14 December 2005
Key Points:
Patent owners might have to show that their invention adds to the economic wealth of Australia or otherwise benefits Australian society as a whole, and that their patent advances the public interest.
In Grant v The Commissioner of Patents [2005] FCA 1100, Justice Branson in the Federal Court analysed what is a patentable invention under Australian law and concluded that to be patentable in Australia, an invention must be for the benefit of society as a whole.
Grant involved an appeal from a decision of the Patents Office as to whether an innovation patent for a method of protecting assets (presumably from creditors) involving the use of a trust fund was patentable. This application was refused by the Patents Office and became the subject of the appeal.
It is noted that the application in question was for a business method patent. The patentability of business methods has been a controversial topic both in Australia and internationally for a number of years. However, Australian courts have recognised the patentability of business methods since 2001 when the Federal Court of Australia in Welcome Real Time SA v Catuity [2001] FCA 445 held that business methods are patentable in Australia provided they satisfy the same requirements for patentability as all other inventions. Justice Branson did not question the general patentability of business methods, but instead considered the more general question of what is a patentable invention.
The basic question of what is patentable was considered by the High Court in NRDC v The Commissioner of Patents (1959) 102 CLR 252, in which the High Court observed that in order to be patentable, a process:
"must be one that offers some advantage which is material, in the sense that the process belongs to a useful artform as distinct from a fine art — that is a value to the country is in the field of economic endeavour."
NRDC is longstanding authority in Australia, and this was recognised by Justice Branson However, her judgment involves a significant reinterpretation of this test, which has the potential to narrow the field of patentable inventions in Australia. Justice Branson was of the view that the "value to the country" referred to by the High Court involved something more than value to particular individuals. In this case, she said, the asset protection scheme was only of value to the person whose assets were protected, or possibly their professional advisers. She concluded that:
"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 of 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 section 6 of the statute of monopolies."
Justice Branson's judgment reads a significant new requirement of social good into the question of what is patentable. To satisfy this requirement, patent owners must show that their invention adds to the economic wealth of Australia or otherwise benefits Australian society as a whole, and that their patent advances the public interest. If this test is adopted by other judges, this approach may lead to significant problems in future cases as courts and litigants attempt to define the line between public and private interests.
The position proposed by Justice Branson appears contrary to previous Australian cases, such as IBM v The Commissioner of Patents (1991) 22 IPR 417, in which the court relied on a more workable "commercially useful effect" test to assess patentability. IBM is similar to the US approach in State Street Bank & Trust Co v Signature Financial Group 149 3d 1368 (1998), the US case which established the patentability of business methods under US law, which advocated a "useful, concrete and tangible result" test. (It is noted with respect to the US law that the upcoming appeal in LabCorp v Metabolite to be heard by the US Supreme Court may provide that court with its first opportunity to rule on the patentability of business methods under US law.)
Patent applicants and practitioners should be concerned about what effect Justice Branson's decision may have in practice. We will need to wait and see how it influences future judicial decisions, as well as any new rules issued by the Patent Office in the meantime.
