Aristocrat Technologies Australia Pty Limited (ATA) appealed to the Federal Court from an Australian Patent Office decision that four of its innovation patents (the Patents) for electronic gaming machines (EGMs) should be revoked to failing to define patentable subject matter. The Federal Court allowed the appeal, finding that the EGMs were patentable subject matter.
EGMs, also called "slot machines", are a combination of hardware and software components. The hardware includes cabinets with video display screens, a "slot" or other vending device to receive money or other forms of credit, and various internal electronics, including an internal computer to operate software to operate the EGM. The internal computer, commonly called a "game controller", runs software to visually display reels with symbols on the screen and simulate movement of the reels, in order to play a game based on the displayed symbols. Typically, a person makes a wager or monetary bet via the vending device to play the game on the EGM. In this case, the novel and innovative features of the Patents lay in the aspects of the game played on the EGM, as controlled by the computer, and not in any aspect of the hardware (which was essentially generic for EGMs).
ATA had filed the Patents and requested examination of each one before the Australian Patent Office. The Patents each defined in their respective independent claims an EGM comprising various hardware components and the steps performed by the game controller to execute the game. During examination, the Patents were each objected to for failing to define patentable subject matter (known as "manner of manufacture" under the Australian Patents Act 1990 (Cth)). The basis of the objection was that the substance of the invention was in the rules or procedure for playing the game, and so was a mere scheme that was unpatentable. ATA requested a hearing before a Delegate of the Commissioner of Patents to decide the issue. The Delegate agreed with the examiner and held that the Patents did not define patentable subject matter, finding that the hardware components of the claimed EGM did not add anything of substance to the "inventive concept", being the game. ATA appealed the Delegate's decision regarding each of the Patents to the Federal Court.
In the Federal Court appeal, Burley J reviewed the authorities on patentable subject matter and found that in determining whether a patent defined patentable subject matter, there was a two-step test. The first step was to consider whether the invention related to a mere scheme or business method. If so, the second step was to consider whether the invention is in the computerisation of the scheme or business method.
In deciding the issue, Burley J followed the recent Full Federal Court decision in Commissioner of Patents v Rokt Pte Ltd  FCAFC 86, where it was held that expert evidence on patentable subject matter was of limited use. As such, the extensive expert evidence filed by both parties during trial before the Rokt decision issued was mostly ignored. However, Burley J did rely on expert evidence as to the highly regulated nature of EGMs in Australia as an indication that EGMs must have a particular construction and are built for a specific (and limited) purpose.
Are inventions relating to EGMs a mere scheme?
In applying the two-step approach, Burley J found that the invention claimed by each of the Patents was not simply a mere scheme or business method. Rather, Burley J construed each of the claimed inventions as a "mechanism of a particular construction, the operation of which involves a combination of physical parts and software to produce a particular outcome in the form of an EGM that functions in a particular way". As the initial question was answered in favour of patentability (ie, not a mere scheme), it was not necessary to answer the second question (ie, whether the invention lay in the computerisation).
In support of his finding, Burley J pointed out specific hardware components of an EGM, including the display for displaying the virtual reels, credit input mechanism (vending device), game play mechanism (buttons) and the game controller that are characteristic of EGMs. Also, due to the highly regulated environment in Australia in which EGMs can be operated, these factors demonstrated that the invention is a machine specifically designed to provide a specific gaming function. Accordingly, the combination of the physical hardware components and the virtual software components (being the virtual reels and displayed symbols) produced the "invention". Thus, the invention had a specific character and a single purpose – to enable a person to play a game.
The fact that the hardware components were agreed by both ATA and the Commissioner to be part of the common general knowledge in the art did not detract from this finding.
It was also noted by Burley J that the Commissioner of Patents had conceded that a traditional gaming machine comprised solely of hardware and mechanical components that implemented the same game without any software would have been patentable subject matter. To Burley J, this concession was inconsistent with the Commissioner's position that effectively separated the game rules or procedure from the hardware in an EGM only because of its electronic nature.
It seems that the particular construction of EGMs and their highly regulated nature influenced Burley J's assessment of whether the claims of the Patents defined patentable subject matter. Despite the agreement of both parties that the hardware components were conventional in the art of gaming machines, the specific function and purpose of those hardware components, compared to generic computer or processor parts typically found in other computer-implemented inventions, led to the finding that the invention was not simply a scheme or business method, and so was decisive.
While this reasoning seems logical to some extent, the test for when hardware forms part of the invention appears to remain somewhat arbitrary. It could be said that hardware components of EGMs are just as "generic" or "conventional" within the EGM field as general computer elements, like a processor or memory.
Justice Burley J relied upon previous Federal Court decisions in which EGMs were found to be patentable subject matter: Neurizon Pty Ltd v LTH Consulting and Marketing Services Pty Ltd (2002) 58 IPR 93 at  and  (Dowsett J) and Aristocrat Technologies Australia Pty Limited v Konami Australia Pty Limited (2015) 114 IPR 28 at  (Nicholas J). However, each of those previous decisions was decided prior to keyFull Federal Court decisions confirming the current principles for determining the patentability of computer-implemented inventions, particularly Encompass Corporation Pty Ltd v InfoTrack Pty Ltd  FCAFC 161 and Rokt.
While this decision is of benefit to EGM manufacturers, it should be noted that the claims are limited to those hardware components. As such, the claims are of limited scope to physical EGMs and thus online gaming platforms, mobile devices and even desktop computers appear to be free to simulate the same game the subject of these claims without fear of infringing the claims if they do not also provide the hardware components defined by the claims of the Patents.
The decision provides some guidance on the patentability of computer-implemented inventions that employ specific and not generic hardware. Where a computer-implemented invention employs hardware components are specific to the invention or purpose-built, then the invention will be patentable, even if those hardware components are well-known in the technical field.
However, due to this requirement for specific or purpose-built hardware, the decision has limited application to the patentability of computer-implemented inventions in general, such as those found to be unpatentable in previous Federal Court decisions. In particular, many computer-implemented inventions are specifically, and advantageously, designed to be "hardware-neutral" so they can efficiently leverage a wide variety of computer technologies (such as personal computers, smartphones, physical and wireless internet networks, satellites, etc). This recent decision does not provide any additional hope for companies seeking patent protection in Australia for such inventions.
Accordingly, in the appropriate circumstances, patent applicants should carefully draft their patent applications to emphasise the combination of hardware and software in achieving a computer-implemented invention, and especially whether the hardware components are specific to a particular technical field or serve a particular purpose, and are not simply generic computer components applicable to all fields of computer technology.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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