacture? Are the mere presence of an artificial effect and economic utility, without more, sufficient to determine manner of manufacture?
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.”[11]
[10] [2015] FCAFC 177 (‘RPL Central’).
[11] RPL Central at [96]-[98].
In Research Affiliates LLC v Commissioner of Patents[12] the Full Court of the Federal Court stated:
[12] [2014] FCAFC 150 (‘Research Affiliates’).
“When the authorities in Australia prior to and including Grant are considered, a consistent approach emerges as to the relevance of:
· a distinction between a claim to a business scheme and claims to methods which in practice result in a new machine or process or an old machine giving a new and improved result – that is, a distinction between mere intellectual information and a method that affects the operation of an apparatus in a physical form (Grant at [18]);
· the fact that the claimed steps are foreign to the normal use of computers, such as the production of an improved curve image (IBM 2 at 225-226);
· the particular mode or manner of achieving an end result which is an artificially created state of affairs, such as the storage of data as to Chinese characters and retrieval of graphic representations to enable word processing (CCOM at 295);
· whether part of the invention is an inventive method which includes the application and operation in a physical device (Grant at [30]);
· the distinction drawn in Catuity, as explained in Grant (at [24]), between ‘a technological innovation which is patentable and a business innovation which is not’. In Catuity, Heerey J did not accept that a physically observable effect was necessarily required (at [128]) but the Full Court in Grant expressed the opinion that a physical effect in the sense of a concrete effect or phenomenon, or manifestation or transformation is required (at [32]).
· the fact that a physical effect is required does not make it sufficient to confer patentability;
· the fact that a method may be called a business method does not prevent it being properly the subject of letters patent (Grant at [26] citing Catuity at [125]-[126]);
· the fact that for claimed computer programs, the courts look to the application of the program to produce a practical and useful result, so that more than ‘intellectual information’ is involved (Grant at [29]). A method that is in the nature of directions for use does not constitute an invention or a manner of manufacture in the absence of some previously unrecognised property of an aspect of the method (Grant at [29]).”[13]
[13] Research Affiliates at [94].
In considering the substance of the invention the Full Court went on to say:
“In the context of the claim, the significance lies in the content of the data rather than any specific effect generated by the computer. The computer-implementation is an essential integer of the claimed process. That is, of course, important. It is of particular importance in the assessment of, for example, novelty and infringement. However, in examining whether a claimed invention is properly the subject of letters patent, it is necessary to look not only at the integers of that claimed invention but also at the substance of that invention.
The claimed method in this case clearly involves what may well be an inventive idea, but it is an abstract idea. The specification makes it apparent that any inventive step arises in the creation of the index as information and as a scheme. There is no suggestion in the specification or the claims that any part of the inventive step lies in the computer implementation. Rather, it is apparent that the scheme is merely implemented in a computer and a standard computer at that. It is not part of the claimed method that there is an improvement in what might broadly be called ‘computer technology’.[14]
[14] Research Affiliates at [117]-[118].
The Full Court in Encompass Pty Ltd v InfoTrack Pty Ltd[15] did not find it necessary to revisit the correctness of RPL Central or Research Affiliates, explaining that:
“In each case, the Full Court was seeking to describe the conceptual distinction between a manner of manufacture and an unpatentable abstraction. In each case, the Full Court was explaining that a claimed method that is unpatentable does not change its legal character merely because the method is implemented by the instrumentality of a computer.”[16]
[15] [2019] FCAFC 161; 372 ALR 646 at [7] (‘Encompass’).
[16] Encompass at [91].
The delegate in Aristocrat Technologies Australia Pty Ltd[17] provided the following summary in relation to whether a computer related invention is in substance a manner of manufacture, which is of continuing relevance:
[17] [2016] APO 49 at [35] (‘Aristocrat’).
“I conclude that it is relevant to consider a range of matters. Without seeking to be exhaustive, these include:
·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.”
Summary of the applicant’s submissions
The applicant submitted that:
“the Examiner has incorrectly characterised the ‘substance’ of the presently claimed invention by continuing to assert an inappropriate requirement for a ‘technical improvement’ in the computer technology without due consideration regarding a possible improvement regarding ‘how’ the computer technology is used.”
