Australian start-up ROKT has had a major win in the fight for software-related inventions. Senior Associate and Patent Attorney Pasquale Aliberti considers the ramifications.
In recent years, Australian courts have issued a series of decisions against patentability of software inventions. As a result, the Australian Patent Office (the APO) has developed a practice of rejecting software patents unless the invention provides substantial changes in the way computers operate. Now, though, ROKT has challenged the Commissioner of Patents in the Federal Court (Rokt Pte Ltd v Commissioner of Patents  FCA 1988) and won.
Not all inventions are eligible for patent protection. For example, a business scheme or a pure discovery may not qualify for patent protection, because it is directed to non-eligible subject matter. The High Court, in NRDC, set out basic principles for ascertaining whether a process is patentable: the invention should belong to a useful art (not a fine art); and it should be valuable in the field of economic endeavour and provide a useful effect. The NRDC test, used in modern times, has led to a significant number of patents being granted that claim general business methods combined with standard computing hardware. To address the issue, the Federal Court more recently adopted a narrower approach to the NRDC test, in Research Affiliates LLC v Commissioner of Patents  FCAFC 150 and Commissioner of Patents v RPL Central Pty Ltd  FCAFC 177. The court formulated a new test that requires establishing what is the substance of the invention, and assessing whether the substance is directed to new and improved computer technology. This recalibration in the test requires a change in the conventional operation of a computer. This, however, is a rare occurrence and would not apply to most software-related inventions.
The APO has relied on the recent court decisions to distil its own test for assessing computer-implemented inventions. The 'test' the APO currently applies is largely based on the UK decision in Aerotel and requires, among other things, that the actual or alleged contribution to the art is actually technical in nature. Although the Aerotel decision was discussed in Research Affiliates, the court did not find that this was the appropriate test to assess patentable subject matter in Australia. Nevertheless, the APO's rigid application of the Aerotel approach has, in the past few years, prevented patents for a large number of software inventions from being granted.
Encompass Corporation owned granted innovation patents for software that allows creation of a graphical network representation of entities, by drawing data from multiple sources and performing federated searches on one or more of the entities. Earlier this year, Justice Perram, in Encompass Corporation Pty Ltd v InfoTrack Pty Ltd  FCA 421, found Encompass's patents to be invalid. In arriving at this conclusion, His Honour could not establish that the 'substance' of the patented inventions was directed to new computer technology. This will come as no surprise, given the majority of software-type inventions do not aim to change the way computers function (eg by performing operations on binary data). After all, a key advantage and power of computers is that different software can enable a general machine to perform a variety of customised tasks without having to change the machine itself.
Software innovators have not raised the white flag just yet, as shown by their rare victory against the APO in the ROKT case. Justice Robertson allowed a patent for software that provides a series of smart advertising messages within e-commerce platforms to trigger engagement by leveraging the psychology behind how a shopper would respond to specifically ordered messages. His Honour, despite having the Encompass decision before him, found that the use of a computer in the ROKT invention was integral, rather than incidental – ie it couldn't happen without computers.
Encompass Corporation appealed the decision, and the Federal Court appointed a Full Bench of five judges (as opposed to the usual three) for the appeal, which was heard in November 2018. During the hearing, the court appeared to acknowledge that some forms of software should be patentable in Australia, and now the Full Bench has the rare opportunity to set a higher authority and provide guidance to software innovators about what type of software qualifies for patent protection in Australia. A decision is expected by mid-2019, and we will keep you updated on the outcome and its implications.