Australia rules on patents for computer-implemented inventions

By Tommy Chen, Cici Cui, Artemis Kirkinis, Courtney Parnell
Intellectual Property Patents & Trade Marks Technology & Outsourcing

A bet each way on patentability 15 min read

The High Court of Australia has grappled with the question of when a computer-implemented invention is patentable. Unfortunately, for technology owners and implementers in this space, the bench was split evenly. By a technicality, the case (Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCA 29) was decided against the patentee. The decision leaves us with two approaches to the question, each supported by three justices of the nation's highest court.

It remains to be seen whether this will change the Patent Office's examination practice, and whether the issue is now primed for a further appeal to the High Court. In this Insight we unpack the two High Court opinions and how these approaches compare to recent case law and Patent Office practice.

How does this affect you?

  • The case affirms that, in Australia, inventions that are not directed to a 'manner of manufacture' are not eligible for patent protection. This could be because, for example, the invention amounts only to a mere scheme, abstract idea or business method.
  • The opinion of the technical majority of the High Court may indicate a future direction for change to the approach for assessing the patentability of computer-implemented inventions in Australia.
  • Technology owners should adopt a wholistic approach to protecting the value of their technology, considering the protection conferred by the law of copyright and confidential information as well as potential patents.

The story so far

The issue

Like many countries, Australian patent law excludes certain classes of inventions that are considered unsuitable for patent protection for policy reasons. The Patents Act 1990 (Cth) expressly lists two categories of unpatentable subject matter: humans, and plants and animals (and biological processes for their generation). Beyond these two categories, the Patents Act defines patentable subject matter by reference to a provision of the Statute of Monopolies, enacted in 1624 by the pre-Union parliament of England, and the centuries of case law interpreting that provision. Specifically, an invention is eligible for patent protection if it is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies.

This case concerns an innovation patent, a class of patents with a lower threshold for patentability and a shorter term of protection. As we have reported previously, innovation patents are being phased out in Australia. The same requirement of 'manner of manufacture' applies to innovation and standard patents alike.

The requirement of 'manner of manufacture' has been paraphrased in many ways. It is well established, however, that mere schemes, discoveries, ideas, scientific theories and laws of nature will not satisfy this definition. However, the implementation of a scheme, idea or scientific discovery, eg in a new and inventive mechanical device, could be patentable subject matter.

Computers obviously did not exist in 1624, and the application of this requirement to computer-implemented inventions has been a particularly vexing issue in recent years. Case law has variously said that, where the claimed invention is a method embodied within computer software and hardware, it will only be patentable subject matter if the invention lies in the computerisation and the way in which the computer carries out the method. It has also been said that the invention must also involve the creation of an artificially created state of affairs, which can be achieved if the invention involves an advancement in computer technology, rather than the mere use of conventional computer technology. If an unpatentable method is implemented within a conventional computer, that will not transform it into a patentable invention.

First instance decision and appeal

In 2016, Aristocrat applied for innovation patents relating to an electronic gaming machine (EGM) (in layman's terms, an electronic poker machine, fruit machine or slot machine) in which certain sequences of symbols in the base game can be programmed to trigger a 'feature game' – an additional bonus or free game. The Australian Patent Office accepted that the other requirements for an innovation patent were met (novelty, innovative step and usefulness), but rejected the application for not being directed to patentable subject matter, noting that the substance of the invention was merely a set of game rules which were implemented using conventional computer technology.

On appeal to the Federal Court of Australia, Justice Burley found that the claimed invention was a manner of manufacture and not a mere scheme. His Honour adopted a two-step process: first, asking if the invention was a mere scheme or business method; and second, if so, whether the invention lay in the computerisation of that method, or if it merely involved 'plugging an unpatentable scheme into a computer'.

