The Full Federal Court dismisses the appeal in Encompass Corporation v InfoTrack

In brief 4 min read

On 13 September, the Full Bench of the Australian Federal Court dismissed the appeal in Encompass Corporation v InfoTrack¹, confirming that 'computer-implementation' is insufficient to provide patentability to an otherwise unpatentable scheme. The highly-anticipated decision, while not providing a definitive test, nonetheless offers greater clarity on the criteria for patentability of computer-implemented inventions.

Background

Encompass’ innovation patents are directed to a software platform that allows generating and displaying to a user a network representation by querying remote data sources. The platform allows the user to select a node on the network, perform multiple searches to retrieve information related to the selected node and provide the retrieved information to the user.

Encompass initially launched proceedings against InfoTrack alleging infringement of two of its innovation patents. InfoTrack admitted infringement and counterclaimed for invalidity of Encompass' innovation patents. Amongst other things, InfoTrack claimed the inventions were not patentable in accordance with Australian Law. The two innovation patents are very similar, and the court limited the analysis to a single patent².

The question of patentability of computer-implemented inventions has been the subject of debate in Australia for a number of years. In our previous article we listed some of the Federal Court decisions that have resulted in the current state of the law and discussed the controversial application of these decisions by IP Australia.

In the primary case, Justice Perram found the Encompass patents to be invalid as not directed to patentable subject matter. The decision endorsed all previous authorities in this area without providing any additional guidance to ascertain what type of computer-implemented inventions would be patentable.

The appeal decision

Encompass appealed the decision of the primary judge, giving the Federal Court another opportunity to clear the uncertainty by providing a more defined test for patentability of computer-implemented inventions.

The full bench of the Federal Court dismissed the appeal. The judges asserted that the Encompass invention can be performed, in substance, using a generic computer implementation and, therefore, cannot be considered patentable.

Interestingly, the decision refers to a number of passages of the patent specification stating that specific functions of the software platform can be realised 'in a number of ways depending on the preferred implementation'. Such generality also applies to the claims of the patent. The broad scope of the terminology used was extensively debated at the hearing and did not seem to help Encompass' case. However, given the rapidly evolving nature of computer technologies, it would not be commercially valuable to restrict computer-implemented inventions to a specific software/architecture implementation.

As we have previously pointed out, in the Research Affiliates decision³, another bench of the Federal Court cited a foreign case, Aerotel⁴, while assessing the patentability of a computer-implemented invention. Since then, elements of the 'Aerotel test' have been controversially leveraged by IP Australia when assessing computer-implemented inventions⁵. The full bench in Encompass appears to have missed the opportunity to clearly comment on the validity of this approach.

However, importantly, the Full Court did note that the primary judge may have used language that introduced conceptually distinct elements of patentability in the consideration of whether the claimed method and apparatus were directed to an eligible subject matter. The bench drew attention to the caution expressed in CCOM in respect to importing novelty or inventive step considerations into the assessment of subject matter eligibility, inferring that some flaws may exist in the primary judgement, despite arriving at a similar conclusion.

After attending the hearing of the Encompass appeal proceedings, the decision was not too surprising. However, given the full bench of five judges, we had hoped the decision would provide greater clarity in respect of a test to determine what is required for a computer-implemented invention to be patentable in Australia.

What's next?

This decision is unlikely to radically alter the current state of play, but does clarify that the invention was deemed to be an otherwise unpatentable method operated on a 'generic computer'. This distinguishes it from inventions that remain patentable where there is ingenuity in the use of a computer or an algorithm, implemented on a computer, which produces a tangible technical output.

Importantly, the judges also avoided commenting on the recent Federal Court decision in Rokt⁶ (currently on appeal) in which Justice Robertson found a patent for a smart advertising software platform to be patentable. This leaves hope for further clarification on what computer-implemented inventions are patentable subject matter in Australia, and we continue to work with our clients in navigating this area to obtain positive commercial outcomes.

There are at least two other cases that the Australian Federal Court will have to decide in the near future, including the appeal in Rokt (noted above). We will be watching this space closely and will keep all our clients and readers up to date.