FEDERAL COURT OF AUSTRALIA

Neurizon Pty Ltd v Jupiters Limited [2004] FCA 1012

INTELLECTUAL PROPERTY – patents – infringement – whether claims of the patent are unclear when read by skilled addressee- whether the specification should be used to determine the meaning of claims when considering issue of infringement – fair basing – whether the claims express a wider invention than the matter described in the specification – novelty – whether the patent is anticipated by the prior art base – application of the reverse infringement test – obviousness – whether the patent lacks an inventive step – whether the patent would have been obvious to a person skilled in the art in the light of the common general knowledge as it existed in the patent area before the priority date – effect of previous decision involving the same patent in determining construction of the patent

Statutes

Patents Act 1990 (Cth) ss 40(3), 18(1)(b)(ii), 7(2), 7(3), 115(1)(a)

Queensland Gaming Machine Act 1991 (Qld)

Cases

Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 56 IPR 129 Foll

Edison and Swan Electric Light Co v Holland (1889) 6 RPC 243 Dist

Flexible Steel Lacing Company v Beltreco Ltd (2000) 49 IPR 331 Cited

Flour Oxidizing Company Ltd v Carr & Co Ltd (1908) 25 RPC 428 Dist

Hicks v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 757 Cons

Higginson & Arundel v Pyman (1926) 43 RPC 291 Dist

Improver Corporation v Remington Consumer Products Limited [1990] FSR 181 Foll

Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 177 ALR 460 Foll

La Macchia v Minister for Primary Industries & Energy (1992) 110 ALR 201 Cited

Meyers Taylor Pty Ltd v Vicarr Industries Limited (1977) 137 CLR 228 Foll

Neurizon Pty Ltd v LTH Consulting and Marketing Services Pty Ltd [2002] FCA 1547 Cons

Olin Corporation v Super Cartridge Co Pty Ltd (1977) 180 CLR 236 Foll

Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd [1970] RPC 157 Foll

Otto v Steel (1886) 3 RPC 109 Dist

Re Dow Corning Corporation’s Application [1969] RPC 544 Cited

The Automatic Weighing Machine Co v The Combined Weighing Machine Co (1889) 6 RPC 367 Dist

NEURIZON PTY LTD v JUPITERS LIMITED, JUPITERS MACHINE GAMING PTY LIMITED, EASTERN SUBURBS LEAGUES CLUB LIMITED, WYNNUM MANLY LEAGUES CLUB LIMITED, QUEENSLAND LIONS SOCCER CLUB

Q44 OF 2003

KIEFEL J

BRISBANE

5 AUGUST 2004

INDEX

AND

THE COURT DECLARES THAT:

1. That the respondents have infringed claims 1, 2, 4, 5, 12, 13, 17, 18 and 21 of the applicant’s patent being Australian Patent No 714229.

THE COURT ORDERS THAT:

2. The respondents’ cross-claim be dismissed.

3. The respondents pay the applicant’s and second cross-respondent’s costs of these proceedings.

4. The question of injunctions following upon infringement be adjourned to a date to be fixed.

5. The issue of damages be adjourned to a date to be fixed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

AND

REASONS FOR JUDGMENT

BACKGROUND

1                     The applicant, Neurizon Pty Ltd, is the proprietor of Australian Patent No 714229. The Managing Director of the applicant, and the person responsible for the invention, is Steven Brian Johnson. The applicant and Mr Johnson are also cross-respondents. The invention is entitled ‘PRIZE AWARDING SYSTEM’ and is referable to the award of jackpot prizes in electronic gaming machines (‘EGMs’). The priority date of the patent is 9 August 1999.

2                     The first respondent Jupiters Limited (‘Jupiters’) is the developer and owner of an EGM monitoring system known as ‘Cougar’ which can provide jackpot functions. The second respondent, Jupiters Machine Gaming Pty Limited (‘Jupiters Gaming’), is a subsidiary of Jupiters and a licensed monitoring operator in Queensland since 19 August 1997. It offers gaming technology services to hotels, clubs and other premises having liquor licences. It provides monitoring services with respect to EGMs and it promotes and supplies the Cougar system to various venues in Queensland. The third, fourth and fifth respondents are licencees of the Cougar system.

3                     Mention was made during the proceedings of Tabcorp Holdings Limited (‘Tabcorp’) having acquired the whole or part of the undertaking of Jupiters. Particular mention was made of the Jupiters’ technical services division and of the fact that Tabcorp was only authorised as a licensed monitoring operator. The defence, which was amended at a time close to trial, does not however suggest that the Jupiters’ respondents no longer have the proprietary interests or conduct the activities in question in these proceedings.

4                     Mr Johnson worked for Jupiters at times between 1994 and the end of January 1997. He was engaged in the latter part as the software development manager. At this time Jupiters was developing its ActivData monitoring system. It was enhanced with a method for a jackpot by about July 1996. It was then called ActivData II+.

5                     This is the second case involving the Neurizon patent. The first, involving different respondents, was determined by Dowsett J on 13 December 2002 (Neurizon Pty Ltd v LTH Consulting and Marketing Services Pty Ltd [2002] FCA 1547; 58 IPR 93). Subsequent to that judgment, and as a result of comments made by his Honour in it, Neurizon amended its patent to delete some claims and limit others to a reference to EGMs and not electronic gaming devices (EGDs) generally. Other amendments were contemplated but not pursued.

6                     Electronic machine gaming is regulated in Queensland under the Queensland Gaming Machine Act 1991 (Qld). In 1997 the Act was amended to limit the role of the government to a regulatory probity role. Monitoring of EGMs could then be performed by licensed monitoring operators.

7                     EGMs used in Queensland are required to meet technical requirements set by the Queensland Office of Gaming Regulation (‘QOGR’). The present requirements are set out in the Australian/New Zealand Gaming Machine National Standard (Revision 6.0 dated 6 December 2002) and the Australian/New Zealand Gaming Machine National Standard Queensland Appendix (Version 6.0.1). EGMs for use in Queensland clubs and hotels must operate in the following way:

·                         a game play commences when the player commits a wager from the EGMs credit meter;

·                         the player must initiate game play by pressing a play or bet button, or similar input device;

·                         prize determination must be clearly specified or accessible to the player;

·                         the EGM must generate representations to players (random symbols or reel stop positions) from a random number generator algorithm and mapping algorithm;

·                         the choice of algorithm is at the discretion of the supplier of the equipment but must meet minimum QOGR standards;

·                         the prize determination is the result of the computer based random number generator in conjunction with the prevailing payout tables and rules of the game;

·                         a game must have a statistical expectation of a return to player of between 85 per cent and 92 per cent;

·                         a game play is considered complete when the final transfer to the player's credit meter takes place (in the case of a win) or when all credits wagered or won on that game play that have not been transferred to the credit meter are lost;

·                         the period after completion of a game play and before commencement of the next game play is idle mode.

8                     All EGMs in Queensland must be monitored by a central monitoring system. If an EGM is not in constant contact with that monitoring system, after a certain number of attempts to communicate with the system, the EGM must disable itself from play. The QOGR requires the use of the Queensland Communications (‘QCOM’) protocol as the standard method of communication between EGMs and the site controller of the monitoring system. The QCOM protocol in force at 9 August 1999 was the protocol published on 16 October 1998. The current version of the protocol (Version 1.5.5a) was published on 19 December 2001. The QCOM protocol is a method of 2-way communication between EGMs and the site controller of the monitoring system. A site controller is a device which controls and polls all EGMs in a venue. The software component of the site controller is the floor controller. It collects relevant data from EGMs operating in a jackpot pool and communicates that data to, and receives information from, the jackpot triggering device and other components within the site controller. A jackpot trigger device (‘JTD’) is one which determines if a jackpot is won.

9                     Electronic communication from the site controller to the EGM is referred to as polling. Each electronic message transmitted is called a poll. A poll is a message sent by a site controller in accordance with the QCOM protocol to an EGM which, if valid, will cause the EGM to send a response. Under the QCOM protocol electronic communication from an EGM to the site controller is permitted only when the site controller sends a poll message to the EGM. A poll under the QCOM protocol performs two functions: it transmits information or instructions from the site controller to an EGM and it allows the EGM to respond with transmission of information from the EGM to the site controller. Under the QCOM protocol the site controller cannot poll an EGM faster than once per second.

10                  The representation of meter information sent by an EGM in response to a poll is in a ‘raw’ form, in that meters are expressed as the total accumulated value of each meter since the EGM was commissioned, or its memory reset.

11                  An EGM can itself award prizes. Jackpots are a special prize on an EGM. A progressive jackpot is one where the potential prize amount increases over time, with a proportion of all bets contributing to the jackpot pool. The prize amount is called the jackpot pool. Jackpots can be stand alone or ‘linked’. They may be linked within a venue (local area jackpots) or across venues (wide area jackpots). An internal jackpot is one that has the jackpot trigger determined by the EGM, rather than a monitoring system. An example of this is an Aristocrat EGM which is the subject of further discussion. An external jackpot is a jackpot that has the jackpot trigger determined by a monitoring system or jackpot controller external to any EGM that is participating in that jackpot. The Cougar systemis an example of this. It may be described as an external random progressive (‘ERP’) jackpot. The trigger condition for a standard progressive mystery jackpot is when the pool value reaches or exceeds a predetermined, but secret or ‘mystery’, value which lies somewhere between the minimum and maximum values of the pool. A new mystery value is calculated, and the pool value re-set to its minimum, each time the jackpot is won. This style of jackpot was first described by Boris Frankovic and others in a patent in 1985. Its trade name is ‘Cashcade’. The ActivData II+ monitoring system implements a standard progressive mystery jackpot and a weighted progressive mystery jackpot. The Hyperlink system, the subject of Australian Patent No 754689, is also a random progressive jackpot. It is owned by Aristocrat Technologies Pty Ltd. The jackpot trigger and operational software are incorporated within certain types of Aristocrat EGMs.

12                  Jackpot systems are currently subject to QOGR ‘Minimum Technical Requirements’. There is an issue as to whether QOGR had published such requirements at the priority date and what the understanding of persons in the industry would have been as to whether a jackpot system was ‘deterministic’. The Frankovic system is deterministic in nature and was understood to be so at the priority date. I do not understand it to be disputed that, at the least, a deterministic jackpot is one where the probability of a win on the jackpot increases with time and is affected by a past event. If a jackpot is non-deterministic it may be approved by the QOGR as a return to player (‘RTP’) jackpot. The RTP is the ratio of the value of prizes paid to the value of wagers made on an EGM and is usually expressed as a percentage, such as 92 per cent of the amounts wagered on an EGM are returned to the players of that EGM. Gaming tax in Queensland is calculated as a fraction of that figure. The higher the RTP figure for an EGM the lower the amount of gaming tax is paid.

