{"id":1382,"date":"2019-09-17T15:05:47","date_gmt":"2019-09-17T03:05:47","guid":{"rendered":"https:\/\/www.jamesandwells.com\/?p=1382"},"modified":"2022-02-01T15:07:28","modified_gmt":"2022-02-01T02:07:28","slug":"encompass-appeal-the-latest-word-on-manner-of-manufacture-and-computer-implemented-inventions","status":"publish","type":"post","link":"https:\/\/www.jamesandwells.com\/nz\/encompass-appeal-the-latest-word-on-manner-of-manufacture-and-computer-implemented-inventions\/","title":{"rendered":"Encompass appeal: the latest word on manner of manufacture and computer-implemented inventions"},"content":{"rendered":"<h6>Key Points:<\/h6>\n<ul>\n<li>Encompass\u2019 appeal has been unanimously dismissed.<\/li>\n<li>The claimed method and apparatus did not involve a manner of manufacture.<\/li>\n<li>The Full Court did not consider that the appeal raised any significant question of principle.<\/li>\n<li>The Full Court declined to consider IPTA\u2019s submissions on the practice of IP Australia in relation to applications for computer-implemented inventions.<\/li>\n<li>The Full Court expressly repudiated the view that its judgment in<em>\u00a0Encompass<\/em>\u00a0would define the boundaries of patentability for computer-implemented inventions generally.<\/li>\n<li>The Full Court saw no error in how the primary judge had applied\u00a0<em>Research Affiliates<\/em>\u00a0and\u00a0<em>RPL Central<\/em>.<\/li>\n<li>The Full Court did not interpret the trial judge\u2019s references to whether there was \u201c<em>an improvement in the computer<\/em>\u201d as imposing a hardware requirement.<\/li>\n<li>The Full Court accepted that the trial judge might have impermissibly blurred considerations of manner of manufacture with other, conceptually distinct elements of patentability, but nonetheless found no error in the primary judge\u2019s conclusion.<\/li>\n<li>The Full Court\u2019s explanation of\u00a0<em>Research Affiliates<\/em>\u00a0and the first instance decision on Encompass is somewhat positive for patentees of computer-implemented inventions.<\/li>\n<\/ul>\n<h6>Introduction<\/h6>\n<p>The highly anticipated appeal judgment in\u00a0<em>Encompass Corporation Pty Ltd v InfoTrack Pty Ltd<sup>[1]<\/sup><\/em>\u00a0was handed down on Friday by a Full Court of the Federal Court of Australia. For patent litigators and patent attorneys on both side of the ditch who had been hoping that this decision would bring clarity to the vexed issue of the circumstances in which a computer-implemented invention may be patentable, the judgment is somewhat of an anticlimax, although the Full Court\u2019s interpretation of\u00a0<em>Research Affiliates LLC v Commissioner of Patents<sup>[2]<\/sup><\/em>(<em><strong>Research Affiliates<\/strong><\/em>) and the first instance decision in<em>\u00a0Encompass<\/em>\u00a0as not mandating a hardware component will be welcome to some. The amount of interest in this case is highlighted by the fact that both the Commissioner of Patents and the Institute of Patent and Trade Mark Attorneys of Australia (<strong>IPTA<\/strong>) intervened in the appeal. The appeal was heard by a bench of five judges, who delivered a single judgment.<\/p>\n<h6>The Trial Judgment<\/h6>\n<p>The case related to two Australian innovation patents owned by Encompass. The patents are very similar and relate to \u201c<em>a method and apparatus for displaying information and in one particular example, to a method and apparatus for displaying information relating to one or more entities, to thereby provide business intelligence<\/em>\u201d.<\/p>\n<p>The trial judge, Perram\u00a0J, held that the patents were invalid because they did not involve a manner of manufacture. InfoTrack\u2019s validity attack based on other grounds was unsuccessful.