Discouraging Innovation?

By Miriam Stiel
Industrials Intellectual Property Patents & Trade Marks

In brief

More companies are investing in software-based products, including those using machine learning, blockchain and the internet of things. But how has the Australian Patent Office been processing patent applications for computer-implemented inventions in the current climate? Senior Associate Robert Munro reports.

What's happened?

As recently reported in The Australian Financial Review, Bruce Buchanan from Rokt, one Australia's fast-growing Australian marketing technology start-ups (with a current revenue of approximately $134 million per annum), has hit out at the Australian Patent Office (IP Australia) for discouraging innovation through its approach to patentable subject matter concerning software patents. Rokt is currently appealing a patentable subject matter decision from IP Australia in the Federal Court of Australia.

There has been no legislative change to patentable subject matter recently, but the case law relating to computer-implemented inventions has been evolving over the past few years. This evolution, combined with IP Australia's interpretation of the case law, has left many IP owners (and their attorneys) frustrated over the obtainment of patent rights for computer-implemented inventions. It is accepted that computer-implemented inventions may form the basis of patentable subject matter, providing that the contribution of the invention is not abstract. However, defining the contribution of the invention has left the industry trying to reconcile whether IP Australia's current approach to patentable subject matter is a pseudo-inventive step test. This issue was also evident in the recent case of Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2018] FCA 421 (Encompass), which is currently on appeal.

Why is this important?

Taking the internet of things (IoT) as an example, this industry is expected to generate revenue close to USD10 trillion globally by 2025. Investment in this area is therefore growing rapidly but, in order to gauge the risks and opportunities of such investment, having an element of uncertainty around patentable subject matter could curb such growth, at least in Australia. For instance, whilst gaining patent protection in other overseas jurisdictions may be available, if Australian companies are unable to protect their innovation and investment in their initial (primary) market, there will likely be reluctance in investing in these developing industries. Conversely, it is appreciated that if patent protection is not available in these areas, this may encourage other open-source forms of collaboration and innovation. Ultimately, however, uncertainty is the key here, and Rokt's ongoing litigation is a case in point in this regard. Companies are growing and heavily investing in computer-implemented inventions and, whilst good patent attorneys can guide clients through the current pitfalls, further judicial or legislative clarification is needed to shore up Australia's current patent approach to computer-implemented inventions.

What's next?

The forthcoming decision of the Federal Court in Rokt may provide some further guidance on patentable subject matter. However, as evident in the Encompass decision, it is likely that the Full Court will need to weigh in further on this matter. In the meantime, it is important to stay abreast of the practicalities in this IP area in order to ensure informed commercial decisions are made.