In this regard the applicant referred to two recent decisions of the Patent Office: Jagwood Pty Ltd[18] and eBay Inc.[19]These decisions represent applications of the principles derived from decisions of the courts, including those discussed above, to particular facts and I will discuss these decisions and the applicant’s submissions in relation to them in more detail below. At this point, it suffices to note that the applicant extracts the following principles from them:
·a claimed invention may constitute patentable subject matter despite involving only the use of a generic computing device (as per the comments of the delegate in Jagwood)
·of the list of factors outlined in Aristocrat, in view of the decision of the delegate in eBay, an invention which satisfies only two of those questions (“is the contribution of the claimed invention technical in nature” and “does the application of the method produce a practical and useful result”) may constitute patentable subject matter.
[18] [2020] APO 38 (‘Jagwood’).
[19] [2020] APO 49 (‘eBay’).
In the applicant’s submission, the claimed invention provides a technical contribution and a practical and useful result, as discussed in greater detail below.
The applicant also commented that the objection in the most recent report is inconsistent insofar as it indicates that the “invention solves the problem of establishing generic mapping relationship between the computer variables” and later states that “no problem has been solved (let alone technical)”, such that the applicant does not understand the case to be answered. Despite this, I consider that the applicant’s submissions as a whole indicate that it does sufficiently understand the case to be answered, noting the indication at a general level that the examiner:
“maintained objection to the claims for lack of patentable subject matter on the basis that the ‘substance’ of the claimed invention resides solely in a scheme for determining profit allocation according to several variables that are considered to solely represent generic financial parameters.”
Consideration
It is apparent from the specification that the invention described addresses problems related to profit-sharing in professional firms and the like and provides a method by which profit sharing better (more objectively) reflects the actual profitability of billing entities based on the proxy of client stability. It is clear that, described at this level of generality, the invention is a business method or scheme (i.e. a scheme or method for carrying on a business) of the sort which has, as set out above, traditionally been held not patentable. However, the question I must consider is whether the claimed invention, in substance, is something more than a business method or abstract scheme.
While there are, as set out above, various factors that may inform this consideration, I will, reflecting the focus of the applicant’s submissions, address first the questions of whether the claimed invention gives rise to a practical and useful result and whether the contribution of the claimed invention is technical in nature. I note that the applicant’s written submissions are succinct, and accordingly I will also have regard to the applicant’s submissions of 29 January 2021 in response to the first examination report as appropriate.
Practical and useful result
The applicant submitted that the claims “clearly give rise to a practical and useful result”, and, in view of the submissions of 29 January 2021, I understand the asserted practical and useful result to include “the ability to normalize or leverage the value of time billed for Timekeepers more objectively as compared with traditional methods”. I can accept that this is provided by the claimed invention.
The question, however, is whether this is a “practical and useful result” in the relevant sense. In this regard, I note the Deputy Commissioner’s observation in CareFusion 303, Inc.[20] that “[n]ot every result which might colloquially be considered useful is relevant.” He went on to refer to the following passage of Research Affiliates:
“To take the words of NRDC at 268, the process does not produce ‘either immediately or ultimately, a useful physical result in relation to a material or tangible entity.’ The claimed method, the result of the ingenuity of the inventors, does not produce such a result; the ingenuity is in the scheme. Again, drawing from NRDC at 270, there is a useful result of the claimed process but there is no physical thing ‘brought into existence or so affected as the better to serve man’s purposes’. There is no ‘physical phenomenon in which the effect, be it creation or merely alteration, may be observed’ (NRDC at 276).”[21]
[20] [2021] APO 11 at [58] (‘CareFusion’).
[21] Research Affiliates at [114].
Of course, it is trite to say that a physical product as such need not result for there to a be a practical and useful result of a method or scheme. Indeed, in CareFusion the Deputy Commissioner was satisfied that reduced wastage of medications was a practical and useful result of a scheme implemented by generic computer technology. A “practical and useful” result is one that is just that – practical or “real world” rather than abstract.