<\/p>\n<p>Although Perram\u00a0J accepted that the claimed invention satisfied both criteria set out in\u00a0<em>National Research Development Corporation v Commissioner of Patents<sup>[3]<\/sup><\/em>(<em><strong>NRDC<\/strong><\/em>) (bringing about an artificially created state of affairs with economic significance), Perram\u00a0J went on to hold that the satisfaction of those criteria was not enough, relying on\u00a0<em>Commissioner of Patents v RPL Central Pty Ltd<sup>[4]<\/sup><\/em>(<em><strong>RPL Central<\/strong><\/em>) in support of the proposition that it is necessary to ask whether the method or apparatus disclosed in the patents involves the implementation of an abstract idea which results in \u201c<em>an improvement in the computer\u201d\u00a0<\/em>(<em>Research Affiliates<\/em>) or, to the contrary, it can be said that the method\u00a0<em>\u201cmerely requires generic computer implementation\u201d\u00a0<\/em>(<em>RPL Central<\/em>)<em>.<\/em>\u00a0Perram\u00a0J found that the method and apparatus resulted in the computer being used to do something it had not be used to do before, but went on to hold that, in so doing, the method and apparatus involved any improvement in the computer.<\/p>\n<h6>The Appeal Decision<\/h6>\n<p>Despite the high hopes which many a practitioner had for this judgment, the Full Court took the view that the case did not raise any significant question of principle, the real issue being whether the trial judge had correctly applied the earlier Full Court judgments in\u00a0<em>Research Affiliates<\/em>\u00a0and<em>\u00a0RPL Central<\/em>. The Full Court stated that:\u00a0<em>\u201cThis appeal does not provide the occasion for this Court to set out the metes and bounds of patentable computer-implemented inventions, assuming that be an appropriate task\u2026\u201d.<sup>[5]<\/sup><\/em><\/p>\n<p>The Court granted IPTA only limited leave to intervene, and declined to consider IPTA\u2019s submissions on the practice of IP Australia in relation to applications for computer-implemented inventions.<\/p>\n<p>The Full Court applied\u00a0<em>NRDC<\/em>\u00a0and\u00a0<em>D\u2019Arcy v Myriad Genetics Inc<sup>[6]<\/sup><\/em>(<em><strong>Myriad<\/strong><\/em>), and explained that the decisions and language used in Research Affiliates and RPL Central are to be understood as attempts \u201c<em>to describe the conceptual difference between a manner of manufacture and unpatentable abstraction\u201d.<sup>[7]<\/sup><\/em>\u00a0That is, the Full Court\u2019s use of language such as \u201cartificial\u201d, \u201cphysical effects\u201d and \u201ctechnical contribution\u201d in\u00a0<em>Research Affiliates<\/em>\u00a0was simply a means of explaining that the claimed method \u201c<em>did not transcend, as a matter of substance, what remained an abstract idea or mere information of a kind that has never been considered to be patentable subject matter under Australian law\u201d.<sup>[8]<\/sup><\/em><\/p>\n<p>In rejecting the appellants\u2019 submission that the trial judge had erred by inquiring whether the claimed method results in \u201can improvement in the computer\u201d, the Full Court gave a rather fulsome interpretation of Perram\u00a0J\u2019s succinct findings on manner of manufacture. In the Full Court\u2019s view, his Honour\u2019s numerous references to \u201can improvement in the computer\u201d were merely \u201callusive\u201d references to the more detailed discussion in\u00a0<em>Research Affiliates<\/em>\u00a0that was \u201c<em>directed to elucidating the distinction between mere schemes, abstract ideas and intellectual information on the one hand, and on the other, possibly patentable, subject matter<\/em>\u201d. The Full Court noted that the trial judge had concurrently and alternatively asked whether the claimed method merely requires generic computer implementation (in the language of\u00a0<em>RPL Central<\/em>).<\/p>\n<p>The Full Court explained Perram\u00a0J\u2019s reference to whether there was an improvement in the computer \u201c<em>as an inquiry into and search for possibly patentable subject matter by reference to a touchstone of such subject matter\u201d.<\/em><\/p>\n<p>The Full Court held that:<\/p>\n<div><em>\u201c\u2026[W]e do not read the terms in which the primary judge couched this inquiry as signifying that his Honour was seeking to import any particular test into his consideration. In particular, we do not understand his Honour to have been positing a hardware-specific test \u2026 . The primary judge was simply directing his mind to whether the claimed invention was something more than mere \u2018generic computer implementation\u2019 of an otherwise abstract idea.