The Full Federal Court has delivered its highly anticipated judgment in the Encompass v InfoTrack appeal, unanimously agreeing that two Encompass innovation patents are invalid because the computer-implemented methods claimed do not satisfy the "manner of manufacture" requirement for patentable subject matter in Australia. However, the Court's judgment will be a disappointment for those who had hoped the Full Court would set down a definitive test for patentability of computer-implemented inventions. Rather, the appeal was decided on the basis that the primary judge had reached the correct conclusion. The judgment does nevertheless provide some important guidance about specificity in patent drafting, and the role of prior art in the manner of manufacture assessment.

Summary of Encompass v InfoTrack

• There remains no definitive test for whether a computer-implemented invention satisfies the "manner of manufacture" requirement for patentability in Australia. The applicable, somewhat nebulous, inquiry is whether the invention is proper subject matter for a patent according to the developed legal principles.
• Whether the invention brings about an "artificially created state of affairs of economic significance" or results in an "improvement in the computer" may be useful as a guide, but neither concept is a determinative rule for patentability.
• To be directed to a manner of manufacture, patent claims and specifications must contain sufficient specificity so that the invention can be implemented. This involves a balancing act for patent applicants, who might naturally favour seeking the broadest protection possible.
• Considerations of novelty and inventive step should not intrude in the determination of manner of manufacture, according to obiter comments by the Full Court. The Patent Office has since released a statement indicating that the Patent Examiners Manual (which refers to prior art and novelty in the context of manner of manufacture) will be reviewed, but that the Encompass judgment does not alter current examination practice in relation to computer-implemented inventions.
• While the patents in this case were considered invalid, the outcome was based on the circumstances of the case. Computer-implemented inventions may still be patentable in Australia, particularly where they result in an improvement in computer technology (Rokt [2018] FCA 1988, which is currently under appeal).

Background to Encompass v InfoTrack 

Encompass's innovation patents claimed computer-implemented methods and apparatus for performing searches of repositories and displaying the information to provide business intelligence.

At trial, Justice Perram found that neither patent claimed a patentable invention in that the invention in each case was not a manner of manufacture. His Honour found that it was not sufficient that the inventions brought about an "artificially created state of affair of economic significance", in accordance with the well-established "test" set down by the High Court (NRDC). Justice Perram applied the further principle that the invention must result in “an improvement in the computer” for it to be a manner of manufacture, and not merely be a "generic computer implementation" (Research Affiliates).

Justice Perram concluded that although the invention was novel, innovative, and resulted in an "enhanced user experience", it was not directed to a manner of manufacture because it was merely a "concatenation" of three well-known methods, none of which were new. Together, those methods did not result in the computer being used to do something that it had not been used to do before, so did not bring about an improvement in the computer or its functionality.

No definitive test for patentability of computer-implemented inventions

Despite being a five-judge bench (therefore with the power to overturn earlier Full Court judgments), the Full Court declined to set down a definitive test for determining whether a computer-implemented invention satisfies the manner of manufacture requirement, saying that this was not the occasion to do so "assuming that be an appropriate task".

The Full Court confirmed that the principal inquiry to assess manner of manufacture is whether the invention is proper subject matter for a patent according to the developed legal principles. The invention is to be characterised as a matter of substance, not merely claim form. According to the Full Court, in most cases, it is relevant to consider whether the invention brings about an "artificially created state of affairs", which has "economic significance", however this is a guide rather than a rule. In the present case, the primary judge had not erred in concluding that Encompass's inventions satisfied these criteria, but were not a manner of manufacture.

For computer-implemented inventions, consideration of whether the invention results in an "improvement in the computer" or in the "functionality of the machine" may be appropriate as "touchstones" in determining patentable manner of manufacture. Here the primary judge had used these factors to "elucidate the distinction between mere schemes or abstract ideas and possibly patentable subject matter", and had not applied them as a rigid test. Accordingly, his Honour had not erred in finding that the Encompass invention did not result in an "improvement in the computer" and that this was relevant to his conclusion that the invention was not directed to a manner of manufacture.

The role of prior art in assessing manner of manufacture

In the Full Court's only disapproval of the primary judge's approach, the appeal judgment indicates that "conceptually distinct elements of patentability might have intruded into his Honour’s consideration of whether the claimed method and apparatus were directed to a manner of manufacture", but that there was no error in his ultimate conclusion. The Full Court was referring to statements by Justice Perram doubting whether the claimed method allowed the computer to do anything that had not already been done and describing the "the enhanced user experience" as resulting "from the combination of well-known computing mechanisms". 

Historically, the approach under Australian law has been to keep the determination of the manner of manufacture requirement "conceptually distinct" from considerations of novelty and inventive step (Research Affiliates and Lockwood). In 2017 however, the Australian Patent Examiners Manual was amended to recommend that when assessing the substance of the invention for the purpose of the manner of manufacture requirement, examiners consider the common general knowledge and prior art, and, in the case of computer-implemented inventions, "consider which features of the claim confer novelty over the prior art". This approach was reflected in Justice Perram's decision in Encompass, delivered in March 2018.

While the Full Court fell short of expressly stating that prior art is not relevant to the manner of manufacture assessment, its statements are difficult to reconcile with the Patent Examiners Manual and with the approach of certain first instance judges. Since the Full Court judgment was delivered, the Patent Office has released a statement indicating that the Patent Examiners Manual will be reviewed, however that the judgment does not alter current examination practice in relation to computer-implemented inventions.

The need to disclose implementation of the invention with specificity

In considering the Encompass patent specification itself (which was broadly identical between the two patents), the Full Court found that the description was "largely agnostic as to how the method should be implemented" and the method claims were "no more than an instruction to apply an abstract idea… using generic computer technology." The Full Court referred to the specification as comprising "permissive language" and "broadly-expressed and non-limiting suggestions or possibilities", for example language such as "in any appropriate form”, “in a number of ways", and "using any suitable mechanism”.

While patent applicants like Encompass generally draft their claims as broadly as possible to seek the broadest protection possible, here the "permissive" language was a factor in the Full Court's conclusion that the invention was not directed to a manner of manufacture. The appeal judgment confirms that if a patentee does not describe the implementation of the invention with some specificity, the manner of manufacture requirement may not be satisfied.