The Australian Patent Office has delivered some good news for software patents in Jagwood Pty Ltd [2020] APO 38 by finding that a system for reconciling electronic payments constitutes patent eligible subject matter.

This decision reinforces that it is impermissible to reduce an invention to an abstract idea by overlooking the technical implementation of the invention, even if this involves the use of a generic computer device. It also highlights how requesting a hearing could be a viable strategy to address an unfavourable examination experience.

Jagwood's invention reconciles financial documents and B2B payments

When payments are made, it is common to use a reference number so that a payment can be associated with the correct financial document. It is also possible for a payee to match the details of the payment (such as the date, payment amount, payer name), with details on the bank statement.1

However, a major limitation with this common approach is that payment details on bank statements are often limited to a few fields. This limitation is exacerbated when conducting business-to-business transactions which are more complicated.2

The solution proposed by Jagwood's invention is to use a Uniform Resource Identifier (URI) in the reference number field linking to the financial document.3 The Delegate summarised the invention into the following four steps:4

  • Step 1. Payer uploads financial document to a server which is assigned a URI
  • Step 2. Payer puts URI into the reference field and makes payment via an electronic payment system
  • Step 3. Payee receives the payment via electronic payment system with the URI link to the financial document
  • Step 4. Payee opens the financial document to see what the payment is for. The URI is a link to the financial document.

A new concept: adopting technical vs non-technical perspectives when assessing patent eligibility

Jagwood made the following points when arguing for patent eligibility.5

  1. The computer is "integral to" the invention.
  2. There is no "pen-and-paper" or "old-school" equivalent to the invention.
  3. The improvement is at the level of the computer architecture.
  4. Technical effect can reside in configuring known computer elements in a new and advantageous way; the result of the invention is in the business realm, but the substance is in the technical realm.
  5. Inventions pertaining to business methods are not inherently less patentable than those in any other field.
  6. A method of applying a known thing to a new and useful purpose may be patentable.
  7. The invention overcomes the "bandwidth problem" with a technical solution.
  8. The invention overcomes the "matching problem" with a technical solution.

Points 1, 2, 5 and 6 were accepted by the Delegate. 

With respect to points 3 and 4, the Delegate deferred to his consideration of points 7 and 8 and noted (in a break from convention) that the invention can be viewed from a technical and non-technical perspective:6

From [a 'non-technical solution 'perspective''] the substance of the invention could be considered a convention for naming the location of documents which provides a non-technical solution. From this perspective, although the solution requires a particular configuration or architecture of a network and computers, these are generic network and computing devices, and do not provide a technical solution.

From [a 'technical solution 'perspective''], the use of an identifier (specifically a URI) to have the dual purpose of supplying both the location of a financial document and the payment reference in an electronic payment system, provides a technical solution to identified problems (the 'bandwidth problem' and the 'matching problem').

The Delegate considered the non-technical solution perspective to be `unsatisfying' as it 'reduces the invention to an abstract idea by overlooking the necessary elements of the invention.'7 This finding is consistent with a recent Federal Court decision which discouraged the approach of stripping back a claim so that only an abstract idea emerges.8

Turning to the specific architecture of the invention, the Delegate stated that 'the electronic payment system are [sic] inexorably intertwined with the computing and networking systems. It is a technical solution because this synergistic utilisation of technology overcomes the problems faced by the inventor.'9

Following on from this deliberation, the Delegate considered that the problem being solved could be characterised as being either technical or non-technical.10 This meant that while the invention produces a practical and useful result,11 it does not do so by improving the functioning of the computer.12 Thus, '[t]he substance of the invention is not an improvement in the computer technology itself, and instead the improvement lies in how the computer technology is used.'13

However as the specific architecture of the invention overcomes the problems faced by the inventor, the Delegate was satisfied that there was ingenuity in the way in which the computer was utilised.14

Ultimately, the Delegate was persuaded that the contribution of the claimed invention was technical in nature and thus, constituted a manner of manufacture.15

Benefits of requesting a hearing to bypass unfavourable examination

Prior to this hearing, Jagwood filed several generations of divisional applications16 which, despite being considered by different Examiners, were viewed unfavourably as lacking patentable subject matter. However, this decision demonstrates that objections raised during examination are not conclusive and that the prospect of obtaining a positive outcome may be enhanced by requesting a hearing.

If you have questions about patents for software or would like to understand more about the hearings process, please contact the authors Isaac Tan (itan@davies.com.au) or Ken Simpson (ksimpson@davies.com.sg). 

Footnotes

1 Jagwood Pty Ltd [2020] APO 38, [14].

2 Ibid [17].

3 Ibid [12].

4 Ibid [21].

5 Ibid [60].

6 Ibid [78]-[79].

7 Ibid [78]-[82].

8 Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778.

9 Jagwood (n 1) [83].

10 Ibid.

11 Ibid [89].

12 Ibid [88].

13 Ibid [90].

14 Ibid [93].

15 Ibid [97].

16 Ibid [2].

Originally published August 24, 2020.

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.