\u201d<sup>[9]<\/sup><\/em><\/div>\n<p>In this case, the Full Court found that the method and apparatus claims were no more than an instruction to apply an abstract idea using generic computer technology. In so holding, the Full Court noted that the claims in suit did not claim, as an essential feature of the invention, any particular software or programming that would carry out the method, and found that description in the specification was \u201clargely agnostic\u201d as to how the methods were to be implemented.<\/p>\n<p>The Full Court also rejected the appellants\u2019 submission that the primary judge had focussed on individual features of the claimed method at the expense of considering the effect of their contribution.<\/p>\n<p>Significantly, the Full Court accepted that various statements by the trial judge about whether the method and apparatus resulted in a computer being used to do something which it has not been used to do before, as well as his Honour\u2019s references to the \u201cenhanced user experience\u201d suggest that \u201c<em>other, conceptually distinct elements of patentability might have intruded into his Honour\u2019s consideration of whether the claimed method and apparatus were directed to a manner of manufacture<\/em>\u201d,<sup>[10]<\/sup>\u00a0contrary to<em>\u00a0CCOM Pty Ltd v Jiejing Pty Ltd<sup>[11]<\/sup><\/em>(<em><strong>CCOM<\/strong><\/em>) and\u00a0<em>Research Affiliates<\/em>. However, the Full Court found that there was no error with Perram\u00a0J\u2019s ultimate conclusion that no manner of manufacture was involved in the method and apparatus as claimed.<\/p>\n<h6>Implications for New Zealand<\/h6>\n<p>In New Zealand, inventions involving computer programmes must pass an initial hurdle under section 11 of the<em>\u00a0Patents Act 2013<\/em>\u00a0(<strong>the 2013 Act<\/strong>). Under that section, claims relating to a computer program \u201cas such\u201d are excluded from the definition of \u201cinvention\u201d. If an invention which involves a computer program gets over the hurdle of section 11, the invention must still be found to be a \u201cpatentable invention\u201d within the meaning of section 14 because, among the other requirements for patentability, it is a manner of manufacture within the meaning of section 6 of the\u00a0<em>Statute of Monopolies<\/em>, and is not excluded from being a patentable invention under sections 15 or 16.<\/p>\n<h6>(a)\u00a0\u00a0\u00a0 Section 11 \u2013 computer program \u201cas such\u201d<\/h6>\n<p>To date, there have not been any New Zealand court decisions on section 11. Under the\u00a0<em>Patents Act 1953,<\/em>\u00a0computer software patents were held to be patentable, if the test formulated by Burchett J\u00a0<em>International Business Machines Corporation v Commissioner of Patents<sup>[12]<\/sup><\/em>\u00a0\u00a0was met, namely, that for computer software to be patentable it must have:<\/p>\n<ul>\n<li>Embodied a novel concept; and<\/li>\n<li>Had a commercially useful effect.<\/li>\n<\/ul>\n<p>Chapter 11 of IPONZ\u2019s Examination Manual (the\u00a0<strong>Manual<\/strong>) provides guidance on IPONZ\u2019s approach to section 11. Notably, the Manual states that the five \u201csignposts\u201d (framed in terms of \u201ctechnical effect\u201d) set down in the UK case of\u00a0<em>AT&amp;T KnowledgeVentures v Comptroller General of Patents<sup>[13]<\/sup><\/em>(<strong>AT&amp;T<\/strong>) may be useful in assessing whether the claims relate to a computer program \u201cas such\u201d. As reformulated in the Manual, the 5 \u201csignposts\u201d are:<\/p>\n<ol type=\"i\">\n<li><em>Whether the computer program, when run, has an effect on a process which is carried on outside the computer;<\/em><\/li>\n<li><em>Whether the program, when run, operates at the level of the architecture of the computer; that is to say whether the effect produced by the program is produced irrespective of the data being processed or the applications being run;<\/em><\/li>\n<li><em>Whether the program, when run, results in the computer being made to operate in a new way;<\/em><\/li>\n<li><em>Whether the program, when run, makes the computer a better computer in the sense of running more efficiently and effectively as a computer;<\/em><\/li>\n<li><em>Whether the perceived problem is overcome by the claimed invention as opposed to merely being circumvented.