The second stage would require considering whether the invention makes a contribution which is technical in nature or solves a technical problem, as opposed to merely 'generic' computer implementation. Justice Burley characterised the invention as a machine of particular construction which used various hardware and software components to produce a particular outcome. Having answered the first answer in the negative, it was not necessary to consider the second question. His Honour noted the importance of advancing the social utility and value of innovation. He was particularly influenced by the consideration that, if the invention only utilised mechanical functions it would be patentable, and the use of software to improve its efficiency should not be discouraged.

On further appeal to the Full Court of the Federal Court, as we noted here, the primary judge's decision was overturned by a panel of three judges. Justices Middleton and Perram disagreed with the primary judge's two-step test, and formulated a different two-step test specific to computer-implemented inventions: first, is it a computer-implemented invention?; and second, can it be considered as an advancement in computer technology? Their Honours held that while the feature game was a computer-implemented invention, the invention (involving changes to the reel structure and the idea of configurable symbols in the feature game) were not advances in computer technology, and therefore not patentable, although their Honours remarked that these may constitute advances in gaming technology.

Further, even if a mechanical gaming machine would be patentable, it did not follow that an electronic gaming machine implementing the same game should be as well. Their Honours noted in particular that the patent did not disclose the programming to give effect to the games, and left this to the programmer implementing the invention to devise. The third judge, Justice Nicholas, reached the same conclusion but did not subscribe to the test used by the other two judges. Instead, his Honour asked whether the invention produced an 'artificially created state of affairs', as a result of being a 'technical solution' to a 'technical problem'.

As we reported here, Aristocrat was granted special leave to appeal the decision to the High Court. The case was heard in June 2022, and judgment was delivered in August.

The High Court decision

The High Court bench of six was divided three-three, with Chief Justice Kiefel, and Justices Gageler and Keane ruling that the appeal should be dismissed, while Justices Gordon, Edelman and Steward ruled it should be allowed. Where the High Court is equally divided in opinion, section 23(2)(a) of the Judiciary Act 1903 (Cth) requires that the decision from which the appeal arises be affirmed, thus resulting in the appeal being dismissed and the Full Court's decision being upheld. Although the opinion of Chief Justice Kiefel, and Justices Gageler and Keane  prevailed, they did not endorse the two-step test adopted by the Full Court when determining whether the claimed invention is directed to a manner of manufacture.

Appeal dismissed - Chief Justice Kiefel, and Justices Gageler and Keane

Their Honours first considered the relationship between the 'manner of manufacture' requirement and the other requirements of patentability, such as novelty and non-obviousness. Their Honours rejected the argument that 'manner of manufacture' must be assessed without regard to the newness or inventiveness of the claimed invention. As the High Court said in N V Philips Gloeilampenfabrieken v Mirabella International Pty Ltd1, 'manner of manufacture' is a threshold requirement. Section 6 of the Statute of Monopolies refers to a 'manner of new manufacture', which includes an element of assessing the newness and inventiveness of the invention. This operates in addition to, and cumulatively with, the requirements of novelty and non-obviousness as assessed against the prior art. Thus, in the example of a claim for a ballpoint pen, the claim would fail not only for lack of novelty and inventive step, but also for not meeting the threshold requirement.

Their Honours referred to previous authorities which have established that mere schemes, methods, abstract ideas or a set of rules are not ordinarily patentable subject matter. While the practical implementation of these things could be patentable, it would not be if the mode of implementation is not itself patentable. A claimed method becomes patentable only if there is some physical consequence for a process or product. Applied to computer-implemented inventions, their Honours noted statements in past cases that there must be some 'concrete, tangible, physical, or observable effect', or an 'artificial state of affairs' must be created. This may be the case where the invention results in an improvement in computer technology, provided the computer is integral to the invention. Merely reducing a method to written form is not sufficient, even if it results in a vendible product. This is because the presentation of an idea in written form is an obvious example of common general knowledge.