13                  The Hyperlink jackpot system is what has been described as ‘game-based’. In essence it may be said that the probability of winning a jackpot in that system is dependent upon the amount wagered on a single game on that EGM. It was approved by the QOGR at the priority date as an RTPjackpot and looked to be in a position to acquire a large part of the market for jackpot systems.

14                  The invention in question was an attempt, in part, to provide a jackpot different from the Hyperlink system. It was approved as an RTPjackpot by the QOGR on 13 October 1999.

the patent

15                  The invention is generally described as follows:

‘This invention relates to a prize awarding system. In particular, the invention is directed to method and apparatus for awarding a prize to players of gaming machines, wherein the probability that the player of a gaming machine will win the prize is dependent upon the amount bet on that gaming machine during an elapsed period.’

16                  Under ‘BACKGROUND ART’ it is explained that an EGM, such as a poker machine, provides a player with the opportunity to win cash or other prizes. To entice more people to play EGMs, or to make them more exciting to play, the EGM can be electronically linked in a network with each EGM contributing a proportion of its turnover to a pooled jackpot. The EGMs may be located at one site or spread over several remote sites.

17                  It is further explained that in a ‘typical progressive linked jackpot system’ one or more EGMs contribute a percentage of turnover to a pool. Each time an EGM is played it tests for a particular winning combination. If it is achieved the EGM is awarded a prize. A key aspect of such an arrangement is that each game played has the same probability of a jackpot win. The popularity of this arrangement is now diminishing due to the introduction of EGMs which offer the option of multiple wagers. In that case the probability of a player winning is no longer proportional to the wager. It is said that this is considered a major disincentive. It also became necessary to provide special software able to test for the winning combination. Further it is difficult to link EGMs which have different basic wagers to the same progressive jackpot pool.

18                  Reference is then made to Australian Patent No 655801. This is a reference to the Frankovic patent. In that system one or more EGMs are typically connected to an external Random Jackpot Controller via a data network. As each game is played, the controller adds a proportion of each wager to the external pool. The controller provides the pool with a starting value and then selects a random number between that value and a predetermined maximum value. As each EGM is played the Random Jackpot Controller is informed of the credits bet and a proportion of the wager is added to the pool. The value of the pool is then compared with the selected random number. If there is a match, the Random Jackpot Controller awards the current pool value to that EGM. This arrangement has the characteristic that the probability of a win on each EGM increases as the pool increases towards the maximum limit. Therefore a player playing after the pool is reset has a lower probability of winning the jackpot than a player playing later, even though they may be wagering the same amount. The arrangement is generally considered unfair and deterministic. This has led some gaming authorities to deny the inclusion of pool contributions, with consequent loss of taxation advantages to operators.

19                  The Aristocrat Hyperlink patent is then described. It is said that in it, as each game is played, the EGM tests for the occurrence of a random ‘win’ event the probability of which is a function of the credits bet on that particular game. The EGM is connected to an External Feature Game Controller via a communications network. Each EGM informs the controller of credits bet and a proportion of the credits bet is added to the external starting pool. If the EGM detects the random event the controller is informed. The EGM then typically enters a feature game where the winning amount is determined. The greater the wager per game the greater the probability of a win on that game. A disadvantage of the system is that it is not easily applied to existing EGMs. It requires special software with a means of determining and detecting the random event per game. Alternatively a communications-based Central Feature Game Controller may theoretically be employed. It would have the means of determining and testing for this random event per game on behalf of each EGM, based on the credits bet on each game.

20                  It is noted that many jurisdictions have allowed the use of specialised communications networks designed to collect EGM data and to provide external control over the EGMs. Some operators of the networks have implemented jackpot awarding systems utilising the networks. The networks cannot however guarantee that each EGM’s data will be collected in synchronisation with each EGM’s game cycle. Further, many of these networks do not support the collection of ‘credits bet’ data from EGMs. In some cases there may be over six games played between data collections. It is likely that games would be missed due to the delay in data collection or ‘latency’ of the communications systems. These games would still be contributing to the jackpot without having a chance of winning. Another problem is that a smart player could defer the playing of the feature game until the jackpot pool increased. The longer a player waits the greater the potential pool increase and the greater the prize. In an extreme example a player could wait until the feature game is triggered on another contributing EGM, then immediately play the feature game and effectively steal the other player’s prize.

21                  It is said that it is an object of the invention to overcome or ameliorate these disadvantages or to provide a useful alternative.

22                  The invention is summarised as follows:

‘In one broad form, the invention provides a method of awarding a prize in a gaming system comprising at least one electronic gaming machine, characterised in that the probability of each electronic gaming machine winning the prize is dependent upon at least some of the amount wagered on that electronic gaming machine during an elapsed period.’

23                  I have the advantage of Dowsett J’s summary (at 97-99, pars [10]-[14]) of the invention in a preferred embodiment of the specification as described in the patent (his Honour uses the acronym EGD):

‘THE INVENTION

10. … In a preferred embodiment, EGDs are connected to a communications network. The network contains a monitoring system which collects financial and other information from EGDs. This information is commonly referred to as “meters”. The system also contains a special prize presentation controller task (SPPCT) which is the jackpot controller, maintaining one or more jackpot pools. The jackpot controller displays the current value of each jackpot pool on one or more jackpot displays which may be remote from the EGDs. It calculates and manages the pools from information provided to it by the monitoring system. A turnover meter on each EGD indicates the accumulated turnover since the EGD was commissioned (that is commenced operating). The jackpot controller calculates from the received turnover meter reading, the change in turnover since the last time the meter was read. This is the primary figure used for all jackpot calculations. …

11. For each jackpot, the jackpot controller maintains a prize pool made up of a starting amount, to which is added a fixed percentage of the increase in turnover of each EGD since the last jackpot was won. This pool will normally be the jackpot prize. The probability of an EGD winning the jackpot depends upon the turnover of that EGD over a predetermined, elapsed period of time. This period of time is said to be a sliding or rolling “window” of time prior to each jackpot draw. Every change in the turnover meter recorded for an EGD is stored by the jackpot controller with a “time stamp” which indicates when the change in turnover was recorded. Only turnover within the time window or “record period” is used for the purpose of calculating the probability of a jackpot win. In other words, increases occurring prior to the commencement of each elapsed period will be discarded.

12. The preferred embodiment also utilises a second time window known as the “draw period”. This is the time between attempts at awarding the jackpot. To ensure that each change in turnover is included in at least one draw, the length of the draw period may be less than, or equal to the length of the record period, but may not exceed such length. The probability that an EGD will win a jackpot draw depends upon a calculated ‘scaling factor’. In the preferred embodiment the scaling factor is calculated by taking for each EGD, the total turnover in the record period, and dividing it by the number of draw periods per record period, yielding an average turnover per draw period over the record period. This is the scaling factor. Each EGD has the same predetermined “base probability” of winning the jackpot. This is multiplied by the scaling factor for that EGD as calculated for the draw in question.

13. The jackpot draw can be conducted by any suitable draw method which has the required overall probability. For example, a random number generator may be used. A fixed number range is defined and divided into two separate sections - the winning band and the losing band. A random number is generated over the entire range. If it falls within the winning band, the draw is won; if it falls outside the winning band, the draw is lost. The winning band is a percentage of the entire number range, reflecting the desired probability of a win. If an EGD wins a jackpot, it enters a ‘winning mode’, and the prize is advertised on the display. The act of awarding a jackpot need not necessarily terminate the draw process. It is possible that another EGD might also be selected as a winner. I infer that this is because the random number is used in draws for all participating EGDs. Although the probability of each machine winning will vary, having regard to the amount wagered on it during the elapsed period, the random number may fall within the winning bands appropriate to more than one of them. If there are multiple winners, the prize pool is preferably paid to the first detected winner, and all other winners are awarded the reset, or starting value of the pool. Alternatively, the pool may be apportioned among winners.

14. The patent identifies the invention as offering the following advantages over prior art:

·                          Each eligible player (or gaming machine) has the opportunity of winning a prize, with the probability of a win being dependent upon the amount of betting activity on that machine over a recent period, not merely the last game. This provides a fairer outcome as machines with a higher average turnover during that period have a higher win probability than a machine with a lower average turnover during the same period, even if the latter machines had a higher wager on the last game.

·                          The trigger for a draw is not a function of individual games played on a gaming machine, but of time. Therefore the prize awarding system may be applied to existing EGDs of differing base denominations, manufacture or game type without the need for specialised software support. The system can also be operated over existing communication networks and with centralised jackpot systems.

·                          Since the award of a prize is non-deterministic, prizes may be included in the RTP of a gaming system, effectively resulting in higher profitability for the operator.

·                          Prize-award parameters may be changed by the operator at any time without any alteration to the hardware, firmware or internal parameters of the EGDs.

·                          If the awarding of the prize involves a feature game, a fairer outcome is obtained by ensuring that increases in the values of prize pools are suspended until the completion of the feature game. This prevents a player from gaining financial advantage over subsequent players by delaying the feature game.’

24                  To this description I need only add that in the ‘Detailed description of preferred embodiments’ in the specification an example is given of the movement of the window of time which is the record period:

‘For example, Table 1 shows the turnover information recorded for three EGDs for a Record Period equal to the immediately preceding 30-second period. The turnover meters of the EGDs are nominally read approximately once every 10 seconds. The current time for the purpose of the example is 10:29:20. Hence the relevant window of time or Record Period was that period between 10:28:50 and 10:29:20.

As shown in Table 1, EGD 1 had its change in turnover meter recorded approximately every 8 Seconds, EGD 2 approximately every 7 Seconds and EGD 3 approximately every 11 Seconds. This variation is due to operational variances across machines such as type, model, vintage, manufacturer and network characteristics.

Table 2 shows the changes in turnover meter recorded for the same three EGDs at 10:29:30, i.e. after a further 10 seconds have elapsed. The relevant window of time or Record Period is now that period between 10:29:00 and 10:29:30.

During the further 10 second period, several recorded values aged to a point where they were greater than 30 seconds old, and were therefore discarded. For each EGD one new change in turnover was recorded. The discarded turnover values are shown in Table 3.’

25                  The claims defining the invention are as follows:

‘1. A method of awarding a prize in a gaming system comprising at least one electronic gaming machine, characterised in that the probability of each electronic gaming machine winning the prize is dependent upon at least some of the amount wagered on that electronic gaming machine during an elapsed period.

2. A method as claimed in claim 1 wherein the probability is related to the total wagered amount recorded during the elapsed period.

3. A method as claimed in claim 1 wherein the probability is related to the maximum amount wagered on a game during the elapsed period.

4. A method as claimed in any preceding claim, wherein the elapsed period is a rolling or sliding period of time.

5. A method as claimed in any preceding claim, including the step of conducting a series of prize draws and, prior to each prize draw, calculating the probability of each electronic gaming machine winning that draw.

6. A method as claimed in claim 5, wherein the elapsed period is a predetermined period preceding each draw, further comprising the steps of recording amounts wagered on each electronic gaming machine and calculating the probability of each electronic gaming machine winning that draw from amount(s) recorded during the predetermined period.