<\/em><\/li>\n<\/ol>\n<p>Just as the Australian courts have commented that UK jurisprudence on the \u201cas such\u201d gloss to be potentially useful in analysing \u201cartificial effect\u201d (see<em>\u00a0Research Affiliates<\/em>), there is a good argument that in addition to UK case law such as\u00a0<em>AT&amp;T<\/em>, Australian case law on assessing \u201cartificial effect\u201d in relation to computer-implemented inventions, such as in\u00a0<em>Research Affiliates, RPL Centra<\/em>l and now the\u00a0<em>Encompass<\/em>\u00a0appeal judgment, could assist New Zealand courts grappling with the \u201cactual contribution\u201d of such inventions.<\/p>\n<p>In\u00a0<em>Encompass,<\/em>\u00a0the Full Court has emphasised that it is the substance of the claims rather than their form which is relevant. Such an approach is expressly mandated in section 11 of the 2013 Act.<\/p>\n<p>Arguably, a significant difference between the law in NZ and Australia is the role which consideration of the prior art may play in assessing patentable subject matter. The requirement in section 11 of the new Act to consider the \u201cactual contribution\u201d arguably invites a comparison between the claims and the prior art which has the potential to blur the boundaries between patent eligibility and inventive step. In Australia, the High Court has emphasised that the grounds of novelty, inventive step and manner of manufacture are conceptually distinct grounds, and that manner of manufacture is assessed on the face of the specification alone. The Full Court in\u00a0<em>Encompass<\/em>\u00a0cited\u00a0<em>CCOM<\/em>\u00a0and\u00a0<em>Research Affiliates<\/em>\u00a0in support of that proposition.<\/p>\n<h6>(b)\u00a0\u00a0\u00a0 Section 14(a) \u2013 manner of manufacture<\/h6>\n<p>It is apparent from examination reports that IPONZ has commonly been applying\u00a0<em>NRDC<\/em>\u00a0and\u00a0<em>Research Affiliate<\/em>s when examining whether computer-implemented inventions are a manner of manufacture under section 14(a) of the 2013 Act. It is likely that the New Zealand courts will affirm that the NRDC approach (as accepted as applicable in New Zealand in\u00a0<em>Swift &amp; Co v Commissioner of Patents<sup>[14]<\/sup><\/em>(<em><strong>Swift<\/strong><\/em>)) remains the basis of the law in New Zealand under the 2013 Act, and that the courts will regard recent Australian case law, such as\u00a0<em>Encompass, Research Affiliates<\/em>\u00a0and\u00a0<em>RPL Central<\/em>, as providing guidance.<\/p>\n<p>The Full Court\u2019s explanation of\u00a0<em>Research Affiliates<\/em>\u00a0(and the\u00a0<em>Encompass<\/em>\u00a0trial judgment) as not mandating a hardware element suggests a broader approach to assessing manner of manufacture of computer-implemented inventions than what had appeared to some to be a rather narrow test applied by Perram\u00a0J at first instance in\u00a0<em>Encompass<\/em>. To the extent to which the New Zealand courts might regard the Full Court\u2019s judgment in\u00a0<em>Encompass<\/em>\u00a0as providing useful guidance in the absence of New Zealand case law, this will be a welcome development for patentees of computer-implemented inventions in New Zealand. Patentees in New Zealand are also likely to refer New Zealand courts to the Full Court\u2019s reminder in\u00a0<em>Encompass<\/em>\u00a0of the caution expressed in\u00a0<em>CCOM<\/em>\u00a0of the need to consider the various requirements of patentability as separate, conceptually distinct grounds.<\/p>\n<p>For the time being in New Zealand, the approach of the courts to computer-implemented inventions under section 11 and section 14(a) remains a matter of speculation.<\/p>\n<div class=\"post-footnotes\"><em>[1] [2019] FCAFC 161.<br \/>\n<\/em><em>[2] (2014) 227 FCR 378.<br \/>\n<\/em><em>[3] 102 CLR 252<br \/>\n<\/em><em>[4] (2015) 238 FCR 27<br \/>\n<\/em><em>[5] Encompass at [77].<br \/>\n<\/em><em>[6] (2015) 258 CLR 334<br \/>\n<\/em><em>[7] Encompass at [91].<br \/>\n<\/em><em>[8] Encompass at [94].<br \/>\n<\/em><em>[9] Encompass at [110].<br \/>\n<\/em><em>[10] Encompass at [112].<br \/>\n<\/em><em>[11] (1994) 51 FCR 260.