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Here’s an interesting one: a judgment from Branson J regarding an order made by the Patent Office revoking an innovation patent.

What’s interesting is that the case looks pretty much like a pure business method patent.

The patent was for:

‘a method for structuring a financial transaction, the purported effect of which is to protect an individual’s assets (presumably against the lawful claims of the individual’s creditors)’

And the issue was whether such a method was capable of being the subject of a patent. Like the Deputy Commissioner of Patents, the court decided that the subject matter claimed in the patent was not a ‘manner of manufacture’ – in other words, the invention was not the proper subject matter for a patent.

Unlike the only other previous Australian judicial consideration in the ‘business method’ context, Catuity, this case does not involve an implementation in hardware/software (Catuity was all about smart cards).

There’s been a bit of discussion of this issue at the Patent Office level in the recent past. In Re Innovation Patent No 2004100848 in the name of Peter Szabo and Associates Pty Ltd [2005] APO 24 (‘Szabo’), Deputy Commissioner of Patents Herald decided that Australian patent law required a ‘material element’ for there to be patentable subject matter:

In that case, which concerned a method for implementing a ‘reverse mortgage’, the Deputy Commissioner held that there was no ‘material application of science or technology’, and hence no patentable subject matter.

Branson J discusses, but does not fully endorse this reasoning. According to Branson J:

‘It may be that a principle has been developed for the application of s 6 of the Statute of Monopolies that patent protection is only available in respect of inventions which reflect scientific or technological developments. I interpolate that if a principle so expressed has been developed it may give rise to debate as to the true boundaries of science and technology; for this reason the principle may prove to be of little more assistance than the presently accepted dichotomy between useful arts and fine arts. ‘

That much I follow. Justice Branson wouldn’t be the first to criticise the Szabo reasoning: BDW’s David Clark has told our patent office, IP Australia that it should ‘get with the times’:

‘In this era of of knowledge-based economies and globalisation there is a strong argument that any prohibition on business method patents would be short-sighted. … It is important that the Patent Office does not set out to create new laws in excluding business method or system patents.’

What I don’t follow is where Branson J goes next. Her Honour offers two reasons for rejecting the patent as being not patentable subject matter, and the first is a real doozy:

‘The Deputy Commissioner did not think that there could be any argument about the invention the subject of the Patent being of economic utility because of the number of financial advisers in society charged with looking after their client’s assets. This was, in my view, to adopt the wrong approach to the question of whether the method has ‘value to the country in the field of economic endeavour’ within the meaning of the above excerpt from NRDC. The economic utility identified by the Deputy Commissioner is not a utility of value to the country; it is a utility of value only to those whose assets are ultimately protected – and possibly to their professional advisers. The performance of the invention will not add to the economic wealth of Australia or otherwise benefit Australian society as a whole. For this reason, in my view, the invention the subject of the Patent is not a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies.’

Say what? It won’t contribute to Australia’s economic well being therefore it’s not patentable? How is that a certain standard? How is that to be assessed? (As a colleague commented – so Viagra does contribute to Australia’s economic well-being….?)

The second reason is slightly less disturbing:

‘the law of Australia assumes that the public interest is served by individuals paying their debts as and when they fall due. …The invention of a ‘method for protecting an asset owned by an owner’ within the meaning of claim 1 of the Patent is thus the invention of a method by which the owner may be insulated from the operation of laws intended to serve the public interest. In my view, this is an additional reason why the invention the subject matter of the Patent is not a proper subject of letters patent according to the principles which have been developed for the application of s 6 of the Statute of Monopolies. …The social cost of conferring on the invention the protection of a patent would therefore not be counterbalanced by any resultant benefit to the public.

The funny thing is, I thought that the original reason given by the Patent Office for revoking the innovation patent was reasonably sound:

‘The invention resides in the law of Australia. That law is the creation of Parliament, and of the courts through common law. At one level one could say that all laws are “artificial” in that … they are the creation of Parliament or of the courts. Beyond that, the law must be taken as being a deliberate intention of the legislature to provide governance of the population at large. I think it must be taken that the legislature has enacted the law in full knowledge of all its consequences, and in particular the interaction with other laws of the Commonwealth, including the common law.
…
Furthermore, the law is the foundation upon which our society is built … I do not believe that it is open (or proper) for the Commissioner of Patents to grant monopoly rights over certain aspects of Australian law. The law is for the populace at large; it is not for the use of one individual to the exclusion of all others who desire to follow the law.’

I still can’t work out why Branson J didn’t just affirm that ground, and avoid all the messy business method patent-y stuff completely. But maybe I’m missing something…