7. A method as claimed in claim 6, wherein the draws are conducted at periodic intervals of time, the period between draws being no greater than the predetermined period.

8. A method as claimed in claim 6 or 7, wherein the winning probability for each electronic gaming machine is calculated from the estimated amount wagered on that electronic gaming machine during the period since the last draw, the estimated amount being calculated on a pro rata basis from the recorded amount of wagers during the predetermined period.

9. A method as claimed in any one of claims 5 to 8, further comprising the step of awarding to a draw winning electronic gaming machine a further game to determine the actual prize won.

10. A method as claimed in claim 9, wherein the time allowed for playing the further game is limited to a predetermined period.

11. A method as claimed in claim 9 or 10, wherein the prize is a jackpot or one of a plurality of jackpots, the method further comprising the step of suspending the jackpot(s) until the determination of the further game.

12. A method as claimed in any preceding claim, wherein the prize is a jackpot pool.

13. A method as claimed in claim 12, wherein the jackpot pool comprises an initial amount and a proportion of the amount wagered on the electronic gaming machine(s) since the jackpot pool was reset.

14. A method as claimed in any preceding claim further comprising the step of displaying a graphical representation of the probability of the electronic gaming machine(s) winning the prize.

15. A method as claimed in claim 14 wherein the gaming system includes a plurality of electronic gaming machines, and the probabilities are displayed in relative format.

16. [deleted]

17. A gaming system comprising

at least one electronic gaming machine;

control means connected to the electronic gaming machine(s), the control means being adapted to conduct a series of prize draws in each of which each electronic gaming machine has an opportunity to win a prize on a non-deterministic basis; and

means for determining the winning probability of each electronic gaming machine at each prize draw,

characterised in that the probability of each electronic gaming machine winning a prize draw is dependent on at least some of the amount wagered on that gaming machine during an elapsed period.

18. A gaming system as claimed in claim 17 wherein the probability is related to the total wagered amount recorded during the elapsed period .

19. A gaming system as claimed in claim 17 or 18, wherein the elapsed period is a rolling or sliding predetermined period of time prior to each prize draw.

20. A gaming system as claimed in claim 19, wherein the control means includes means for recording during the predetermined period amounts wagered on each electronic gaming machine.

21. A gaming system as claimed in any one of claims 18 to 20, wherein the control means includes a jackpot controller, and the prize is a progressive linked jackpot.

22. [deleted]

23. A gaming system as claimed in any one of claims 18 to 21, having display means to display a graphical representation of the probability of each electronic gaming machine of winning the prize draw.

24. An electronic gaming machine having

means for effecting a prize draw to award a prize on a non-deterministic basis, and

means for determining the probability of the electronic gaming machine winning the prize,

characterised in that the probability of the electronic gaming machine winning the prize is dependent on at least some some of the amount wagered on the gaming electronic machine during an elapsed period.

25. An electronic gaming machine as claimed in claim 24, wherein the probability is related to the total wagered amount recorded during the elapsed period.

26. An electronic gaming machine as claimed in claim 24 or 25 wherein the elapsed period is a sliding or rolling predetermined period prior to the prize draw.

27. An electronic gaming machine as claimed in claim 26, further comprising means for recording during the predetermined record period amounts wagered on the electronic gaming machine.

28. An electronic gaming machine as claimed in any one of claims 24 to 27, having display means to present a graphical representation of the probability of winning the prize draw.

29. A method of awarding a prize substantially as hereinbefore described with reference to the drawings.

30. A gaming system substantially as hereinbefore described with reference to the drawings.’

the issues

26                  The Cougar system was previously called the ‘Cyclone Cash’ system and the Statement of Claim refers to it by that name. Although the system has other functions I shall refer to the jackpot system in it as ‘the Cougar system’. It is alleged that the Cougar system infringes claims 1, 2, 3, 4, 5, 12, 13, 17, 18 and 21 of the Neurizon patent. The infringing conduct relied upon is alleged to have commenced in April 2002. It would appear at that time that it was intended to release Jupiter’s complying (‘regulatory’) jackpot system, namely Cougar. It was promoted at about this time at a gaming trade show in Brisbane. It is not disputed that the second respondent provides the Cougar system, and services associated with it, to the third, fourth and fifth respondents and that they utilise it. As at 26 November 2002 there were a total of 97 ERPjackpots in operation which incorporated the Cougar system.

27                  The respondents deny infringement. Their principal contention is one of construction. It relates to that part of claim 1 which requires that the probability of a win be dependent upon at least some of the amount wagered on an EGM ‘during an elapsed period’. It is contended that this is ambiguous and should not be construed broadly. A reference to the body of the specification discloses a much narrower meaning and one which the respondents do not infringe. It is also submitted that the probability of a win of a jackpot in the Cougar system is not dependent upon the amount wagered ‘during an elapsed period’. Rather the jackpot draw is triggered by, and has regard to, each game played.

28                  Another construction issue relates to the words ‘dependent upon’. It is said to arise in connexion with the question as to whether the weighting component for the jackpot ActivData II+ anticipates the Neurizon invention and was the subject of prior use. It is alleged that Mr Johnson was aware of the details of the ActivData II+ system and that he used that knowledge in coming to the invention in question. Jupiters seeks orders to give effect to its part ownership of the invention. Further orders, for damages based upon Mr Johnson’s alleged breaches of confidentiality and trust, are not pursued.

29                  The alternative case raised by Jupiters and the other respondents is that the patent should be revoked. It is alleged that claims 1, 17 and 24, and their dependent claims, claim a wider invention than the invention disclosed in the patent specification and are not fairly based because the claims are for a system involving an ‘elapsed period’. Claims 17 and 24 are alleged to disclose an invention which awards prizes on a ‘non-deterministic’ basis. The meaning of deterministic, and the relevance of various QOGR definitions of a deterministic jackpot are here in question.

30                  It was alleged that the patent is not novel when regard is had to the prior publication of the Hyperlink patent, the Frankovic patent and two other patents - the IGT patent ‘Progressive Gaming System’ USA Patent No 5855515 and the Mikohn patent ‘Progressive Jackpot Gaming System with Secret Bonus Pool’ Australian Patent No 736679. At the hearing the respondents limited their reliance to only the Hyperlink and the IGT patent as anticipating the Neurizon invention. An allegation concerning the prior use of a system known as the IGT/Acres Casino Management and Bonus System was not the subject of evidence. The respondents’ principal contention in this regard depends upon mystery jackpots which were implemented in the ActivData II+ system since 10 July 1996 and used in various venues since then.

31                  The respondents also rely upon common general knowledge at the priority date to allege that the invention was obvious.

The EFFECT OF THE previous decision

32                  The applicant submits that I ought to follow the reasoning of Dowsett J on the patent. It relies upon the following statement from Terrell on the Law of Patents, 15^th edn, ed S Thorley et al, Sweet & Maxwell, London, 2000 at p 420, par 12.103:

‘Where there has been a previous decision upon the validity of a patent by a court of co-ordinate or superior jurisdiction, which by reason of having been given in proceedings between different parties does not operate as an estoppel, strong additional evidence will be required in order to reverse the previous finding, and the court will usually hold itself bound by previous decisions on the question of the construction of the specification.’

33                  I take Neurizon to limit its contention to his Honour’s determinations on questions of the construction of the claims. It could not be suggested that a Court might hold itself bound upon issues which depend upon evidence and findings of fact.

34                  The cases cited in Terrell to support the proposition were: Otto v Steel (1886) 3 RPC 109; The Automatic Weighing Machine Co v The Combined Weighing Machine Co (1889) 6 RPC 367; Edison and Swan Electric Light Co v Holland (1889) 6 RPC 243; Flour Oxidizing Company Ltd v Carr & Co Ltd (1908) 25 RPC 428and Higginson & Arundel v Pyman (1926) 43 RPC 291. All but the last-mentioned of those cases involved questions of the construction of the patent. And the cases do not concern two single judge decisions on the same patent. The cases which say that the Court would not be likely to depart from an earlier decision, on a point of construction, involve courts of appeal at the same level.

35                  A similar approach applies in this Court with respect to earlier decisions of single judges, as well as to appeal court decisions. As a matter of judicial comity the earlier decision will usually be followed, unless the second judge is convinced that it is wrong: La Macchia v Minister for Primary Industries & Energy (1992) 110 ALR 201at 204. The reason for the approach, as French J pointed out in Hicks v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 757(at [76]), is to encourage confidence in the law by consistency in judicial decision-making,particularly where questions of law and of statutory construction are involved. This rationale seems particularly appropriate, in my view, where the construction of a public document defining a monopoly is involved. Nevertheless it is necessary that his Honour’s determination on questions of construction be considered in light of the respondents’ submissions.

the skilled addressee and the witnesses

36                  In order to understand the patent and the prior art it would be necessary for a person to have a knowledge of the electronic gaming industry, the jackpot systems or methods utilised in it and the regulations relating to systems at the priority date. They would need to be aware of the jackpot systems that the patent was addressed to and which formed part of the common general knowledge, in particular the Frankovic and Hyperlink systems, although it would not be necessary for them to be familiar with these patents. They would need to be in a position to understand the design and development and implementation of computer software in that context. In particular they would require knowledge of data communication and communication protocols. They would need some aptitude in mathematics but not at a high or advanced level. It does not seem to me to be essential that a person have actual experience in the implementation of jackpot systems, which was a criticism levelled at Mr Kopff. Of course such a person should not be inventive.

37                  Mr Kopff was called as an independent expert witness by Neurizon. He is qualified as a person to whom the patent is addressed. Mr Johnson has the qualities of a skilled addressee and was cross-examined on that basis, but he is an inventor. I have however found his evidence helpful on many topics, although I remain conscious that his evidence could not be said to be independent.

38                  Mr Miller was called by the respondents. He is qualified as a skilled addressee, but he cannot be said to be a witness independent of some of the parties for whom his evidence was given. Although he said, in his first affidavit, that he had had regard to the Court’s ‘Guidelines for Expert Witnesses in Proceedings in the Federal Court of Australia’ document, regrettably he did not draw to the Court’s attention that he or his company has acted as a consultant for Jupiters or Jupiters Technology in the past and that that association continues. This emerged in cross-examination. He and his company are currently involved in the possible implementation of the Cougar system in Victoria. In these circumstances there is always a strong possibility that a person will favour their client with their views. Moreover Mr Miller has some interest in the continuance of the Cougar system. There were aspects of Mr Miller’s evidence which confirmed that his evidence might not be entirely objective. He was unwilling to make concessions and was not always responsive. And I consider it to be a matter of some importance that he contended that all four of the patents originally relied upon as anticipating the Neurizon invention did so. It is difficult to accept that he could have seriously so argued with respect to the Frankovic system. Even the respondents withdrew reliance upon it and also the Mikohn patent. It is necessary nevertheless to consider the points raised by Mr Miller, but I do so with some caution.

