What Aristocrat means for computer-implemented patents

A win for innovation 11 min read

Software companies such as Atlassian, Canva and Rokt are hailed as success stories of Australian innovation. However, for at least the past decade, it has been difficult to protect the value of investment in computer-implemented technology under Australian patent law.

This has been due, in large part, to IP Australia's narrow approach in assessing whether a claimed invention, if implemented on a computer, is subject matter that is eligible for patenting. This difficulty has forced technology innovators to change their investment and IP protection strategies in Australia. 

In this Insight, we unpack the positive developments from the Full Court of the Federal Court's welcome decision in Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2025] FCAFC 131 (Aristocrat II), and comment on the latest response to it, in relation to computer-implemented inventions, from IP Australia.

Who in your organisation needs to know about this?

• IP portfolio managers
• Software R&D managers
• Patent attorneys
• Legal counsel

Key takeaways

• To the vexed question of when a computer-implemented invention is eligible subject matter for patenting, the Full Court endorsed a (seemingly) straightforward test. Is the claimed invention:

i) an abstract idea manipulated on a computer (not patentable); or

ii) an abstract idea implemented on a computer to produce an artificial state of affairs and a useful result (patentable).

       This test offers a more flexible framework for applicants.

• The Full Court has clarified that, when assessing patentable subject matter, the claimed invention must be considered as a whole, including both inventive and non-inventive elements. This holistic approach marks a significant departure from IP Australia's prior practice of isolating only the novel features to assess eligibility, and strengthens the position of applicants seeking protection for computer-implemented inventions in Australia.
• IP Australia has sought special leave to appeal the Aristocrat II decision to the High Court, citing public interest in establishing consistent principles for assessing patent eligibility. In its updated Patent Manual of Practice and Procedure (the PMPP), IP Australia has added the 'artificial state of affairs' criterion from the Full Court decision to a broader list of considerations, but retains the state of the art as an important factor—which, in past practice, has meant a focus on new features when assessing eligible subject matter. This potentially means retaining an approach that is inconsistent in practice with the Full Court's decision.
• Aristocrat II provides a more innovation-friendly stance on patentable subject matter, which is consistent with the High Court's view on patent laws' policy purpose to encourage innovation. When drafting and prosecuting claims for computer-implemented inventions in Australia, applicants and advisors should lean on the Full Court's guidance.

The story so far

The Aristocrat dispute has now been running longer than the life of the innovation patents in question. We summarised the unique procedural history in our previous Insights (see here on the 2022 High Court case and here on the 2024 first instance decision on the remitted case). The following aspects of the procedural history are important to note:

• Under Australia's former innovation patent system, Aristocrat applied for four innovation patents relating to electronic gaming machines (EGM). The question under the Patents Act 1990 (Cth) of whether these innovation patents included a 'manner of manufacture', within the meaning of the Statute of Monopolies of 1624, went up to the High Court.
• An even-numbered High Court bench was split, with three judges upholding the Full Court's decision and three disagreeing. By a statutory technicality, this means that the Full Court's initial decision was affirmed. However, all six judges criticised the Full Court majority's two-step test:
  1. Is the invention claimed a computer-implemented invention?
  2. If so, can the invention claimed broadly be described as an advance in computer technology?¹
• In accordance with the Full Court's affirmed orders, claim 1 of the relevant innovation patents (which was the subject of the appeal to the Full Court) was revoked, but the case was remitted to the first instance judge to decide on other claims of the innovation patents.
• This remitted decision was appealed to the Full Court (with a different panel of judges), with the key questions being:
  1. were Justice Burley and the current Full Court bound by the first Full Court's decision and, in particular, did the two-step test still apply; and
  2. if the Full Court were to depart from the first Full Court's decision (spoiler alert: they did), was the claimed invention a manner of manufacture within the meaning of the Patents Act 1990 (Cth)?²

Is the Federal Court bound by the previous Full Court decision?  

The Full Court in Aristocrat II confirmed that, due to the operation of section 23(2)(a) of the Judiciary Act 1903 (Cth), the 3:3 split in the High Court meant that the decision below (the first Full Court decision) was affirmed. This means that the first Full Court's decision, that claim 1 of the relevant patents was not patentable, stood and could not be reopened.

However, in circumstances where there was no binding decision by the High Court, the Full Court itself was free to depart from its own previous decisions. The Full Court held that it should depart from a prior Full Court decision only where there is a 'compelling reason' to do so.³

In this case, the fact that all six judges of the High Court criticised the first Full Court majority's two-step analysis was a compelling reason for the second Full Court not to follow the first Full Court majority's reasoning. This meant that the Full Court was free to consider anew the patent eligibility of Aristocrat’s remaining claims on their merits (other than claim 1 that had finally been determined by the first Full Court).

The Full Court's test for 'manner of manufacture'

1. Characterisation of the claimed invention

In characterising the invention to be assessed for patentable subject matter, the judges in the preceding decisions took different views. The key difference is between those judges who focused on the elements that are claimed to be inventive, and those who preferred to characterise the invention as a whole, looking at both inventive and non-inventive elements.

The Full Court preferred the approach adopted in the allowing reasons by the High Court (Justices Gordon, Edelman and Steward, who would have found the claimed invention patentable). The Full Court said (emphasis added):⁴

the characterisation as better reflecting the integers of the claim viewed as a whole, encompassing the combination of both the inventive and the non-inventive elements … The characterisation adopted in 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 those physical elements which are non-inventive yet fundamental to the operation of the EGM.

