29 May 2006

Why is Software Patentable in Australia?

In this post I will explain that the boundary between patentable and unpatentable subject matter is clearly demarcated. On the way there, I will explain how we arrived at a patent system comfortable with software inventions.


Section 18(1)(a) of the Australian Patents Act forms the basis of the patentability question in Australia. To quote: "a patentable invention is an invention that, so far as claimed in any claim is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies."

So, unlike Europe, we have no statute that specifically prohibits the granting of patents for software products. It follows that we do not have to perform various semantic gymnastics if we need to protect software, as is the case in Europe.

The 1623 Statute of Monopolies

The Statute of Monopolies was established in England in 1623 and is the original source of Anglo-American law. I am proud that we have maintained our connection to this Statute. In my opinion, section 18(1)(a) is an excellent provision since it allows our judiciary to continue to define and re-define the meaning of "manner of manufacture".

The history of patentable subject matter in Australia actually begins and is still deeply rooted in England. In fact it goes as far back as 1623. The reason for this lies in section 18(1)(a) of our Patents Act. According to that section an invention will be patentable provided it is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies.

Back in the late 1500's, Queen Elizabeth I granted monopolies to various courtiers and favourites for all manner of products which were already in existence in an attempt to raise revenue. Because of the uproar this caused, the Queen revoked the most objectionable and allowed the common law courts to determine the validity of the remaining monopolies. In Darcy v Allin, (1602), Darcy sued Allin for infringement of his sole rights of importing and making playing cards. The court held that the patent was bad and thus set a precedent which could be used in further matters.

However, after Elizabeth, King James I continued to grant objectionable monopolies. As a result, the Statute of Monopolies was passed. The Statute banned all present and future monopolies except for inventions, which were preserved by section 6 of that Statute.

Section 6 reads as follows: "Provided also, and be it declared and enacted that any declaration beforementioned shall not extend to any Letters Patent, and grants of privilege for the term of 14 years or under hereafter to be made of the sole working or making of any manner of new manufactures (emphasis added) within this realm to the true and first inventor and inventors of such manufactures which others at the time of making such Letters Patent and grants shall not use so as also they be not contrary to the law nor mischievous to the state by raising prices of commodities at home or hurt of trade or generally inconvenient (emphasis added), the said 14 years to be accounted from the date of first Letters Patent or grant of such privileges hereof to be made, but that the same shall be of such force as they should if this Act had never been made, and of none other."

There are two phrases that have been the source of much judicial precedent. These are: "manner of new manufactures" and "generally inconvenient". For the purpose of this post, I will just consider "manner of new manufactures".

Manner of New Manufactures

In a series of cases, the courts in England attempted to define this phrase, leading eventually to the watershed case of National Research Development Corporation v Commissioner of Patents (1959) 102 CLR (The "NRDC" Case).

In that case, NRDC attempted to obtain a patent for a method of applying a herbicide to a field. The High Court pointed out that we should not be attempting to reduce the question of patentability to a question of verbal interpretation, but rather as a general title for a whole category of subject matter for which patents may be granted. The court proposed a broad approach towards the meaning of invention, while still attempting to provide some guidance. In the Court of the Commissioner, reference had been made to the English case of GEC's Application in 1942.

In that matter, Justice Morton put forward what have become known as Morton's Rules. In terms of those rules, a method or process is a manner of manufacture if it (a) results in the production of some vendible product; or (b) improves or restores to it's former condition a vendible product; or (c) has the effect of preserving from deterioration some vendible product to which it is applied.

This was too much of a limitation for the High Court in NRDC and it held that it would only accept those rules if "product" could be interpreted as covering any artificially created state of affairs, which was "vendible" if it had economic significance. Furthermore, the method or process must have application in the industrial as opposed to the fine arts. That said, the High Court compared a field full of weeds with a weed-free field and concluded that there was indeed an artificially created state of affairs evident in the weed-free field. The weed free field was clearly of economic significance and thus it concluded that NRDC indeed had a patentable invention.

It follows that we can distill three rules for patentability from the NRDC case. In order to qualify as patentable subject matter, a method or process must:

(a) Result in an artificially created state of affairs, and

(b) Be of economic significance, and

(c) Be applied to the industrial arts as opposed to the fine art.

Applying NRDC to Software

In the 1991 case of IBM v Commissioner of Patents, the Delegate of the Commissioner of Patents rejected an application by IBM for "A Method and Apparatus for Producing a Curved Image". The method in question was objected to by the Delegate as not being a "manner of manufacture". The Delegate stated that the claim was bad since it defined a mathematical algorithm. A mathematical algorithm is not patentable since it is a method of solving a mathematical problem and so does not result in "an artificially created state of affairs".

The relevant claim included a number of computing steps and a displaying step. The claim itself did not disclose any apparatus or physical mechanism for computing and displaying the curve. Thus, citing a number of US cases, the Delegate rejected the claim. The court, however, correctly construed the claim in the light of the specification and held that there was clearly a computer involved in the generation of the curve. Furthermore, the court held that there was no difference conceptually between the use of the compounds involved in the NRDC case and the use of the computer to generate the curve. Just as those compounds were previously known, so here, it was not suggested there is anything new about the mathematics of the invention. What was new was the application of the selected mathematical methods to computers, and, in particular, to the production of the desired curve by computer. The production of an improved curve image was held to be a commercially useful effect in computer graphics. Thus, the method claim described an "artificially created state of affairs" that was of "economic significance".

The Australian Patent Examiners Manual

The Patent Examiner's manual has endorsed NRDC and IBM, by stating that the following will almost always be patentable:

1. Source code for patentable computer software.

2. Executable code for patentable computer software, which is in a machine readable form.

3. A computer, when programmed to achieve any result which has utility in the field of economic endeavour.

Proper Claiming

In view of NRDC, IBM and the Examiner's manual, when putting together a set of claims for software it is advisable to have independent claims including

1. A method claim covering the steps carried out by the software product

2. A claim directed to a computer configured or programmed to carry out the steps.

3. A claim directed to the software product per se.


It is clear that there is no reason to treat software any differently from any other field of technology when it comes to patents. In my opinion, much of the contention has been driven by a feeling that patents are somehow not suited to software. Furthermore, I think that the patent examination process is not particularly suited to software at the moment, leading to patents being granted for subject matter that is often neither novel nor inventive.

However, before we throw out the baby with the bathwater, there are things that we can do to address this issue and to deal with software patents which could unreasonably hinder development. I will deal with that in a further post.

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