39                  Mr Krimmer and Mr Gregory are employees of Jupiters Technology, now Tabcorp. They are respectively Principal Architect Monitoring Systems and Principal Systems Architect. They each have a background in computer programming and have worked in the gaming industry for Jupiters only since 1996. Mr Krimmer has been involved with Jupiters’ gaming machine monitoring products but not with computer software design, although he expresses a familiarity with it. Mr Gregory was involved in the development of the Cougar system. Both appear to have been put forward as skilled addressees, but they do not qualify. They had little experience in the gaming industry before the priority date and their experience was not wide. It appears to have been focussed upon the Jupiters systems development. There is no suggestion that they were then familiar with systems which formed part of the common general knowledge such as Hyperlink and Frankovic. Their evidence as skilled addressees is therefore bound to be flawed. This is especially so on an issue such as obviousness.

40                  Mr Krimmer and Mr Gregory are however competent witnesses with respect to the operation of the Cougar and ActivData II+ systems and as to regulatory matters, although their lack of independence may affect the reliability of any opinion evidence.

41                  Mr Spencer was called by the respondents to give direct evidence as to obviousness. He is both qualified as a skilled addressee and an independent witness.

42                  I do not understand the mathematicians, Dr Pollett and Prof Donnelly to be put forward as skilled addressees. Their evidenced is more limited and is to be taken properly as referable to matters relating to the concept of and to the meaning of some mathematical expressions.

43                  Mr Hopkins was foreshadowed as a further witness by the applicant and an affidavit filed. He was not called. No inference adverse to the applicant can be drawn from that fact.

approach to construction

44                  The proper approach to the construction of a patent on issues other than that of the construction of the claims was referred to in Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 177 ALR 460(‘Kimberly-Clark’) at 466, pars [14]-[17] and in some detail by Hely J in Flexible Steel Lacing Company v Beltreco Ltd (2000) 49 IPR 331at 347-350, pars [70] - [81]. The fundamental rule is that the specification must be read as a whole. As is pointed out in Kimberly-Clark however fair basing involves different principles, requiring a comparison between the matter described in the specification and the claim which defines the scope of the monopoly. A different approach is also taken where the question concerns infringement:

‘Where the question concerns infringement of a claim or the sufficiency of a claim to “define” the invention, it has been held in this court and under the 1952 Act that the plain and unambiguous meaning of a claim cannot be varied or qualified by reference to the body of the specification: Weld Perrin & Co Pty Ltd v Worrel (1961) 106 CLR 588 at 610. However, terms in the claim which are unclear may be defined or clarified by reference to the body of the specification: Interlego AG v Toltoys Pty Ltd (1973) 130 CLR 461 at 479.’

(Kimberly-Clark at 466).

INFRINGEMENT

45                  I adopt the identification of the integers by Dowsett J (at 113-116, par [77]) to those claims here relevant. Mr Miller also applied them.

46                  The respondents do not deny that the Cougar system takes all the integers of claim 1 save for the last - ‘during an elapsed period’. The meaning of ‘probability’ in claim 1 is not in issue in these proceedings. It is agreed that it means mathematical probability and can be expressed by the equation:

P =

47                  Probability in the Neurizon patent may be expressed as:

P = Tm x BP

Where:

P means the probability of an EGM winning the jackpot prize;

Tm means the amount wagered on the EGM during the relevant elapsed period; and

BP means the base probability (being a factor which does not vary).

48                  It is also agreed that ‘absolute probability’ is the probability of an event occurring and ‘conditional probability’ is the probability of the event occurring given a stated set of circumstances or when extra information is provided, which circumstances or information affect or affects such probability. It is also necessary to add that the word ‘turnover’ (on an EGM) which is used at many points in the evidence, refers an amount or amounts wagered on an EGM. It reflects an increment in the amount wagered on an EGM.

49                  In Mr Miller’s view the words ‘an elapsed period’ are meaningless. They could refer to a predefined period of time, an arbitrary length of time or any period of time at all. He says that there needs to be some further identification of the period because any event, or a series of events, can be said to occur within some period of time. Mr Miller added that, because all events must logically occur in an elapsed period the words add no new feature. This would appear to be relevant to issues other than meaning. However, I understand the point sought to be made is that an inventor is not likely to have intended so broad a construction. There are obvious difficulties in approaching the meaning of words with an assumption such as this. A determination of the meaning of the words may however lead one to that conclusion.

50                  It cannot be said that the expression is meaningless. Dowsett J in the previous proceedings defined ‘an elapsed period’ as follows (at 103, par [27]):

‘…any discrete and finite period of time which has passed, having both a beginning and an end.’

And although his Honour did not expressly say so, I infer that questions as to ambiguity or uncertainty in the meaning of the expression were raised before him.

51                  The respondents’ case is that it is necessary to go to the body of the specification to ascertain a meaning. Mr Miller observes that the preferred embodiments involve a pre-defined period of time, a period of known duration and one longer than a game cycle. In support of this intended meaning he observes that they all appear to involve the use of timers. A wide definition of ‘an elapsed period’ does not correspond with these descriptions. It follows, the argument proceeds, that the period in claim 1 must be seen as fixed or predetermined by reference to time. Mr Miller observes that the key ingredient of the patent is the recording and accumulating of turnover from a number of games on an EGM in a period, maintaining it and dropping reports from it once they age to an extent that they fall outside the period. An elapsed period should therefore be understood in terms of the record and draw periods. This latter observation would not appear to be entirely correct as the elapsed period is clearly only the record period.

52                  Mr Miller did not explain how factors such as what length the elapsed period might be, and how the period might be determined, could render the expression unclear to a skilled addressee. I am not satisfied that such a person would consider it to be unclear. The person reading the claim would appreciate that it was intended to be wide and understand it to have the meaning his Honour gave to it. The width of meaning of the expression may have other consequences for the patent in this litigation, but that does not make it ambiguous.

53                  A skilled addressee would most likely assume that the period must be fixed or predetermined in some way. Mr Johnson concedes that it would be necessary to provide a method for determining the boundaries of an elapsed period in any implementation. I took the other evidence, including Mr Miller’s, to be to the same effect. It does not follow that there is any uncertainty associated with the expression. And it would seem to me unnecessary to add these words to the definition given by Dowsett J.

54                  Given the fact that jackpot draws are undertaken successively it would be understood that the elapsed period will change, or move forward. It may be assumed that the period will be recent to the time of the draw and the attempt to award the jackpot. The suggested use of a draw period and a record period in the preferred embodiments and the fact that they move forward or ‘slide’ in time are relevant to the implementation of the invention. Even accepting that the record period is the elapsed period in a preferred embodiment this does not mean that this method of implementation serves to define the expression ‘an elapsed period’. Clearly it does not.

55                  In my view the respondents seek impermissibly to use the body of the specification to limit the claim. In my view the expression ‘an elapsed period’ would be understood as having a wide meaning, that given to it by Dowsett J.

56                  It may be added that even if one had recourse to the specification it would not follow that the words ‘an elapsed period’ must have a narrower, more closely defined meaning. The specification shows, Mr Miller points out, that the elapsed period is one of a certain duration and it is set by a timer. However, as Mr Johnson explains, there are many ways in which an elapsed period might be determined in a gaming system or method. They would be clear to those skilled in the art from what is taught by the patent. A timer could be used to fix a periodic rate, say of 5 seconds, or the timer could run for a random period of time, between 5 to 10 seconds. The use of a timer is not essential. The occurrence of two events could be used to mark the beginning and the end of a period. Mr Johnson gave as an example the use made by an EGM manufacturer, who has implemented the invention, of losing games. An event could be a $20 wager on a single game, so that the elapsed period would be the period of time between two single games on which $20 was wagered. It cannot therefore be said that the Neurizon method depends on turnover over a predetermined elapsed period of time. Whilst the period must be predetermined in some way, the length of time does not have to be.

57                  I should add that the respondents also sought to rely upon certain further amendments to the patent which had been proposed by the applicant. It is not necessary to set them out. The respondents contend that they show that ‘an elapsed period’ could be more meaningfully defined. I do not consider that they are relevant to the question of construction.

58                  I turn to consider the question whether Cougar’s system has regard to an amount wagered ‘during’ an elapsed period, in light of the meaning of ‘an elapsed period’. It is the respondents’ case that the Cougar system has regard to individual games played, as occurs in the Hyperlink system. At least the trigger for the jackpot draw is not a function of time, but of individual games played, it is submitted.

59                  The Cougar system was developed over several stages. Stage 1 was developed between December 1997 and July 1998 but it is not suggested that it contained the random jackpot component. Mr Gregory was responsible for its development. It does not appear to have been implemented when the patent was granted. In September 1999 Mr Johnson enquired of Mr Evans of Jupiters Gaming whether Jupiters had any interest in a non-deterministic system which could be used without using Aristocrat Hyperlink EGMs. Mr Evans told him that Jupiters had been attempting to develop such a system itself. This is not likely to have been a reference to ActivData II+ and there would have been no need to refer Mr Johnson to it. Mr Gregory said that it was not until January 2000 that either the jackpot component or the prototype of its source code was developed.

60                  The site controller of the Cougar system is a personal computer located at each venue. The site controller is connected by a network to each EGM at that venue. The EGMs are connected to the site controller in loops, with up to 32 EGMs on each loop, the maximum that QCOM will allow. It is the JTD that implements that part of Cougar’s algorithm for the determination of a win of the jackpot. The JTD does this by determining whether a random number generated falls within a particular range. The probability of the jackpot being awarded to an EGM does not depend on the turnover wagered on any other EGM.

61                  The Cougar system is designed to poll EGMs at a venue each second. The time taken to play a game was said by Jupiters to be 3 seconds and sometimes more, 3 to 5 seconds. Mr Miller put it at 2.5 to 3 seconds and Mr Kopff said it was 2.2 seconds. There was also some dispute as to the terms of the enquiry made of the EGM by a site controller. It does not seem to me to be necessary or desirable to attempt to settle it in words-worth. It is generally accepted that the system is designed to detect turnover or the amount bet, which is to say increments. When an EGM is polled and it has received a wager since the last poll, it reports that to the site controller. It does so by saying what its turnover, or the total amount bet, now is. The site controller, or floor controller has the previous response from the EGM. If it was 20 and the new response is 30 it can detect a change in turnover, of the amount bet, of $10.00. It does not retain the previous response once a new response is received. But it can be said that until that time it stores the information. I understand Mr Krimmer to have agreed that this is so. Each time the Cougar system detects a change in turnover at the EGM it updates the jackpot pool value and asks the JTD to determine if that EGM has won the jackpot. A random number is generated by the system. When the system determines the amount wagered on the EGM since turnover was last reported it assigns a range of numbers by reference to the amount bet. If the random number falls within that range the EGM wins. The extent of the range is determined by the amount bet. The probability of a win remains proportional to the amount wagered. As within the Neurizon system, it may then be said that the probability of a win is dependent upon the amount wagered or some of it. The question which arises is whether in the Cougar system the wager can be said to have taken place ‘during an elapsed period’.