2.  Test for computer-implemented inventions  

As to whether a particular computer-implemented invention is a manner of manufacture, the Full Court rejected the first Full Court majority's two-step test, and constructed a new test (emphasis added):

… whether, properly characterised, the subject matter that is alleged to be patentable 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.⁵

This test adopts language used in the allowing reasons in the High Court, and echoes wording previously used in High Court decisions on patentable subject matter, such as NRDC,⁶  and the authorities that followed it.

The Full Court, like the allowing decision in the High Court, found attractive the argument that the position they adopted helps avoid the anomaly of treating a computerised EGM as unpatentable, whereas it would be patentable if the same game mechanisms were implemented mechanically. The Full Court emphasised that the technology-neutral approach aligned with the policy need for the Patents Act to encourage invention and innovation.⁷  

Where does this leave patent applicants?

The approach the Full Court adopted on characterisation of the invention and the test for 'manner of manufacture' in the context of computer-implemented inventions is welcome news for innovators.

Previously, IP Australia has taken a narrow, and arguably too rigid, approach to characterising inventions during examination, with prior art being raised to narrowly define the substance of the invention. This is at odds with both the legislative scheme, and the views of most of the judges at all levels in the Aristocrat cases that 'manner of manufacture' is a preliminary test, and not a pre-assessment of novelty and obviousness.

Aristocrat II steers the manner of manufacture analysis away from the two-step test that the first Full Court recognised and brings the test back to first principles, in line with prior High Court decisions on patentable subject matter, such as NRDC and Myriad.⁸ The adoption of a simpler test is an emphatic rejection of any requirement of an 'advance in computer technology' (which had been a key part of the test that IP Australia used in practice).

However, uncertainty remains for applicants, and further debates as to exactly where the line is to be drawn between the two alternatives contemplated in the test are inevitable. This is particularly problematic because the Full Court (and the High Court before it) emphasised that, despite the change in the legal test, the results of previous Full Court cases on computer-implemented inventions have been correctly decided, but it is not clear that this is the case when applying the Full Court's new test. It may be difficult to reconcile eg how an EGM with feature games is allowable in Aristocrat II while encouragement offers for computer users were not allowable in Commissioner of Patents v Rokt Pte Ltd [2020] FCAFC 86. Considering the emphasis on the claimed invention in Aristocrat II, the key to reconciling these cases (and a key point for applicants to take care with) may be that the computer-implemented invention's technical elements, instead of the associated business practices, should be captured in the claims.

Another area of caution for applicants is that the legal test in Australia remains different from that of other major jurisdictions such as the US and the UK. Although most exclude the patentability of certain types of non-technical inventions or discoveries, they do it through different statutory mechanisms: Australia and New Zealand are the only notable common law countries to have retained a link to the 400-year-old Statute of Monopolies in their patent laws. The High Court's allowing decision expressly cautioned against reliance on UK and US case law on computer-implemented inventions because of the different statutory tests in those jurisdictions. This means that, despite the current Australian patent law being expressly intended to generally align Australian patent law to that of major jurisdictions (especially UK and European Patent Office jurisprudence), it cannot be assumed that the outcome in Australia for any particular computer-implemented invention will be in line with the patentability assessment in the US or UK, or by the European Patent Office.

Latest updates from IP Australia

Since Aristocrat II, IP Australia announced on 14 October 2025 that it has:

• sought special leave to appeal the decision to the High Court; and
• updated the PMPP to reflect the outcome of Aristocrat II.

While the PMPP now acknowledges the need to balance inventive and non-inventive aspects in claim characterisation, it still allows consideration of the state of the art in assessing manner of manufacture. This potentially leaves room for continued problematic examination practices of the type we have seen in practice before Aristocrat II. The test Aristocrat II adopted should prevent examiners from requiring an advancement in computer technology for the purposes of patentable subject matter for computer-implemented inventions. However, IP Australia's light touch amendments to the PMPP—and its request for special leave to the High Court—potentially indicate that IP Australia has an underlying policy to pursue. This appears to be at odds with the position that industry advocates.

While IP Australia's position may yet evolve, based on the decision in Aristocrat II the best approach for applicants remains drafting patents specifications in a way that focuses on the technical implementation of the computer-implemented invention to solve a technical problem (as opposed to a business problem), to help avoid situations where the claims, when properly characterised, are construed as a business scheme.  

Actions you can take now

• Reassess your IP protection strategies in Australia: In light of the favourable outcome, applicants can be more optimistic about the likelihood of obtaining patent protection for their computer-implemented inventions in Australia.
• Capitalise on the momentum this decision has created: Innovators may wish to file applications for their computer-implemented inventions now, in order to secure favourable outcomes for their IP portfolio, assisted by the Full Court's decision and pending the outcome of the appeal to the High Court.
• Consider further advocacy to IP Australia: Discuss with us the possibility of advocating with IP Australia to ensure its examination practice aligns with the Full Court decision—whether directly, via a sector-based effort; or indirectly, through interested professional organisations.
• Emphasise technical aspects in patent specifications: Drafting patent specifications focusing on its technical implementation solving a technical problem, rather than on its business application, can help increase the likelihood that the patent claims, when properly characterised, are construed as a 'manner of manufacture'.