In eBay, to which the applicant referred, the delegate indicated that the result in that case, physical directions for a recommended route to avoid congestion provided to a user, was “a practical and useful result that is not related to a business process or business rules”[22] and concluded that:
“In contrast to that defined in Research Affiliates, RPL, Encompass, and Rokt, the claims of this application clearly define more than an abstract idea. In combination the claims define changing the physical directions provided to a user based on at least the current time, a time to start or restart of the event and congestion along the route to get to the point of interest. The provision of physical directions for the user to take, as claimed, is not considered to be abstract or implementing a business process, but rather a physical and technical solution to a physical and technical problem that provides a practical and useful result.”[23]
[22] eBay at [41].
[23] eBay at [43].
That is, the “practical and useful result” of the scheme identified by the delegate was considered to be more than simply the result of implementing a business process within a computer, and to afford a physical result and a solution to a physical and technical problem.
In contrast, I consider “the ability to normalize or leverage the value of time billed for Timekeepers more objectively as compared with traditional methods” and the particular profit allocation that results from the claimed method to be abstract results, having no tangible or real-world effect. While I accept that this may be advantageous in the operation of a professional services firm or the like, it is not a “practical and useful result” as understood by reference to either eBay or, more particularly, the Full Court decisions to which eBay refers.
Contribution of the claimed invention
The specification sets out an object of providing an improved system and method for normalizing or leveraging the value of time billed for timekeepers for the purpose of profit sharing. In the examination response of 29 January 2021, the applicant framed the problem addressed by the invention more broadly: “…the claimed subject matter seeks to address at least the technical problem regarding how to improve upon existing computerised time and billing systems.” I do not agree that the broadly put problem of improving upon existing computerised time and billing systems is a “technical” problem – the broad problem may conceivably be addressed by technical innovations or business innovations. However, when considering the narrower object addressed by the specification and the problem which can be derived from the specification as a whole and particularly the claims, related to profit-sharing in professional firms and the like, I am mindful of the comments of the Full Court of the Federal Court in Watson v Commissioner of Patents[24], albeit considering an invention which was not computer-implemented, stating that financial or business issues faced by an organisation are not technical problems:
“In Grant, the abstract idea of the claimed invention fell outside the ambit of patentability as the notion of asset protection produced no artificial effect. Indeed, the substance of the scheme in Grant is analogous to Mr Watson’s claimed invention. Problems solved by the claim, as claimed by Mr Watson, are in fact business or financial issues potentially faced by an organisation, not technical problems solved by the claimed method. At most, the claimed invention is a business innovation, not a technological or technical innovation.”[25]
[24] [2020] FCAFC 56; 150 IPR 207 (‘Watson’).
[25] Watson at [31].
On balance, I consider that the claimed invention solves a business problem rather than a technical problem. This does not, however, mean that the contribution of the claimed invention must necessarily be non-technical in nature.
The applicant submitted that “the contribution provided by the combination of technical features in the presently pending claims is technical in nature”, making the same point in the submissions of 29 January 2021:
“…claim 1 recites a specific combination of technical features that involves significantly more than a scheme for calculating a billing entity factor, and instead, recites a specific technique which determines profit allocation for a Billing Entity based on an adjusted Billing Entity Factor.”
In the applicant’s submission, the examiner has not properly considered the combination of technical features of the claims in assessing the contribution to the art:
“The Applicant also respectfully submits that the Examiner has failed to afford due weight to various technical features presently recited in the pending claims and in particular, the contribution provided by of combination of technical features and the practical and useful result arising therefrom. In this regard, the Applicant notes that in reaching the conclusion regarding the lack of patentable subject matter, the Examiner isolates the feature of automatically pinging a third party by sending a signal that is recited in the present claims and characterises this feature as a ‘well-known procedure’ in support of the assertion that the present claims do not provide any technical contribution. However, this approach in determining the contribution of the claimed invention cannot be correct, at least in view of the conclusions of the Hearing Officer with respect to the EBAY claims.”
I will say here that it is not controversial that the claim must ultimately be considered as a whole. This does not, however, preclude as part of the consideration of the claim an assessment of whether any given feature of the claim can be considered a technical contribution to the art.