62                  Neurizon alleges that the elapsed period of time in the Cougar system is that period between successive meter responses which convey a change of turnover on the EGM. It seems to me that this submission must be correct. Boundaries of this period are marked by two events, on each occasion the advice to the site controller that there has been an increase in betting activity since the last advice. And the period is one which has passed by the time the jackpot draw is conducted, which must be the point of reference for an ‘elapsed period’. It is a period which is fixed and predetermined, not by time but by event.

63                  The respondents sought to liken the Cougar system to a purely game-based system, such as Hyperlink. The Hyperlink system differs from the Neurizon method because it attempts to award a jackpot each time a game is played. Its jackpot award has no reference to time but to the amount wagered on the game. The respondents argument rested essentially on the speed with which polling occurs in Cougar. Mr Miller said that the effect of polling in accordance with the QCOM protocol, every second, is that the Cougar system is able to detect each game played ‘in the ordinary course of its operation’. The poll interval is always less than the time it takes for a game to be played.

64                  The qualification made by Mr Miller is necessary because some testing conducted by Jupiters of the Cougar system in December 2003 and January 2004, showed that two and on one occasion three games were reported in a meter response. In the period chosen by Mr Gregory, 13 December 2003 to 12 January 2004, approximately 376 million polls were sent by the Cougar system to EGMs at a venue at Wynnum. There were 15 028 582 games played. Mr Gregory said that on 80 occasions the turnover from two games was reported to Cougar in a single meter report. Mr Kopff put the figure somewhat higher, in the order of 200. I take this to include the responses in the whole period when responses were recorded, which extended to 22 January 2004.

65                  Both Mr Kopff and Mr Johnson were of the view that a poll at every second could not be guaranteed. Mr Kopff undertook some calculations to show how long the polling cycle might become and how often multiple games captured, but Mr Miller refuted these figures and they were not gone into further. It remains the case that the system does not appear to be able always to poll each second, even if one accepts that the responses where the turnover from more than one game had been reported are relatively few. It is possible that that is due to errors in communication, although I understood Mr Kopff to say that they would occur in any event. Either way it seems to me that polling at intervals of more than one second is not part of the Cougar method, and should not be treated as such when considering whether it infringes. The fact that it does so however reflects, to an extent, that it is not truly game-based in the way in which Hyperlink is.

66                  Mr Krimmer and Mr Gregory each sought to explain some aspect of Cougar’s operation which might take it closer to a game-play system.

67                  Mr Krimmer said that Cougar could detect turnover on games. He said that it has sufficient information to know whether turnover from more than one game has been included because it receives the EGM’s stroke, or game, meter as well as its turnover meter. This does not appear to be correct. There is nothing in the Cougar documentation which utilises stroke or game meters in order to determine whether or not the jackpot has been won. The only meter it uses in that regard is the turnover meter. It cannot reliably check that the turnover meter difference represents just a single game having been played. The fact that the Cougar system could not detect when a game giving rise to the turnover meter change occurred in the period between a number of polls was shown to effect during cross-examination of Mr Krimmer, on Exhibit 21.

68                  Mr Gregory suggested that in the Cougar system there is a small, fixed probability of a jackpot being awarded each time an EGM is played. The probability is weighted according to the amount wagered by the player on that game. That would not appear to be correct. In Cougar the probability of an EGM winning the jackpot is weighted by the amount of turnover reported, being the difference between the turnover reported between the two meter responses.

69                  Mr Kopff has read the Cougar source code. It was not apparent that Mr Miller had done so himself, although he may have been briefed as to it. Mr Johnson was not permitted to do so under the orders for inspection. Mr Kopff observed that there were many events described in the code, but no game play event was. I did not understand the respondents’ witnesses to contend to the contrary. According to Mr Kopff the system cannot be said to be based only upon game play because the source code does not provide a mechanism to determine individual game play on EGMs.

70                  The Cougar jackpot system does not award jackpots based upon the amount wagered on a single game. The probability of a win does not depend upon game play but the amount wagered during two points in time, the two meter responses. When the new meter response comes in the stored figure from the last response is taken and the change between the two polls is calculated. That change is used in the probability calculation. I understood Mr Krimmer to agree to this. The elapsed period is the period between those responses. Cougar utilises the events of the turnover messages to mark the beginning and end of the period. The fact that Cougar is designed to poll to the shortest period possible under the QCOM protocol does not convert the system to one which is game-based.

71                  The probability of an EGM winning in the Cougar system does depend upon the amount wagered in a period of time in the past. The period is measured by successive meter responses.

CONCLUSIONS ON INFRINGEMENT

72                  Findings are sought by Neurizon with respect to claims 1, 2, 3, 4, 5, 12, 13, 17, 18 and 21.

CLAIM 1

73                  The Cougar RTP jackpot system is a method of awarding a prize in a gaming system comprising at least one EGM, characterised in that the probability of each EGM winning the prize is dependent upon at least some of the amount wagered on that EGM during an elapsed period. Claim 1 is therefore infringed.

Claim 2

74                  The Cougar system also determines the probability of winning on an EGM by reference to the total amount wagered on that EGM recorded during the elapsed period. This claim is infringed.

claim 3

75                  It follows from my findings concerning the Cougar system and what it is able to detect that it cannot determine the maximum amount wagered on an individual game during an elapsed period. This claim is not infringed.

CLAIM 4

76                  The Cougar system has the features of claims 1, 2 and 3 and has a period of time. The end of the elapsed period, the period between meter responses, marks the beginning of the next period which will also lapse. This period slides forward in time by one second increments. This claim is infringed.

claim 5

77                  The Cougar system has the features of claims 1, 2, 3 and 4 and it includes the step of conducting a series of prize draws and, prior to each prize draw, it calculates the probability of each EGM winning that draw. This claim is infringed.

claim 12

78                  The Cougar system has the features of claims 1, 2, 3, 4 and 5 and has a prize which is a jackpot pool. This claim is infringed.

claim 13

79                  The Cougar system has the feature of claim 12 and is a system wherein the jackpot pool comprises an initial amount and a proportion of the amount wagered on the EGM since the jackpot pool was reset. This claim is infringed.

claim 17

80                  The Cougar system:

·                         comprises at least one EGM;

·                         has control means connected to the EGMs, namely the site controller and the JTD;

·                         the site controller and JTD conduct a series of prize draws;

·                         each prize draw for an EGM has an opportunity to win a prize on a non-deterministic basis. I do not understand the respondents to suggest to the contrary;

·                         has means for determining the probability of each EGM winning at each prize draw, through the JTD;

·                         is characterised in that the probability of each EGM winning the prize is dependent on the amount wagered on that EGM during an elapsed period.

This claim is infringed.

claim 18

81                  In addition to the features of claim 17, the Cougar system uses the total amount wagered during the elapsed period. This claim is infringed.

claim 21

82                  The Cougar system has the features of claim 18, it has a site controller and JTD which together are a jackpot controller and it offers a prize that is a progressive linked jackpot. This claim is infringed.

fair basing

83                  Section 40(3) of the Patents Act 1990 (Cth)(‘the Act’) requires that the claims in a patent must be fairly based on the matter described in the specification. The Act requires a comparison between the matter described in the specification and the claim which defines the scope of the monopoly: Kimberly-Clarke at 466, par [15]. The question it poses is whether the claim as expressed travels beyond the matter disclosed in the specification: Olin Corporation v Super Cartridge Co Pty Ltd (1977) 180 CLR 236at 239-240; and is more extensive than the invention disclosed in the specification (at 250).

84                  The first contention of the respondents relates to claims 1, 17 and 24 and their respective dependent claims. It is alleged that they claim a wider invention than the specification because they claim for a system involving any elapsed period.

85                  It is alleged that the integer of an elapsed period, properly informed by the specification, means a period longer than an EGM’s game cycle. This must be so for otherwise the system would not be different from the prior art referred to in the specification. Reliance is placed upon the references in the specification to the advantages of the system over the prior art systems, and to the probability of a win being ‘dependent upon the amount of betting activity on that machine over a recent period, and not just the last game’ (at p 16, lines 31-33). It is said that the claim should be so limited. As framed it includes a period which is only the length of the game cycle.

86                  It does not appear to me on a fair reading of that part of the specification that it excludes the period of a game cycle which, one may observe, would have a beginning and an end and be capable of being predetermined. Moreover the advantages described are those which relate to the preferred embodiments. They are not essential features of the invention. The prior art does not use turnover on a single EGM in an elapsed period of time to weight that EGM’s probability of winning.

87                  The respondents contend that the elapsed period must be one during which multiple turnover reports are, or could be, collected rather than the period during which a single turnover report is received and acted upon. There is nothing in the specification which requires a period to extend beyond the period in which one game is played. The specification does not require the record period to be independent of turnover reporting. The record period could be a length of time which does not permit more than one turnover report to be recorded. The distinction from the prior art, as earlier noted, is that the probability of an EGM winning does not depend on a discrete event, but what occurs in a period, even if it be that only one game occurs.

88                  The cross-claim also alleges that an essential feature of the invention is that the probability of each EGM winning a prize is directly dependent upon the amount bet on each EGM. The amount bet on each EGM governs the probability of that particular machine yielding a jackpot, yet the claims are not so limited. Reliance was placed by the respondents in this regard upon a statement by Mr Johnson that the probability referred to in claim 1 was ‘absolute’. This however refers to the probability not being conditioned. The requirement with which the respondents’ contention is concerned is the probability of each EGM being dependent upon the amount bet. This can mean directly or indirectly dependent.

89                  I should add that not all allegations in paragraph 41 of the cross-claim were pursued in submissions. I refer to par 41(e) and (f).

90                  Paragraph 41A of the cross-claim alleges that claims 17 and 24, and their dependent claims, claim a system which is non-deterministic whereas the invention disclosed in the specification is deterministic. This is because the probability of a player winning the jackpot does not remain constant over time when all other variables are held constant, it is alleged. Rather, the probability of a player winning the jackpot is a function of the history of credits bet on that machine over a period of time greater than one game which may include the credits bet history of a player other than the player of the EGM at the time of the jackpot draw. The respondents’ case is that, so long as more than one game is taken into account, there is a possibility of different players making a joint contribution to that amount which is used to determine the probability of a win. Mr Gregory was of the view that a player has to be at the machine for the whole of the elapsed period and for a sufficient time after it was to allow the draw to occur and receive the benefit of the probability of a win.

91                  The respondents’ case in this respect is said to be based upon the regulatory requirements of the QOGR and the definition of ‘deterministic’ used by it. There is an issue as to the relevance of these documents to the question whether the Neurizon system would be understood to be deterministic at the priority date.

