Aristocrat Technologies Australia (“Aristocrat”) is the owner of a large number of patents related to electronic gaming machines (EGMs). An EGM is an assembly of software and hardware that can be operated to produce a form of gaming that is popular in Australia. In Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778, the Federal Court of Australia found that the Commissioner of Patents (“Commissioner”) had erred in regarding inventions covered by various innovation patents belonging to Aristocrat as having no substance and being simply for game rules and so not patentable subject matter.

Claim 1 of a representative patent described a display, a credit card input mechanism, meters, a random number generator, a game play mechanism and a game controller that performed a number of functions. This case is an appeal from a decision of the Commissioner (via her delegate) that a number of innovation patents with analogous claims did not claim patentable subject matter.

The patent examiner in question had issued an adverse report that set out that the “inventive concept” is in substance directed towards a gaming procedure and that the “mere use of a computer, random number generator, monetary input mechanisms, etc. added “nothing of substance to the inventive concept…”. Given that there were a number of patents involved, the delegate identified a “common aspect” in the inventions as being a “hold and spin” feature. According to the delegate, configurable symbols from a main game are held while the other symbols are removed and replaced in a spin. Agreeing with the examiners, the delegate said that that aspect was a “game rule”. The delegate said that a game rule is not an artificially created state of affairs and does not produce a technical effect. Ultimately, the game is for generating prize money. The generation of prize-money and revenue is a scheme for making money and, as such, is not a manner of manufacture. However, the Court held that the facts of the present case do not fit the paradigm of a scheme that has merely been implemented by a computer.

The Commissioner submitted that the scheme or set of rules uses generic hardware and software components of an EGM. She said that there is no technical contribution in the way that the machine carries out the scheme, and no operational or functional improvement in the machine. The ingenuity lies in the rules of the game. The rules of the game are the only features that distinguish the invention from other EGMs. Encompass Corporation Pty Ltd v InfoTrack Pty Ltd [2019] FCAFC 161 at [99] (“Encompass”) applies the principle that a mere scheme or idea implemented using generic computer technology is not a manner of manufacture.

The Court considered Section 18(1A)(a) of the Patents Act that sets out that an invention is a patentable invention if it is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies. Citing CCOM Pty Ltd v Jeijing [1994] FCA 396 at [291] (“CCOM”), the other requirements of s 18(1A) of novelty, innovative step, usefulness and no secret use are not relevant and are to be assumed for present purposes. In CCOM, the Full Court said that a claim for a ball point pen would not be novel or inventive, but it would still be a manner of manufacture (patentable subject matter).

In Commissioner of Patents v RPL Central Pty Ltd [2015] FCAFC 177 (“RPL”), the Full Court said:

“A claimed invention must be examined to ascertain whether it is in substance a scheme or plan or whether it can broadly be described as an improvement in computer technology. The basis for the analysis starts with the fact that a business method, or mere scheme, is not, per se, patentable. The fact that it is a scheme or business method does not exclude it from properly being the subject of letters patent, but it must be more than that. There must be more than an abstract idea; it must involve the creation of an artificial state of affairs where the computer is integral to the invention, rather than a mere tool in which the invention is performed. Where the claimed invention is to a computerised business method, the invention must lie in that computerisation. It is not a patentable invention simply to “put” a business method “into” a computer to implement the business method using the computer for its well- known and understood functions.”

The Court pointed out that there is an initial question of whether the claimed invention is for a “mere scheme or business method of the type that is not the proper subject matter of a grant of letters patent”. If yes, the question is then whether the invention is simply or merely implementing an unpatentable scheme or method in a computer.  The second inquiry is whether the claimed invention involves the creation of an artificial state of affairs where the computer is integral to the invention, rather than a mere tool in which the invention is performed. This second inquiry has resulted in questioning whether the invention makes a technical contribution or solves a technical problem. In this case, the second inquiry is not necessary because the first enquiry should be answered in the negative.

The Court looked to the process followed in Full Court decisions. For example, In Encompass, the Full Court, “after close examination of the specification and the claims in issue” found that the invention was no more than a scheme or mere idea. Then they considered whether the invention was nevertheless patentable. As set out in Encompass:

“In considering whether the mere implementation by a computer of an abstract idea or scheme is enough to transform unpatentable subject matter into patentable subject matter, the Full Court in Research Affiliates (at [115]) resorted to the language of “artificial” or “physical” effects, “technical contribution” and suchlike expressions, as used by the High Court in NRDC. By resorting to this language, the Full Court was doing no more than explaining that the claimed method in that case did not transcend, as a matter of substance, what remained an abstract idea or mere information of a kind that has never been considered to be patentable subject matter under Australian law.“

Here, the Court did not interpret the invention as being a mere scheme or plan:

“It is to 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. Accordingly, it is unnecessary to consider the second enquiry.”

The invention has hardware, firmware and software components. To a person skilled in the art, it is a machine of a particular construction that implements a gaming function. The physical and virtual features of the display, reels, credit input mechanism, gameplay mechanism and game controller combine to produce the invention.  The approach taken by the delegate and the Commissioner in which they first identify the “inventive concept” and then utilise that concept to conclude that the invention is a mere scheme “rather puts the cart before the horse.”

As set out in Grant v Commissioner of Patents [2006] FCAFC 120:

“While a mere scheme or plan is not the proper subject of a patent, an alleged invention which serves a mechanical purpose that has useful results does not become such an unpatentable scheme or plan merely because the purpose is in the carrying on of a branch of business.”

The Commissioner accepted that there was no doubt that the EGM of claim 1 would be a manner of manufacture if it was implemented mechanically using cogs, physical reels and motors instead of software. The Court said that it is difficult to see why the development of an implementation of an EGM that utilises the efficiencies of electronics technology would be disqualified from patent eligibility, when the old-fashioned mechanical technology was not. Such an approach would be antithetical to the encouragement of invention and innovation.