In the submissions of 29 January 2021, the applicant stated:
“The Applicant respectfully submits that the subject matter of the present independent claims (as amended) provide a contribution that is technical in nature at least in view of the feature of automatically pinging a third party website by sending a signal from the CPU to the third party website requesting information from the third party website regarding the stability of the client and retrieving from the third party website the information regarding the stability of the client that, in combination with the remaining features of the claim, provide a practical and useful result including the ability to normalise or leverage the value of time billed for Timekeepers more objectively as compared with traditional methods. Accordingly, the claimed invention cannot reasonably be characterised as abstract or implementing a business process.”
The applicant went on to say that since the invention cannot be characterised as an abstract idea or scheme, “there is no need for there to be ingenuity in the computerisation for the claims to be considered to comprise patent-eligible subject matter.”
As noted above, the applicant referred to Jagwood in support of the premise that a claimed invention may define patentable subject matter despite involving the use of a generic computing device. This is not controversial. However, clearly not all inventions involving the use of a generic computing device are patentable, and consideration of Jagwood does not appear to advance the applicant’s case. In Jagwood the invention related to the use of an identifier having the dual purpose of supplying both the location of a financial document and the payment reference in an electronic payment solution, and the applicant in that case referred to a “matching problem” (matching of a payment with a financial document) and a “bandwidth problem” associated with the amount of information able to be entered into payment reference fields. The delegate indicated that these problems could plausibly be considered technical or non-technical. Having considered both technical and non-technical perspectives for characterising the claimed invention, the delegate concluded that the claimed invention provided a technical solution to these problems:
“The use of a computer (server) which: a) the payer uploads a financial document, b) assigns a URI, and c) allows the payee to download the financial document (once the URI has been communicated via the reference field in an electronic payment system) is considered a technical solution to the problems the invention sought to overcome. The location of the financial document and the use of this location in the reference field of the electronic payment system are inexorably intertwined with the computing and networking systems. It is a technical solution because this synergistic utilisation of technology overcomes the problems faced by the inventor.”[26]
[26] Jagwood at [83].
In contrast, the applicant has not explained, and I have not identified, any ingenuity in the utilisation of technology defined in the present claims. The applicant has alluded to the contribution provided by the combination of technical features in the claims, which I take, on the basis of the submissions of 29 January 2021, to mean the automatic pinging of a third party website to request and receive information regarding the stability of a client, calculation of a Billing Entity Factor, adjustment of the Billing Entity Factor based on the information regarding the stability of the client, and determining profit allocation based on the adjusted Billing Entity Factor. However, this appears to be a statement of the steps of the method, rather than the identification of any particular technical contribution made by the claimed invention.
It is not apparent to me that the features defined in the claim amount to more than simply the computerisation of an abstract scheme, and it is clear from the decisions of the Full Court of the Federal Court discussed above that computerisation of a scheme is not, in itself (that is, where the invention does not lie in the computerisation), a technical contribution. I cannot, based on the submissions of the applicant or the specification, identify any improvement in computer technology, or the way in which it is used, or any invention in the computerisation of the method, that could be considered to define a technical contribution. Instead, what comes to mind is the observation of the Full Court of the Federal Court in Research Affiliates, in which the claims defined a computer-implemented method for generating an index including the steps of accessing data relating to a plurality of assets, processing the data, accessing a weighting function, and applying the weighting function to assign each of the selected assets a respective weighting:
“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.”[27]
[27] Research Affiliates at [114].
I consider this apposite to the present invention, and I do not consider the contribution of the claimed invention to be technical in nature.
Balance of considerations
I have considered the remainder of the factors identified in Aristocrat, and conclude that the balance of considerations supports a conclusion that the claimed invention is not a manner of manufacture, as discussed briefly below.
