A new treatment for business methods

During 2010 and 2011 the Australian Patent Office issued a string of decisions (eg, Discovery Holdings Limited [2011] APO 56 (9th August 2011)) rejecting applications for so-called "business method patents" on the grounds of unpatentable subject matter. The legislative requirement in this respect is for a manner of manufacture (Section 18(1)(a) of Patents Act (Cth) 1990), according to traditional principles ultimately inherited from old English law.

The rejected business method applications have notably involved various computer-implemented methods that execute some form of business method. The reasoning in recent Patent Office decisions has typically relied quite heavily on the principles set forth in the Grant decision of the Full Federal Court (Grant v Commissioner of Patents [2006] FCAFC 120). Grant is used by the Patent Office to reject claimed methods that are said to amount to no more than “mere schemes”, and exhibit no concrete, tangible, physical or observable effect. This language may seem familiar to US readers, as it is quite similar to that used in the State Street decision, which Grant quoted with approval (State Street Bank and Trust Company v Signature Financial Group, Inc, 149 F 3d 1368 (Fed Cir 1998)). 

Thus, the recent Patent Office decision of Celgene Corporation ([2012] APO 12) has been received with interest as it marks a subtle departure from the prevailing Patent Office treatment of business method patents. Interestingly, while the invention in Celgene Corporation is essentially a business method, the applicant elected to present the invention as a method of treating a patient.

The subject matter of the rejected Celgene application related to a method for dispensing thalidomide, in which a pharmacy dispenses the (potentially harmful) drug only once it has received an indication of whether the risk of taking thalidomide is acceptable (or otherwise) for the patient. The idea is that a physician collects from the patient a signed form evidencing his or her informed consent as regards the risks and side effects of the drug, and the patient is provided with appropriate counselling and information as necessary.

The applicant claimed the invention as a “method of treating a patient with thalidomide”. Presenting the claims thus, the applicant no doubt had in mind the possibility of using to its advantage the Bristol-Myers Squibb decision, which held that methods of treatment of the human body are not inherently unpatentable (Bristol-Myers Squibb Co v FH Faulding & Co Ltd [2000] FCA 316).

However, the specification described no new method of medical treatment per se, but rather a scheme for restricting access to thalidomide. Consequently, the hearing officer cut a swathe through the applicant’s reasoning and held that the claims represented nothing more than working directions to a pharmacist and a scheme for dispensing a drug, and thus not a manner of manufacture. In conclusion, the hearing officer ventured his view of the invention as outside the realms of patentability in the following terms:

"This is analogous to a process of treating a patient characterised by the patient double checking the instructions on the bottle of tablets before taking a tablet. While this is clearly a sensible thing to do, the essence of the method clearly does not lie in the useful arts, or the field of economic endeavour. The hypothetical claims of the present innovation patent are similarly directed to a sensible thing to do, but the essence of the invention does not lie in the field of economic endeavour. I cannot see how the addition of an explicit treatment step could convert the method to a manner of manufacture."

While the Patent Office hearing officer referred in passing to the Grant decision, he did not indulge in a lengthy exposition of the principles of Grant. In a departure from recent decisions in this area, the hearing officer instead placed considerably more emphasis on the approach and principles outlined in the earlier and leading authority regarding manner of manufacture – namely, the High Court's NRDC decision (National Research Development Corporation v Commissioner of Patents [1959] HCA 67).

Interestingly, the tenor of the hearing officer’s decision was that the primary consideration was to look at the applicant’s contribution to the art, rather the ostensible subject matter of the claims, when deciding on patentable subject matter. Readers based in the European Union may sense a parallel with the way in which the European Patent Office decides the patentability of computer-implemented business methods, although the hearing officer did not explicitly reference any European authorities in reaching this view.

While finding a lack of manner of manufacture, the hearing officer also found a lack of novelty and innovative step on the evidence before him. Nonetheless, pending some corrective measures from the Federal Court of Australia, this Patent Office decision highlights that applicants will, for the time being, continue to face a tough time before the Australian Patent Office when trying to patent business methods.

However, coincidentally Celgene has appealed the hearing officer's decision, with a first directions hearing scheduled for 22nd June 2012 before Justice Middleton. Consequently, it is expected that any decision that results from this case should provide clear directions and guidance to the Patent Office when examining so-called “business method” patents. 

The judge will be forced to decide between two antagonistic lines of reasoning: first, that computer-implemented business methods are unpatentable as their technical contribution resides in unpatentable business ideas; and second that computer-implemented business methods are patentable as they claim methods that achieve new and useful results via the mediation of technical apparatus.

This dilemma may be viewed a choice between a more restrictive EU-style approach to patent eligibility, as advanced by the Patent Office, and a more liberal US-style approach, which favours patent applicants with protection for a greater breadth of subject matter. The hearing officer in the Celgene decision has laid some preliminary groundwork in favour of the EU-style “technical contribution” approach. In this respect, the hearing officer has formulated reasons that support the view that the “technical contribution” approach is inherent in the leading Australian authority on the matter, the NRDC decision. More particularly, he quoted the NRDC decision as stating that a patentable process “must offer some advantage that is material, in the sense that the process belongs to a useful art rather than a fine art”. This line of enquiry is supported by further reference to NRDC, as well as a UK judgment referred to in NRDC (Re Virginia-Carolina Chemical Corporation’s Application [1958] RPC 358) and quoted extensively by the hearing officer in his decision.

While any judgment from the Federal Court appeal is not expected until late 2012, if not 2013, prudent applicants may elect to delay examination of pending applications until the Federal Court sheds some light on the future of prevailing Patent Office practice, which currently sees applications rejected on the grounds of patent eligibility.