Their Honours concluded that Aristocrat's claimed invention included hardware components that were all part of the common general knowledge. The introduction of games, using the hardware components, to engage and entertain users, was also part of common general knowledge. Their Honours characterised the claimed invention as for a new system or method of gaming. The new game is an idea and is not itself patentable subject matter, and the claimed invention adapts or adds to technology otherwise well-known in the common general knowledge, such as to 'accommodate the exigencies of the game'. They continued on to note that the claimed invention appeared to be nothing more than an instruction to a person skilled in the art to act upon their own judgment in light of the common general knowledge to program what was essentially a generic EGM.

Although their Honours agreed with the Full Court's decision, they did not agree with the two-step analysis proposed by Justices Middleton and Perram. They also thought the comment of Justices Middleton and Perram in the Full Court – that the invention was an 'advancement of gaming technology' – was an unnecessary flourish. The threshold requirement is to be assessed by characterising the invention by reference to the terms of the specification, having regard to the claim and in light of the common general knowledge. It is not that advances in gaming technology are not patentable subject matter, but rather there is no reason to conclude from the relevant claim that it was claiming an advance in gaming technology other than use of a generic computer to play its new game. The key issue is simply whether there has been some adaptation or addition to technology otherwise well-known in the common general knowledge in order to accommodate the exigencies of the new idea.

It is not clear, however, how their Honours envisage the common general knowledge to be ascertained for this purpose. For example, is this to be assessed by reference to the contribution alleged by the inventor, or is evidence required to establish the common general knowledge? In current practice, (often voluminous) evidence as to common general knowledge is usually only required when assessing novelty and inventive step.

Appeal allowed – Justices Gordon, Edelman and Steward

In contrast, Justices Gordon, Edelman and Steward said that the 'manner of manufacture' threshold is a low one and should be assessed by reference to the face of the claim in the context of the specification.

Their Honours cited with approval statements in past cases, such as National Research Development Corporation v Commissioner of Patents2, that 'manner of manufacture' requires the existence of a material and artificial advantage, and that the product be part of the 'useful arts' rather than the 'fine or intellectual arts'. Their Honours noted that any product that 'improves, restores or preserves' a vendible product and thereby creates some new and useful effect will be a manner of manufacture. Thus, a mere scheme, method or set of rules may become a manner of manufacture when they are used in a way that is embodied in a tangible form.

They proposed another formulation of the test, as whether the subject matter is '(i) an abstract idea which is manipulated on a computer; or (ii) an abstract idea which is implemented on a computer to produce an artificial state of affairs and a useful result' (the latter being patentable subject matter). Such a state of affairs may be that a physical change is produced, or an advancement in computer technology occurs, but neither is necessary. The only requirement is that the results are created by the way the computer carries out the method.

Similar to the primary judge, their Honours were swayed by the consideration that there should not be a different conclusion on patentability where the physical cogs, reels and motors of one game are replaced by complex software and hardware that generate digital images in another. They felt that denying patentability to the latter would be inconsistent with the policy goals of the Patents Act to encourage innovation. Any finding that a digital representation does not involve a physical transformation would be absurd and would place form over substance. Regardless of whether the invention is implemented by a computer or some other machine, the requirements of an artificial state of affairs and a useful result remain the same.

In characterising the claimed invention, their Honours warned that characterisation of the claimed invention is a matter of substance, not form, but also should not be artificially confined to a mere idea or scheme. Their Honours characterised the present invention as 'an EGM incorporating an interdependent player interface and a game controller which includes feature games and configurable symbols'. They noted that the integers included both the configurable symbols and the feature games, each of which require implementation in the EGM, and are interdependent upon other integers of the claim, including the generic hardware components of the EGM.

Their Honours concluded that the claimed operation of the game controller, displayed through the player interface, is an altered EGM involving an artificially created state of affairs and a useful result amounting to a manner of manufacture and, thus, constituted a patentable invention.