As alluded to above, the high-level detail in the specification regarding the operation of the computer system is consistent with generic computer implementation and I do not understand the applicant to dispute that this is the case. The claims have been found to be novel and inventive during examination, such that the method of the invention could be said to allow the computer to do something that it did not do before. However, I do not understand this to be an improvement in computer technology or the functioning of the computer, or to involve steps foreign to the normal use of computers. There appears to be no ingenuity in the way the computer is utilised, and while it is essential to the invention inasmuch as accessing a website is a step of the claimed method, I consider this to be analogous to the use of the computer in Encompass “as an intermediary to carry out the method steps – where the method itself is claimed in terms which amount to no more than an abstract idea or scheme.”[28] For completeness, I will say that I can see no basis to consider the claimed invention a “device of specific character” as discussed by Burley J in Aristocrat Technologies Pty Limitd v Commissioner of Patents.[29] Instead, I understand the invention to rely on the operation of an appropriately programmed general purpose computer.
[28] Encompass at [99].
[29] [2020] FCA 778.
Overall, the balance of considerations leads to a conclusion that the substance of the invention as defined by claim 1 and 11 is a scheme for profit sharing – a business innovation, and the claims simply define the generic implementation of that business innovation in a computer. This is not a manner of manufacture.
The applicant has made no specific submissions regarding the appended claims, which simply define the scheme of the independent claims in more detail (by defining further details of the information to be used in the scheme and identifying specific third party websites to be pinged). I consider that the same conclusion as to lack of manner of manufacture with respect to the independent claims applies to claims 2-10 and 12-20.
Conclusion
The claims of the application do not define a manner of manufacture. I have briefly discussed the disclosure of the specification previously, and having reviewed the specification I can see no subject matter that could be made the subject of a valid claim to overcome this finding. In these circumstances it is appropriate to refuse the application.
Dr S. J. Smith
Delegate of the Commissioner of Patents
Annex A
1. A system including a CPU and data storage, wherein the CPU is operative to:
receive, a Billing Entity ID corresponding to a Billing Entity for a client;
automatically ping a third party website by sending a signal from the CPU to the third party website requesting information from the third party website regarding the stability of the client and retrieve from the third party website the information regarding the stability of the client;
create a predetermined set of rules to calculate a Billing Entity Factor which is proportional to the time collected divided by the time billed by a Billing Entity, and adjust the Billing Entity Factor based on the information regarding the stability of the client; and
determine profit allocation for the Billing Entity based on the adjusted Billing Entity Factor.
2. A system according to claim 1, wherein the CPU is further operative to:
receive a ranking of all Billing Entities in the company; and
utilize the ranking of Billing Entities to create a predetermined set of rules to calculate a Billing Entity Factor.
3. A system according to either claim 1 or claim 2, wherein the CPU is further operative to:
receive a listing for each company client, , including the client, the average number of days each of the company of clients was late in paying a bill and ranking each client accordingly; and
utilize that information to create a predetermined set of rules to calculate a Billing Entity Factor.
4. A system according to any one of the preceding claims, wherein the CPU is further operative to:
receive a listing of all the funds past due for a given Billing Entity and rank that Billing Entity accordingly; and
utilize that information to create a predetermined set of rules to calculate a Billing Entity Factor.
5. A system according to any one of the preceding claims, wherein the third party website is one or more of the following internet billing entity ranking websites: Google, AVVO, Grub Hub, Yelp, Fortune 100 and Fortune 500.
6. A system according to any one of the preceding claims, wherein the CPU is further operative to:
receive a listing of demerits for the clients of each Billing Entity which negatively affects the Billing Entity Factor which is selected from one or more of the following adverse client actions:
failure to attend court hearings when required;
failure to appear for depositions as scheduled;
failure to attend firm meetings as scheduled; and
failure to review, execute and return documents in a timely fashion, and
utilize that information to create the predetermined set of rules to calculate the Billing Entity Factor.
7. A system according to any one of the preceding claims, wherein the CPU is further operative to:
receive a listing of demerits for the clients of each Billing Entity which negatively affects the Billing Entity Factor which is selected from one or more of the following adverse client actions: file groundless bar complaints or a malpractice suit; and
utilize that information to create the predetermined set of rules to calculate the Billing Entity Factor.
8. A system according to any one of the preceding claims, wherein the CPU is further operative to:
receive a listing of Standard Industrial Codes for the clients of each Billing Entity which have been assigned a ranking by the company to encourage Billing Entities to select clients in favorable industries; and
utilize that information to create a predetermined set of rules to calculate a Billing Entity Factor.
