Are Australia and New Zealand the same? Patentability and computer programs

The draft examination guidelines developed by the Intellectual Property Office of New Zealand (IPONZ) relating to the patentability of computer programs in the new New Zealand Patents Bill highlight a marked distinction in how the patentability of inventions is viewed in Australia and New Zealand. With the proposed changes, it seems that the protection of computer programs in both countries will become diametrically opposed.

This is ironic given the latest changes in legislation mooted between the two countries under the Trans-Tasman Mutual Recognition Agreement, which proposes a single regulatory framework for patent attorneys in Australia and New Zealand to bring about a common education and training standard for patent attorneys in the two countries. According to the changes proposed for New Zealand, computer programs should not be regarded as patentable inventions, whereas in Australia, there is no such exclusion provision. Indeed, Australia has some of most accommodating legislation for the patentability of computer programs and business methods in the world, although some recent decisions of the Australian commissioner of patents may challenge this view.

Apart from New Zealand choosing to follow a different course from Australia with regard to the patentability of computer programs, the proposed guidelines seem to equate New Zealand law with UK law, while distancing themselves from corresponding Australian law.

This is remarkable, as the proposed New Zealand law is virtually identical to the existing Australian law – both retain the requirement that an invention must be for a manner of manufacture. The current UK law dispensed with this requirement in 1977 in order to align with the European Patent Convention. In view of this, it would seem inappropriate to import recent UK case law into the draft New Zealand guidelines.

Interestingly, the draft New Zealand guidelines comment that Australian law contains no exclusion provisions for patent-eligible subject matter, and the Australian courts have not developed a test for addressing exclusion. In fact, the Australian act contains two express exclusions (Sections 18(2) and (3)) and several exclusions that form part of the original Section 6 of the now rescinded UK Statute of Monopolies. The latter has been judicially considered through the last centuries by the courts in both the United Kingdom and Australia (National Research Development Corporation (NRDC) v Commissioner of Patents(1959) 102 CLR 252, [1961] RPC 134; Commissioner of Patents v Microcell Limited (1959) 102 CLR 232; Joos v Commissioner of Patents (1972) 126 CLR 252; International Business Machines Corporation v Commissioner of Patents (1991) 22 IPR 417; NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd 32 IPR 449; Grant v Commissioner of Patents [2006] FCAFC 120). The proposed New Zealand provisions and the existing Australian provisions concerning patentable inventions differ only by virtue of the fact that the proposed New Zealand Patents Bill has an express list of exclusions (Clauses 14 and 15) and includes an additional exclusion in a discrete clause (Clause 13A), whereas the Australian act lists two exclusions in discrete sections (Sections 18(2) and (3)) and relies on case law to indicate other exclusions.

The previous Australian Patents Act 1952, which included the manner of manufacture requirement, listed many exclusions and was the underlying legislation to many seminal decisions that have been applied in considering the patentability of computer-related inventions since (NRDC, Commissioner of Patents v Microcell Limited). Indeed, UK case law decided under the UK Patents Act 1949 and Australian case law to date are far more relevant to framing the guidelines than the current UK act.

The UK Burroughs Corporation (Perkin’s) Application and International Business Machines Corporation Application decisions ((1974) RPC 147 and (1991) 33 FCR 218) are relevant to interpreting the ground-breaking Australian NRDC decision on patent eligibility and were useful in considering what type of interaction constituted a physical effect in a computer-related invention and software context.

Given the outcome of NRDC, the UK and Australian courts considered it unnecessary and inappropriate to provide a test on how to apply the exclusion provisions according to a codified process of the type prescribed Aerotel ([2006] EWCA Civ 1371), which is the exemplar case recommended to be followed in the draft guidelines.

Indeed, similar views are now being realised in many major jurisdictions that do not have the body of case law based on the “manner of manufacture” consideration of patentability. In the US Bilski decision (561 US (2010) Case 08-864), the Supreme Court considered it to be inappropriate to restrict considerations of patentability to one or the other prescriptive tests, such as the transformation test that was prescribed in the lower Federal Circuit Court of Appeals decision in that case. Under the European Patent Convention, the Enlarged Board of Appeal of the European Patent Office (EPO), in an opinion provided in response to several questions from the EPO president concerning a possible divergence of UK and EPO case law and having specific regard to the Aerotel decision (EPO G3/08), considered it appropriate to allow the case law to develop and not impose any restrictive or preferential view on issues of perceived divergence. This is entirely consistent with the approach propounded by the High Court in NRDC.

As expressed in the EPO opinion and by the Supreme Court in Bilski, it was considered that the prescriptive tests under consideration were not necessarily incorrect, but were not exclusive approaches to adopt, and that other approaches or tests may be equally applicable.

Under UK and Australian laws of claim interpretation, there is clear precedent indicating that the inclusion of an unpatentable integer in a claim (eg, a statutory exclusion from patentability) does not make the entire claim unpatentable, and that the claim must be considered in its entirety. In Catnic ([1982] RPC 183) Lord Diplock opined that there is a danger in considering the integers of a claim individually and in isolation. This could yield a literal rather than a purposive construction. This approach was supported by the Australian courts in more recent decisions (Nesbit Evans Group Australia Pty Ltd v Impro Ltd (1997) 39 IPR 56; Pfizer Overseas Pharamaceuticals v Eli Lilly [2005] FCAFC 224).

Consistent with the principles propounded by NRDC and subsequent authorities, it is undesirable to fetter what can be patented by an exact verbal formula or to dissect the claim to individual consideration of its elements in isolation of their working relationship with other elements. The tests propounded in Aerotel and Bilski (Federal Circuit Court of Appeals decision) have been criticised for this reason by subsequent authorities, as has the recent Amazon decision in Canada (2010 FC 1011).

In their more recent decisions (Symbian (EWCA [2008] CIV 1066), AT&T ([2009] EWHC 343 (Pat)), the UK courts appear, as far as possible, to be clarifying the reasoning of the Aerotel judgment specifically referred to in the draft guidelines in a way that allows greater harmony with the EPO approach of allowing broader patent protection for computer-implemented inventions. Thus, it is a concern that New Zealand is choosing to follow an outdated legal approach in the guidelines by virtue of its reliance on the Aerotel decision, even in attempting to align itself with the current UK law.

The exclusion provision proposed in the New Zealand Patents Bill could simply be dealt with by interpreting a claim making reference to a computer program, as a whole, and then applying principles of law to determine whether the invention is patentable, having regard to case law that has evolved with respect to “manner of manufacture” such as in Grant.

It is regrettable that the computer program exclusion has been included in the New Zealand Patents Bill, as the precise wording of the exclusion actually sets the patent law of New Zealand apart from the patent laws of many other countries including the EU member states, the United States and Canada, as well as Australia, Japan and Korea.

Indeed, inventions involving computer programs should be patentable under the inclusive language of Article 27(1) of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), to which New Zealand is a party. TRIPs defines the scope of patentable subject matter and states that “patents shall be available in all fields of technology and patent rights shall be enjoyable without discrimination as to the field of technology”.