Their Honours also criticised analysing the Australian law position by reference to US and UK positions, emphasising that the US statutory provision on patentable subject matter is expressed in very different terms ('new and useful process, machine, manufacture, or composition of matter'), while UK case law since the enactment of the Patents Act 1977 (UK) is based on a different statutory scheme (patentable inventions must be 'capable of industrial application', while 'program for a computer' 'as such' is expressly excluded as patentable subject matter).

Implications of the decision

Filing strategies

In the age of artificial intelligence, cloud computing and the Internet of Things, patents for computer-implemented inventions are an important means of protecting the value of innovation. However, for the past few years, patent applicants are gradually finding that Australia is perhaps one of the most difficult jurisdictions to obtain a granted patent directed to computer-implemented inventions. Patent applicants often find themselves in a situation where European Patent and US patent counterparts of their Australian patent application have already progressed to grant, while they are struggling to overcome the repeated manner of manufacture objections at the Australian Patent Office. Applicants are often forced to file a series of divisional patent applications in order to buy themselves more time. The relative difficulty in Australia discourages technology owners from filing applications here.

The long-awaited High Court decision was expected to clarify, and potentially change, the current practice adopted by the Australian Patent Office. With the even split between the justices, and the differences in how the two judgments characterised the claimed invention, it remains uncertain how the current examination practice may change in the future, or if it would change at all. According to a Patent Office announcement, the Commissioner of Patents is 'carefully review[ing] the decision and consider[ing] its implications'. The announcement also said that '[a]t this stage, the Commissioner’s practice will remain to consider that a claimed invention will not satisfy the requirements for manner of manufacture in accordance with s 18(1)(a) or s 18(1A)(a) of the Patents Act 1990 if it is merely directed to the implementation of an otherwise unpatentable idea in conventional and well-understood computer technology''.

Despite their differences, one common thread that can be drawn from the two judgments is that all the High Court judges cast doubt on the suggestion (evident in some Federal Court decisions) that a computer-implemented invention must involve an advance in computer technology for it to be considered as directed to patentable subject matter. The same test has been frequently followed by the examiners at the Patent Office when issuing manner of manufacture objections.

As noted above, rather than considering whether there is an advance in computer technology or 'gaming technology', Chief Justice Kiefel and Justices Gageler and Keane preferred to look at whether the implementation of the unpatentable idea involves some adaptation or addition to technology in the common general knowledge in order to accommodate the exigencies of the new idea. Although the approach of Justices Gordon, Edelman and Steward was different, they expressly noted that the required 'artificial state of affairs and useful result' may, but need not be, an improvement in computer technology. Based on these comments, there is some hope that at least the search for an advance in computer technology by the examiners at the Patent Office can come to an end in the near future.

Another interesting common thread is that, despite the different tests adopted in the two judgments, both endorsed each of Research Affiliates LLC v Commissioner of Patents, Encompass Corporation Pty Ltd v InfoTrack Pty Ltd and Commissioner of Patents v Rokt Pte Ltd as having been correctly decided.

This judgment may prompt further discussion of broader policy questions, including whether the existing legal principles in patent law are apt to deal with intellectual property as it relates to computer technology. Until then, the High Court has provided some clarity on the test (not) to be applied and it remains to be seen whether this will change the Patent Office's examination practice, and whether the issue is now primed for a further appeal to the High Court.

Wholistic approach to IP protection

Regardless of any evolution in the Australian approach on the patentability of computer-implemented inventions, it is important for technology owners to take a wholistic approach when considering strategies to protect, monetise and enforce their innovations. While patents can protect the functionality of a computer system, copyright is the IP right which principally protects software code and (as explained here) datasets in Australia. Non-public information about the inner workings of computer technology can also be protected as confidential information.

Conversely, implementers of computer technology should be mindful that different IP rights may protect a piece of technology, the owners of which may not be identical. When taking licences to technology, implementers should be mindful that they have obtained permission from all relevant owners of IP.


  1. (1995) 183 CLR 655, 663-664.

  2. (1959) 102 CLR 252, 275.