9. A system according to any one of the preceding claims, wherein the CPU is further operative to:
receive a listing of Activities and Areas of Law and their ranking; and
utilize that information to create a predetermined set of rules to calculate a Billing Entity Factor.
10. A system according to any one of the preceding claims, wherein the CPU is further operative to:
receive a listing of each Billing Entity's total billable hours and their ranking; and
utilize that information to create a predetermined set of rules to calculate a Billing Entity Factor.
11. A method implemented by a computer including a CPU and data storage, the method including:
receiving, by the CPU, a Billing Entity ID corresponding to a Billing Entity within a company;
logging, by the CPU, the time Billed and the Time Collected by the Billing Entity for a client,
automatically pinging a third party website by sending a signal from the CPU to the third party website requesting information from the third party website regarding the stability of the client and retrieving from the third party website the information regarding the stability of the client;
creating, by the CPU, a predetermined set of rules to calculate a Billing Entity Factor which is proportional to the time collected divided by the time billed by a Billing Entity and adjusting the Billing Entity Factor based on the information regarding the stability of the client; and
determining, by the CPU, profit allocation for the Billing Entity based on the adjusted Billing Entity Factor.
12. A method according to claim 11, further including the following steps:
receiving, by the CPU, a ranking of all Billing Entities in the company, and
utilizing, by the CPU, that information to create a predetermined set of rules to calculate the Billing Entity Factor.
13. A method according to either claim 11 or claim 12, further including the following steps:
receiving, by the CPU, a listing for each company client, including the client, the average number of days each of the company clients was late in paying a bill and ranking each client accordingly; and
utilizing, by the CPU, that information to create a predetermined set of rules to calculate a Billing Entity Factor.
14. A method according to any one of claims 11 to 13, further including the following steps:
receiving, by the CPU, a listing of all the funds past due for a given Billing Entity and ranking that Billing Entity accordingly; and
utilizing that information to create a predetermined set of rules to calculate a Billing Entity Factor.
15. A method according to any one of claims 11 to 14, further including the following steps:
retrieving from a third party website the information regarding the stability of the client which includes receiving, by the CPU, a business ranking for the client of the Billing Entity which is collected from one or more of the following internet billing entity ranking websites: Google, AVVO, Grub Hub, Yelp, Fortune 100 and Fortune 500.
16. A method according to any one of claims 11 to 15, further including the following steps:
receiving, by the CPU, a listing of demerits for the clients of each Billing Entity which negatively affects the Billing Entity Factor which is selected from one or more of the following adverse client actions: failure to attend court hearings when required; failure to appear for depositions as scheduled; failure to attend firm meetings as scheduled; and, failure to review, execute and return documents in a timely fashion; and
utilizing, by the CPU, that information to create the predetermined set of rules to calculate the Billing Entity Factor.
17. A method according to any one of claims 11 to 16, further including the following steps:
receiving, by the CPU, a listing of demerits for the clients of each Billing Entity which negatively affects the Billing Entity Factor which is selected from one or more of the following adverse client actions: file groundless bar complaints or a malpractice suit; and
utilizing, by the CPU, that information to create the predetermined set of rules to calculate the Billing Entity Factor.
18. A method according to any one of claims 11 to 17, further including the following steps:
receiving, by the CPU, a listing of Standard Industrial Codes for the clients of each Billing Entity which have been assigned a ranking by the company to encourage Billing Entities to select clients in favorable industries; and
utilizing, by the CPU, that information to create a predetermined set of rules to calculate a Billing Entity Factor.
19. A method according to any one of claims 11 to 18 further including the following steps:
receiving, by the CPU, a listing of Activities and Areas of Law and their ranking; and
utilizing that information to create a predetermined set of rules to calculate a Billing Entity Factor.
20. A method according to any one of claims 11 to 19, further including the following steps:
receiving, by the CPU, a listing of each Billing Entity’s total billable hours and their ranking; and
utilizing, by the CPU, that information to create a predetermined set of rules to calculate a Billing Entity Factor.
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