92                  On 13 May 1999 Mr Krimmer wrote a memo to his monitoring development team. He had asked the QOGR how a jackpot would qualify as ‘regulatory’ which I take to mean would receive QOGR approval as an RTP jackpot. He records having been told by QOGR that an externally triggered jackpot would qualify ‘so long as it is purely ‘Random’ and no previous event affects the probability of a trigger occurring.’

93                  Curiously, while Mr Krimmer needed to make this enquiry Mr Gregory deposes to an understanding of the terms ‘deterministic’ and ‘non-deterministic’ at the priority date because, at some time shortly after November 1997, he had obtained and read a copy of a QOGR document entitled ‘Monitoring System Minimum Technical Requirements Version 1.0.’ The document bears the date 3 November 1997, is marked as a ‘draft’ and calls for comments upon it. Section 10.1.2 is entitled ‘DETERMINISTIC or RANDOM’. It provides the following description of jackpots falling within those terms:

‘Jackpots where the trigger is dependent on previous events. (DETERMINISTIC).

ie. the probability (not expectation) that the jackpot will be won, increases over time, eg. the controller picks a hidden random number, then increments another number (usually based on contributions) until the hidden number is reached and the jackpot is awarded.

Otherwise the jackpot is simply a random event independent of previous events or history (RANDOM).’

94                  Version 1.1 followed. It bears the date 31 March 1998. It is not marked draft, but ‘confidential’. It contained an almost identical definition of ‘deterministic’ save that the initial description of a deterministic jackpot is now:

‘Jackpots where the trigger probability is dependent on previous events in time.’

(The additions are highlighted).

95                  A further document entitled ‘QOGR Jackpot Policies’ and dated 27 April 1998 is said to be a draft summary of policies to jackpots. It refers to ‘deterministic’jackpots as those where the jackpot trigger is dependent on previous events.

96                  There is another, later, version of Version 1.0. It is exhibited to Mr Gregory’s affidavit filed 11 December 2003 and is dated 27 September 2000. It is also said to be a draft and asks that comments be forwarded to the QOGR by 12 October 2000. It contains a number of proposed deletions. The definition of ‘deterministic’ is now:

‘A DETERMINISTIC jackpot is where the probability of winning the jackpot does not remain constant over time when all other variables (eg. bet) are held constant. … The trigger probability is dependent on previous events in time. The triggerprobability (not expectation) that the jackpot will be won usually increases over time. An example of a DETERMINISTIC jackpot is when the controller picks a hidden random number, then increments another number (usually based on contributions) until the hidden number is reached and the jackpot is awarded.’

97                  It also contains the following under the heading dealing with ‘Triggering Methodologies’:

‘Jackpot systems where the trigger probability is primarily proportional to turnover over a time period are acceptable so long as the time period is very small. Ie. ~length of a single play cycle of the EGM. Otherwise it would be possible to play for a short time and have no chance of winning which is unacceptable under these requirements.’

98                  A further version, Version 1.3, is dated 6 September 2001. It is not said to be a draft. The definition of deterministic is the same as appears in the September 2000 version of Version 1.0. I understand the respondents to rely upon the definitions in the 1997 Version 1.0 and the two documents of March and April 1998. However they do rely upon section 7.4 of the September 2000, Version 1.3, document. I do not understand how reliance could be placed on this later document. In any event section 7.4 would not appear to me to be part of any definition of a deterministic jackpot. It appears in a section dealing with a different topic. I should add that numerous references were made by the respondents in written opening submissions as to a number of other provisions in the policies, mostly dealing with fairness to players, but these were not pursued in final submissions.

99                  The respondents also point out that the Australian/New Zealand Gaming Machine National Standards Revision 3.0, dated 15 November 1999, clause 3.9.2 provides that events of chance within games must be independent of any other events within the game or any other events within previous games.

100               The meaning of ‘deterministic’ in a gaming context has a meaning different from its ordinary English meaning, as Dowsett J observed (at 107, par [52]). Clearly enough a skilled person would approach its meaning in relation to jackpot awards by reference to systems which were considered to operate in that way.

101               The question is whether definitions made by a regulatory authority can be said to influence a skilled addressee’s understanding of the meaning of the term. Dowsett J identified one problem with the application of the QOGR definitions, namely that there was nothing to suggest that the patent was to be limited to the gaming industry in Queensland. The evidence here does not disclose the meaning other regulatory authorities give to the term, although one might infer that the characteristics of determinism present in the Frankovic patent were likely to have been widely known.

102               If the QOGR definitions were published to persons who had a connexion with the gaming industry in Queensland it might be said that they would have influenced their understanding of what a deterministic jackpot was. No witness from QOGR was called with respect to whether they were made available. The fact that Mr Gregory received copies of the documents in the course of his employment does not establish a wide publication. And it may be observed that Mr Krimmer was seeking advice from the QOGR on what was acceptable at a time when Mr Gregory suggests he took the definitions to be official and settled. The April 1998 document was a draft, as were both versions of Version 1.0. Mr Johnson said that it was likely that he had a copy of Version 1.1 prior to the priority date. He does not recall having seen the earlier documents. It may be that as a document in final form Version 1.3 was published. Without further evidence in that regard no conclusion could be reached as to the extent to which that occurred and in any event it would be published too late to be of relevance here. The fact that Mr Johnson obtained a copy of Version 1.1 in the course of a project again does not establish wide publication.

103               Although the relevance of the various draft versions written before the priority date was gone into in evidence in some detail, it would not seem to me that they differ from what a skilled addressee would have understood a deterministic jackpot to be. The example of determinism known to such a person was the Frankovic system. The example given in each of the documents of a deterministic system is a reference to the Frankovic system. Two factors are identified by the QOGR documents prior to Version 1.3. In my view they reflect what a skilled addressee would have understood as being inherent in a deterministic jackpot system at the time. Mr Johnson’s definition in the earlier proceedings (at 96, par [6]) encompasses them:

‘… a jackpot system in which the prize trigger is not dependent on a previous event and where there is no increased probability over time of the jackpot being awarded…’.

104               In the earlier proceedings his Honour considered that the Neurizon system could not be said to have an increased probability of a win as time went on so as to render it deterministic (at 107, par [52]). Rather the probability of a win might be raised temporarily when a very large wager was made and might fall if there was a period of inactivity. His Honour was referring to the probability of winning changing or fluctuating within an elapsed period and Neurizon points out that in its system the probabilities of a win are not determined by reference to wagers within the elapsed period.

105               The respondents’ contention is that the jackpot trigger in the Neurizon system is dependent on a previous event, that event being a previous wager made in an elapsed period. In support of this contention it is said that a feature of the Neurizon system is that there is a chance that a player might leave after making a wager but before a jackpot draw is conducted, with the result that a following player on the same EGM takes the advantage of the previous wager. That is an event which affects the probability of the second player winning and is therefore deterministic. The problem identified is one referred to in the QOGR policies as ‘walkaways’. It is addressed in part of its policy documents, but not in connexion with deterministic jackpots. In practice the problem is addressed by warning signs. It does not seem to me to be relevant to whether a jackpot system is deterministic in nature. Whilst deterministic methods on systems are regarded as unfair to players, as the patent itself observes, it is not every aspect of unfairness that renders a system deterministic. Moreover the concern of a regulatory authority such as the QOGR is with the jackpot method itself, not with the possibility of some occurrence which depends upon the actions of a player. One cannot by this means refer to the ‘event’ as a previous player’s wager.

106               Mr Miller’s examples also referred to the conduct of, and fairness as between, players, although his examples involved more than one EGM. In one example given by him the previous ‘event’ is the making of wagers of differing amounts. This would seem to me to be far removed from the event in a deterministic jackpot and reflects choices made by players.

107               In any event a wager that is made during an elapsed period in the Neurizon system is not the ‘event’ referred to in the definition of a deterministic jackpot system. The previous event to which it refers is one which conditions probability. In Neurizon the jackpot trigger and award of jackpot is made based upon what is recorded over a period, 30 seconds in the first preferred embodiment. At the end of a 10 second period the jackpot is attempted and the decision to award is based upon data recorded in the past 30 second period. The amount bet in any previous elapsed period and any previous determination of a win does not affect the probability in a current decision to award. So understood the event is the previous attempt to award a jackpot. The conditions of probability in Neurizon may be compared with the Frankovic system (and the ActivData II+ to which I will shortly refer). There the probability of winning is affected by previous contributions to the jackpot pool not meeting or exceeding the previously selected random number. The contributions are therefore previous events which affect the probability of a win and that probability increases over time.

108               It follows in my view that the Neurizon system is not deterministic.

109               In its written submissions Neurizon apprehended an issue which might be raised by the respondents. I take it to be that arising during the cross-examination of Dr Pollett, when reference was made to common data being used in jackpot awards, given the sliding window of time in the Neurizon system. I did not understand the respondents to advance a submission that a previous event is thereby disclosed. Although Neurizon answers it I do not propose to deal with it. It is neither pleaded nor argued.

NOVELTY

110               The test for whether an invention lacks novelty is the ‘reverse infringement test’:

‘The basic test for anticipation or want of novelty is the same as that for infringement and generally one can properly ask oneself whether the alleged anticipation would, if the patent were valid, constitute an infringement.’

(Meyers Taylor Pty Ltd v Vicarr Industries Limited (1977) 137 CLR 228at 235).

111               In the Hyperlink system the probability of a win is dependent upon the amount wagered on a single game on that EGM. A jackpot draw is conducted, and a decision to award a prize made, on every game and on every EGM. An EGM’s probability of winning the jackpot prize is weighted according to the turnover of the current game. If a decision is made to award a prize to an EGM, there is a second screen feature which determines which prize is awarded. At the completion of the feature the value of the selected jackpot pool is transferred to the EGM’s credit meter or a machine attendant is called to arrange payment.

112               It is not disputed that the first three integers of Neurizon are anticipated by Hyperlink. The issue which remains is whether Hyperlink contains the integer of an elapsed period. The respondents’ argument in this regard was based upon the prospect of a finding that the expression ‘an elapsed period’ is a wide one and may encompass one or more games.

113               The respondents refer to claim 45 in Hyperlink which refers to the playing of a game during which testing for the trigger condition will occur, the outcome being the awarding of a feature game. From Figure 2 it appears that the software is initialised (at step 20). The trigger process is then paused to await the start of a game cycle on the main game controller (step 21). When play is initiated details of the play are sent to a controller (step 22). Once achieved, the main prize draw is conducted (step 23). If the player does not win the process loops back to start again at step 21. It is submitted that this process occurs as a matter of steps in the computer system over a period of time. Step 21, it is submitted, suggests that the wager being evaluated for the prize in this configuration is collected between the main game play initiation and the main game play. Mr Gregory surmises that this repeating loop of waiting for a game initiation, starting the draw process, gathering the data of the game played and the testing for a win occurs step-wise over an elapsed period. If the respondents are correct about a period being disclosed, which is elapsed, they would contend that claims 1, 2, 5, 12, 13, 17, 18, 21 and 22 are anticipated.