<br \/>\n<\/em><em>[12] (1991) 33 FCR 218.<br \/>\n<\/em><em>[13] [2009] EWHC 343 (Pat).<br \/>\n<\/em><em>[14] [1960] NZLR 775 (SC).<\/em><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Key Points: Encompass\u2019 appeal has been unanimously dismissed. The claimed method and apparatus did not involve a manner of manufacture. The Full Court did not consider that the appeal raised any significant question of principle. The Full Court declined to consider IPTA\u2019s submissions on the practice of IP Australia in relation to applications for computer-implemented&#8230;<\/p>\n","protected":false},"author":8,"featured_media":594,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[81],"class_list":["post-1382","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ip-update","insight-resource-ip-updates"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Encompass appeal: the latest word on manner of manufacture and computer-implemented inventions - James &amp; Wells<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.jamesandwells.com\/nz\/encompass-appeal-the-latest-word-on-manner-of-manufacture-and-computer-implemented-inventions\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Encompass appeal: the latest word on manner of manufacture and computer-implemented inventions - James &amp; Wells\" \/>\n<meta property=\"og:description\" content=\"Key Points: Encompass\u2019 appeal has been unanimously dismissed. The claimed method and apparatus did not involve a manner of manufacture. The Full Court did not consider that the appeal raised any significant question of principle. 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Wells","og_description":"Key Points: Encompass\u2019 appeal has been unanimously dismissed. The claimed method and apparatus did not involve a manner of manufacture. The Full Court did not consider that the appeal raised any significant question of principle. The Full Court declined to consider IPTA\u2019s submissions on the practice of IP Australia in relation to applications for computer-implemented...","og_url":"https:\/\/www.jamesandwells.com\/nz\/encompass-appeal-the-latest-word-on-manner-of-manufacture-and-computer-implemented-inventions\/","og_site_name":"James &amp; Wells","article_published_time":"2019-09-17T03:05:47+00:00","article_modified_time":"2022-02-01T02:07:28+00:00","og_image":[{"width":1024,"height":610,"url":"https:\/\/www.jamesandwells.com\/wp-content\/uploads\/2021\/09\/Article-23.jpg","type":"image\/jpeg"}],"author":"Jennifer Mertens","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Jennifer Mertens","Est. reading time":"11 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.jamesandwells.com\/nz\/encompass-appeal-the-latest-word-on-manner-of-manufacture-and-computer-implemented-inventions\/#article","isPartOf":{"@id":"https:\/\/www.jamesandwells.com\/nz\/encompass-appeal-the-latest-word-on-manner-of-manufacture-and-computer-implemented-inventions\/"},"author":{"name":"Jennifer Mertens","@id":"https:\/\/www.jamesandwells.com\/nz\/#\/schema\/person\/64e4a40a49fe981aaa979bfd660eb636"},"headline":"Encompass appeal: the latest word on manner of manufacture and computer-implemented inventions","datePublished":"2019-09-17T03:05:47+00:00","dateModified":"2022-02-01T02:07:28+00:00","mainEntityOfPage":{"@id":"https:\/\/www.jamesandwells.com\/nz\/encompass-appeal-the-latest-word-on-manner-of-manufacture-and-computer-implemented-inventions\/"},"wordCount":2162,"image":{"@id":"https:\/\/www.jamesandwells.com\/nz\/encompass-appeal-the-latest-word-on-manner-of-manufacture-and-computer-implemented-inventions\/#primaryimage"},"thumbnailUrl":"https:\/\/www.jamesandwells.com\/wp-content\/uploads\/2021\/09\/Article-23.jpg","articleSection":["IP update"],"inLanguage":"en-NZ"},{"@type":"WebPage","@id":"https:\/\/www.jamesandwells.com\/nz\/encompass-appeal-the-latest-word-on-manner-of-manufacture-and-computer-implemented-inventions\/","url":"https:\/\/www.jamesandwells.com\/nz\/encompass-appeal-the-latest-word-on-manner-of-manufacture-and-computer-implemented-inventions\/","name":"Encompass appeal: the latest word on manner of manufacture and computer-implemented inventions - James &amp; 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