No more 'two-stepping' around manner of manufacture?

Brief snapshot 2 min read

Australia’s approach to patenting computer‑implemented inventions has just shifted decisively. In Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2025] FCAFC 131, the Full Federal Court has stepped away from the much‑debated 'two‑step' detour and steered the analysis back to first principles.

By allowing Aristocrat’s appeal and ordering that the claims in the four innovation patents relating to electronic gaming machines were a manner of manufacture within the meaning of s18(1A)(a) of the Patents Act 1990 (Cth), the decision represents a significant course correction for examiners, applicants and patentees dealing with computer‑implemented inventions, with immediate implications for how software‑related claims, including electronic gaming machines (EGM), will be examined and litigated.

Key takeaways 

1. Rejection of the (infamous) two-step test?

The Full Court found there was a 'compelling reason' to depart from the majority decision in Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd [2021],¹ given the proposed two-step analysis was addressed and criticised by all six judges in Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022]² (see our previous Insight), albeit for two different sets of reasons.³

The Full Court found it would have been 'perverse' for the present Full Court to follow the disapproved two-step approach of the earlier Full Court, stating that 'such a course would also be productive of very substantial uncertainty in the law, at least until the High Court is able to reconsider the issue'.⁴

2. Characterisation of the invention is key

In determining whether the claims of the subject patents were a manner of manufacture, the Full Court preferred the 'allowing reasons' adopted by Justices Gordon, Edelman and Steward,⁵ commenting that:

• the characterisation adopted by the allowing reasons does not give undue or preponderant weight to the inventive aspects of the claim over the non-inventive aspects, and gives due recognition to the physical elements which are non-inventive yet fundamental to the operation of the EGM;⁶
• the allowing reasons were better aligned with the seminal reasoning at [277] of NRDC, and the authorities which have followed it;⁷
• it is too rigid and narrow of an approach to say that the implementation of an idea in a computer, using conventional computer technology for its well-known and well-understood functions, cannot constitute a 'manner of manufacture';⁸ and
• the allowing reasons is able to avoid the anomaly of treating a computerised EGM as unpatentable, whereas [the same EGM] would be patentable if the EGM operated mechanically.⁹

We’ll soon share practical guidance on how this development could shape your IP approach.