114               Dowsett J did not consider that there was an identifiable lapsed period having a beginning and an end in the Hyperlink system (at 104, par [35]). The respondents’ argument, in essence that the game cycle will take some time and is therefore an elapsed period, was not put in argument before his Honour. There is however nothing in this contention, in my view. The period referred to by the respondents is not in the past at the point when the probability determination is made. And in the Hyperlink system time does not affect the probability of a win of an EGM.

115               The IGT patent was not cited in the previous proceedings. At issue here are the 3^rd and 4^th integers of the Neurizon patent, which involve dependency on some of the turnover in an elapsed period.

116               In the IGT invention there is a central host control communicating with multiple venues, casinos. EGMs are played at the casino and the wagers are passed on as contributions by the casino to a central jackpot pool. Casinos are polled periodically. Each time a casino is polled a determination is made as to whether or not the casino is eligible to enter into or participate in a jackpot draw. Casinos are eligible if they have achieved a certain threshold of contributions to the jackpot pool. If a casino has not reached it when polled a jackpot draw is not conducted. If the threshold is reached by the time of a subsequent poll a draw will be conducted.

117               If the threshold of contributions by the casino is reached the jackpot draw involves an enquiry of the casino as to whether there is an EGM active. If there is, a random number is generated which is compared with a previously determined random number. If they match the jackpot is offered to the casino which may then offer it to one of its EGMs or players. The process of selecting the winning EGM is described (at p 9, lines 8-13):

‘In general it is preferred for the casino to make the selection in those embodiments in which selection is random but weighted, e.g. giving preference to players who are playing on higher-denomination machines, or weighting the selection proportional to the relative amount a given player or machine has contributed toward the threshold.’

118               The respondents’ argument was not developed in detail but I take them to say that this description shows that some amount of an EGM’s turnover is to be taken into account. This can be seen in the first place because preference is being given to EGMs on which higher amounts have been wagered. But this is not a reference to an EGM’s turnover, and the amount wagered on it in a period. The IGT patent here refers only to a higher amount being wagered on a single wager. It does not refer to a higher amount being the total amount wagered on the EGM in a period.

119               The second aspect relates to the weighting. It allows the selection of the winning EGM to be ‘proportional to the relative amount a given player or machine has contributed toward the threshold’. It is not very clear in its meaning. But even if it took account of the amount wagered it does not require it to be taken over an elapsed period. It could be the total contribution made to the jackpot.

120               Mr Gregory interprets the description (at p 7, lines 50-53) wherein ‘…the central system determines whether the accumulated contributions from that casino in the period since that casino’s last chance at the jackpot, have exceeded a predetermined threshold amount …’ to mean that revenue used for the jackpot is measured or accumulated ‘during an elapsed period’. This does not mean that revenue during an elapsed period is used in the probability calculation. It is simply concerned to know if a predetermined amount has been met by having regard to contributions in the period since the casino’s last change for the purpose of a draw but not the determination.

121               Mr Krimmer refers to the description (at p 7, lines 24-26) that ‘… the central computer system periodically or frequently polls the processors for each of the various connected casinos …’. He takes it to mean that replies to those polls from the central computer from the venue computer represent accumulated turnover over an elapsed period. On this occasion Mr Krimmer and the respondents are prepared to accept that an elapsed period can be defined by two polls. The respondents’ submissions do not set out the words following, which disclose the purpose of the polling ‘…and collects the contribution from the various casinos.’

122               Neither the Hyperlink patent nor the IGT patent anticipates the Neurizon invention.

ActivData II+

123               Mr Johnson was employed by M&B Electronics Pty Ltd (‘M&B’) from 1989 to 1994. He was responsible for the design of software, amongst other things. During this period he designed the ActivData II Casino Gaming Machine Monitoring system (‘ActivData II’) which had the feature of being able to pay small jackpot prizes to EGMs. In December 1994 the assets of M&B, including ActivData II, were purchased by Jupiters. From 16 December 1994 Mr Johnson was employed by Jupiters as the software development manager in its technology division until November 1996. Between 9 and 31 January 1997 Neurizon took on the role of consultant to Jupiters Technology and Mr Johnson fulfilled this role.

124               ActivData II+ is the version of the ActivData II monitoring system developed by M&B enhanced with a system-triggered jackpot and a database. It was developed and implemented in the MGM Grand Casino in Darwin in about July 1996. The weighting aspect of the jackpot was written by an employee of Jupiters Technology in July 1996. The ‘weighting’ mechanism refers to the method used to vary the probability of an EGM being awarded the jackpot.

125               Mr Paull, who worked with Mr Johnson at Jupiters Technology when the jackpot system was being developed, says that Mr Johnson knew of each development in detail. I do not understand Mr Johnson to deny his familiarity with ActivData II+. He says however that he does not consider it to be an invention and he had nothing to do with ActivData III. This version was in place in Townsville, Darwin, Brisbane and the Gold Coast by March 1997. I understand that it incorporates ActivData II+.

126               The respondents allege that ActivData II+ anticipates the Neurizon invention and that Mr Johnson used the information relating to the weighting phase of ActivData II+ in formulating the invention in the Neurizon patent, in breach of his duties of confidence acquired through his position of employee and consultant. There was an issue raised about the extent of Mr Johnson’s obligation, given the lack of any contractual term as to confidentiality, and whether he could be taken to understand that the information relating to the jackpot was intended to be kept secret by Jupiters. These matters do not arise for consideration unless it is first determined that the ActivData II+ system anticipates the Neurizon invention in critical part. Nevertheless there can be little doubt that Mr Johnson was obliged to keep confidential any developments in jackpot systems made at Jupiters which had a commercial use.

127               The applicant submits that if ActivData is held to anticipate the invention Jupiters should not benefit from an order reflecting some part of its ownership of the invention. The orders it seeks are based upon equitable principles such as a constructive trust. In the applicant’s submission Jupiters’ conduct has been such as to disentitle it to such relief. In this regard the applicant refers to a series of meetings between Jupiters and Mr Johnson in late 1999 when Mr Johnson enquired about Jupiters’ interest in the Neurizon system, and to the fact that Jupiters was aware of the earlier proceedings and elected to take no part in them. At no time did Jupiters mention any connexion between the Neurizon invention and its ActivData II+ system. It was only when Mr Johnson alleged infringement by the Cougar patent that the allegations relating to the ActivData II+ jackpot system surfaced. It is not necessary to consider the relevance of this conduct and the question whether relief should be granted, at this point.

128               ActivData II+ contains three phases. It is the second, which involves weighting of the probability of a win which is in issue and is said to anticipate Neurizon’s invention. The first stage embodies the Frankovic system, in that the turnover from all EGMs in the network increment the jackpot pool until a mystery or random number within that pool is reached. The site controller is programmed to maintain a history of the turnover of each EGM over a sliding one minute period. Turnover is recorded over 15 second periods. As each one minute period moves forward 15 seconds the oldest 15 seconds of recorded turnover is discarded. Once the mystery or random number is reached the system determines an award of the jackpot.

129               Mr Gregory described the second phase as follows:

‘when the value of the jackpot pool exceeded the trigger point and the jackpot was therefore ready to be awarded, the following process was followed:

(i) active machines are selected …

(ii) next, a winning EGM is selected by an algorithm which weights each EGM's chance of being selected in proportion to the turnover of that EGM during the previous minute of play (the algorithm uses the turnover window records referred to above). The way that ActivData III worked was to register credits bet on a machine, add those credits together from all machines participating in the jackpot to give a total credits bet. Thus the probability of each competing EGM becomes the ratio of the credits bet on that machine to the total number of credits bet by all participating machines in that 60 second period. A random number generator was then scaled to that particular range of credits, a random number was generated and if the number corresponded to a particular EGMs part of that range it would be awarded the jackpot. For example, say there were 3 machines in a linked jackpot, on machine A 5 credits were bet in the previous 60 seconds, on machine B 3 credits were bet in the previous 60 seconds, and on machine C 2 credits were bet in the previous 60 seconds. The sum of these credits is 10. Machine A occupies 1 to 5 in the range, machine B 6 to 8 and machine C 9 to 10. The random number generator is scaled to produce a number between 1 and 10. If the number 6 was generated then machine B would be awarded the jackpot;

(iii) finally, the system attempts to award the jackpot to the selected, EGM using the same method as for the standard progressive jackpot.’

130               It does not appear to be in dispute that in this system the one minute window is used to record turnover so that the relative rates of play of all EGMs can be compared and the relative chances of winning be given to machines based on amounts played on other machines. The probability of a machine winning is dependent on the amount wagered on it and every other machine during the one minute period.

131               Mr Johnson points out that the probability of an EGM being offered and winning the jackpot is dependent upon two additional factors, namely that the EGM is active at the time the trigger condition is met and that the EGM to which the jackpot is offered is played again in the next 20 seconds. The probability of an EGM winning the jackpot is represented by:

P = x P(AT) x P(AF)

where:

·                         P means the probability of being selected to receive the jackpot prize after it has been triggered by the trigger condition.

·                         Tm means the amounts of credits wagered on the relevant EGM during the relevant period.

·                         Ta means the total amount of credits bet on all EGMs that are active at the time at which the trigger condition is met.

·                         P(AT) means the probability of the EGM being active at the time at which the trigger condition was met.

·                         P(AF) means the probability of the EGM being active within the next 20 seconds following the trigger condition being met.

132               This may be compared with the probability equation for the Neurizon system.

133               Mr Johnson also explained that if only one EGM was active its turnover in the one minute period is irrelevant as it is the only EGM that can be selected. When a number of EGMs are active the relative contest applied by the system means that the probability of them winning may be affected, potentially significantly, by the activity or inactivity of another EGM.

134               The question which arises in the respondents’ case is whether the algorithm which determines the probability of a win dependent upon turnover during the previous minute of play is within claim 1 of the Neurizon patent given that it involves a relative contest with all other EGMs connected to the jackpot in that minute of play. The focus is upon that part of claim 1 which requires that the probability of a win be ‘dependent upon’ at least some of the amount wagered on that EGM during an elapsed period.

135               The words ‘dependent upon’ were considered by the witnesses to have their meaning in mathematics, informed by ordinary English usage. There was no dispute amongst the expert witnesses that this involves conditional probability and means ‘dependent, among other things, upon’ and does not mean ‘dependent only upon’.

136               Professor Donnelly derived a mathematical expression for the probability of a particular EGM winning a prize in ActivData II+. He concluded that it is dependent on at least some of the amount wagered on that EGM even if the probability is also seen as dependent upon the amount wagered on all other EGMs. This may refer to the process of rating an EGM, which has not been previously discussed. In the ActivData II+ system a rating is given to a machine. The probability of an EGM winning is proportional to that calculated rating and the rating is in turn dependent on the amount of turnover on that EGM in the prescribed period. Mr Johnson counters that there is no document evidencing the ActivData II+ system which discloses a process where the probability of an EGM winning is proportional to turnover on that EGM.

