Software Patentability – A win for software innovators brings clarity

The patentability of certain classes of software in Australia has long been controversial.
Business methods and other merely intellectual endeavours, as opposed to technical
innovation, have long been regarded as inherently unpatentable(a) even when computer-
implemented, and (b) regardless of how inventive or valuable they may be.

The controversy relates to the boundary of this inherently unpatentable business/intellectual
innovation. Court decisions, each specific to the particular circumstances at hand, have
produced authority that is difficult to reconcile and extend to other circumstances. A split 3:3
decision¹ from six justices of Australia’s apex court in 2022 added to the confusion.

The Australian Patent Office has been on the ‘anti-patent’ side of a number of these court
decisions and, in the course of ordinary patent examination, raised objections based on anti-
patent reasoning drawn from these cases (including reasoning criticised by all six justices of
the apex court).

A recent decision² of the court of first appeal for Australian patent matters has endorsed the
reasoning of the ‘pro-patent three’ justices of the apex court, providing long sought-after
guidance that can be more generally applied. The recent decision makes emphatically clear³
that the assessing on which side of the boundary an invention falls entails asking whether the
invention, properly characterised, 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.

A distinction is drawn between ‘useful arts rather than fine arts or intellectual arts’ 4 and
various unpatentable inventions as listed at paragraph 132. Those unpatentable inventions
relate to:

• protecting assets from unsecured creditors;
• assessing the competency or qualification of people;
• displaying business intelligence information;
• GPS-enabled devices for dealing with risk management information; and
• improved logistics methods.

Various other patentable inventions are also listed at paragraph 133. Those patentable
inventions relate to:

• the application of a formula to produce a curve image;
• word processing Chinese characters;
• using signal strength to control opening of entry and exit barriers;
• a method of scanning used in digital mobile radios.
  

The recent decision concerned an electronic gaming machine (EGM) that differed from earlier
gaming machines by the gameplay including certain ‘feature games’ and configurable symbols.

The court characterised the invention as ‘an EGM incorporating an interdependent player
interface and a game controller which includes feature games and configurable symbols’ to
hold that the invention is patentable.

The emphasis on ‘artificial state of affairs and a useful result’ is somewhat of a return to much
older authority and provides guidance that can be more generally applied. It remains to be
seen how the Patent Office applies this guidance. At the time of writing, the relevant section of
the Patent Office’s Patent Manual of Practice and Procedure was yet to be updated but was
prominently marked with:

Hopefully, the recent decision heralds a new era of technical innovation embodied in software
being granted patents more efficiently, and of stable case law that can be more readily
generalised to provide certainty.

^{1 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCA 29
2 Aristocrat Technologies Australia Pty Limited v Commissioner of Patents (No 3) [2024] FCA 212
3 Paragraph 131
4 Paragraph 80}