137               In any event the fact that there may be some dependency on the turnover on the EGM does not determine the question of construction which arises because of the involvement of other EGMs. The question is not only whether the ActivData II+ system involves some dependency on the amount wagered on the EGM in the period, but whether the claim in the Neurizon patent is limited to dependency upon the amount wagered on one EGM and no other at any time.

138               The respondents contend that the reference to ‘that EGM’ in claim 1 does not necessarily exclude other EGMs. To achieve their exclusion the author would have to include the words ‘only upon’ after the word ‘dependent’ or the word ‘only’ before ‘that gaming machine’. There are difficulties in adding the words ‘only upon’ to dependent, for it could exclude other variables. It does not seem to me to be necessary to add the second qualification. ‘That’ gaming machine is that upon which the wager or wagers has or have been made. There is no suggestion of any other machine being involved in the probability calculation.

139               In Improver Corporation v Remington Consumer Products Limited [1990] FSR 181at 189 three questions representing a purposive approach to construction, and relevant to assessing variations on a claim, were formulated. The first enquires whether the variant would have a material effect upon the way the invention works. Here the addition of a relative contest amongst EGMs would have that result. It would follow that the variation is outside the claim. The second is whether the variant would be obvious to a skilled addressee. The answer here is ‘no’ and the variant is therefore outside the claim. The third is whether the skilled addressee would understand from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention. The answer here must be ‘yes’ and the variant is outside the claim.

140               It is not possible to discern a relative contest as coming with the Neurizon patent. It involves turnover on one EGM. And it may be recalled that in the ActivData II+ system when only one EGM is active, the amount wagered in the one minute period on it is irrelevant in the probability calculation.

141               Turning to claim 1 of the Neurizon patent, it cannot be said that in the ActivData II+ system the weighting for probability is relevant where there is only one EGM. It requires a plurality of EGMs for turnover to be taken into account. In ActivData II+ the probability of an EGM winning depends on turnover of other EGMs, which is not part of claim 1.

142               I therefore conclude that the ActivData II+ jackpot system did not anticipate the Neurizon invention.

OBVIOUSNESS

143               The respondents allege that there is no inventive step involved in the Neurizon patent and it is therefore not patentable under s 18(1)(b)(ii) of the Act. Section 7(2) of the Act defines an inventive step:

‘Inventive step

(2) For the purposes of this Act, an invention is to be taken to involve an inventive step when compared with the prior art base unless the invention would have been obvious to a person skilled in the relevant art in the light of the common general knowledge as it existed in the patent area before the priority date of the relevant claim, whether that knowledge is considered separately or together with the information mentioned in subsection (3).’

144               And s 7(3) of the Act provides:

‘(3) The information for the purposes of subsection (2) is:

(a) any single piece of prior art information; or

(b) a combination of any 2 or more pieces of prior art information;

being information that the skilled person mentioned in subsection (2) could, before the priority date of the relevant claim, be reasonably expected to have ascertained, understood, regarded as relevant and, in the case of information mentioned in paragraph (b), combined as mentioned in that paragraph.’

145               The test posed by Graham J in Olin Mathieson Chemical Corporation v Biorex Laboratories Ltd [1970] RPC 157at 187-188 was approved by the High Court in Aktiebolaget Hässle v Alphapharm Pty Ltd (2002) 56 IPR 129at 143, par [53].

‘Would the notional research group at the relevant date, in all the circumstances, which include a knowledge of all the relevant prior art and of the facts of the nature and success of chlorpromazine, directly be led as a matter of course to try the -CF3 substitution in the “2” position in place of the -C1 atom in chlorpromazine or in any other body which, apart from the -CF3 substitution, has the other characteristics of the formula of claim 1, in the expectation that it might well produce a useful alternative to or better drug than chlorpromazine or a body useful for any other purpose?’

(Emphasis added).

146               The solution contained in the present invention was not one which was the result of long experiment or research. Mr Johnson had been asked by a gaming manufacturer to devise an alternative to the Hyperlink system in mid 1999. It was whilst he was driving to Sydney for a meeting with the manufacturer that it occurred to him that he had been approaching the solutions to the problems he perceived in Hyperlink in the wrong way. He thought that turnover on an individual EGM in an elapsed period might condition probability on that EGM. The fact that the invention came rather readily to Mr Johnson does not of course mean that it would have occurred to another person skilled in the art: Re Dow Corning Corporation’s Application [1969] RPC 544at 560, cited in Aktiebolaget Hässle v Alphapharm Pty Ltd at 139, par [39]; or that Neurizon should be denied the protection of a patent.

147               The Frankovic, Aristocrat, Hyperlink and IGT patents are relied upon as part of the common general knowledge at the priority date. The ActivData II+ system is not. I do not think it could be said that any of these patents would have directed a skilled person to the invention found in the Neurizon patent. The patent was a solution to perceived shortcomings in the Frankovic system and an attempt to distinguish itself from the Hyperlink game-based system.

148               I have held that neither Mr Krimmer nor Mr Gregory were skilled addressees at the priority date. Were they in a position to offer the opinion necessary, I would nevertheless be unwilling to act on their evidence. The likelihood is too high that it has been arrived at with hindsight and by a process of reconstruction. For completeness however I shall refer shortly to it.

149               Mr Krimmer said that he and others at Jupiters Technology had considered the Neurizon solution before the priority date and rejected it as unfair and unlikely to comply with QOGR requirements. This may disclose some misunderstanding of the QOGR requirements. In any event I would not accept the assertion unless it were shown how they came to consider it. Mr Krimmer asserted that part of the common general knowledge was that the awarding of a jackpot prize may be related to the total amount wagered in a given period of time. He did not explain where this knowledge was to be derived from. It does not form part of any system known at the time. Mr Krimmer draws upon the features of the Dial Up Computer Monitoring System (‘DUCMS’) protocol to show that weighting based on turnover in a period was obvious. The DUCMS protocol was a communications protocol which predated the QCOM protocols. It is not suitable for a non-deterministic jackpot. Why Mr Krimmer turned his mind to it at the time alleged is not at all clear. Under that protocol information is obtained by the site controller from EGMs every 30 seconds, is stored by it and passed to a central host. Mr Krimmer’s point is that that information is turnover. So much may be accepted. It was known that regulatory authorities required that information be stored for taxation purposes. That does not appear to me to lead one to consider the use of turnover in an elapsed period to weight the probability of an EGM winning. I do not accept that it was likely that Mr Krimmer saw the solution the invention later offered. Not only was it not apparent in the sense discussed above, he was focussed only upon games-based play at that time, as was the industry.

150               Mr Gregory says that the Hyperlink patent is non-deterministic and based on direct proportionality with player turnover. That, together with common general knowledge as to the use of accumulated turnover in monitoring systems, leads directly to the Neurizon patent, in his opinion. It is not at all clear to me that the game-based determination of Hyperlink, however one redescribes it, together with a system such as Frankovic, which accumulates turnover so that the probability of a win increases, can show the way towards a probability dependent on some turnover of an EGM in an elapsed period.

151               Mr Miller does not depose to any belief about the Neurizon solution at the priority date. His evidence was that a skilled addressee, faced with the problems of prior art and the requirements of the QOGR would take one of two paths. On the first, after considering the Frankovic patent, or others associated with mystery jackpots, selecting a communications protocol such as QCOM and considering the need for a non-deterministic jackpot, a skilled addressee:

‘(a) would develop a jackpot system based upon classifying each increment in a time period of some sorts which might be determined to be whatever the next change in turnover delivered by the messaging system or might be categorised into one or more time windows;

(b) as turnover increments were to be analysed, either on a demand basis when turnover increments were observed by the system or on a period time basis, the skilled addressee would design the system to calculate the probability of one or all of the EGMs winning the jackpot;

(c) in order to meet the non-deterministic requirement, the skilled addressee would use a simple algorithm, that was in the public domain, for translating a probability into a win using a random number generator…’.

152               The second path that the skilled addressee might take, Mr Miller says, is to observe the Tabcorp mystery jackpot system and communications system in Victoria and the inherent latency problems. The Tabcorp systems were not further explained. The skilled addressee however is led to the next step:

‘to design the system such that as turnover increments were to be analysed, either on a demand basis when turnover increments were observed by the system or on a period time basis, the system would calculate the probability of one or all of the EGMs winning the jackpot’.

153               Even on the first path, where the prior matters for consideration are identified, it is not made plain how or why a skilled addressee would move from these points immediately to develop a system based upon a period of time and turnover of increments. As such it is an ineffective reconstruction. I also note that it stops short of stating the Neurizon solution. It is not suggested that the skilled addressee would then proceed to weight probability of a win on an EGM by reference to some turnover in an elapsed period.

154               The respondents also relied upon direct evidence of obviousness given by Mr Spencer, and the exercise carried out by him. Mr Spencer was provided with three problems identified under the heading ‘Background Art’ in the Neurizon patent and was asked to attempt a solution to them. Mr Spencer said that he had not seen the Neurizon patent either at the time he undertook this task or at the time he gave evidence.

155               It would appear that Mr Johnson spoke to Mr Spencer in about January 2002, when he asked him to give evidence for Neurizon in the earlier proceedings. He was unable to do so because of some perceived conflict of interest. It was suggested to him that Mr Johnson may have discussed the invention with him. I accept that Mr Spencer is not conscious of any details of the invention being discussed. It also occurred to me that there may have been talk of a new time-based jackpot system in the gaming industry. Persons in it had a familiarity with other systems and I would have thought it would be of some interest. I accept however that the evidence does not permit a firm conclusion about the likelihood of persons such as Mr Spencer hearing about the invention and it was not suggested to him that this occurred. If anything his evidence tends to establish a lack of familiarity with it.

156               The first problem identified for Mr Spencer was the collection of data from EGMs, which cannot be synchronised with each EGM’s game cycle, the problem being latency in the communications system. In some cases there could be six games played between data collections. If the controller collected credits bet information for the purpose of centrally determining the random event based on credits bet on each game there would be a real likelihood that many played games would be issued. They would be contributing to the jackpot pool with no chance of a win.

157               Mr Spencer considered that the problem of the speed at which individual game data was collected by a central controller could be overcome by accumulating credits for any games played between data collection events and incrementing the jackpot pool based on the aggregate bet amount since the last increment for that EGM. The method of incrementing the jackpot pool is based on adding a proportion of the amounts bet to the jackpot pool, not the number of games played.

158               The second problem identified was a system, namely the Frankovic system, which is deterministic in the sense that the probability of an EGM winning increases as the pool increases towards its predetermined maximum limit. Mr Spencer’s solution was to use a random algorithm to trigger jackpots based on time of day or X minutes since the last trigger. It would also be possible to base jackpot values to be awarded on one day as a proportion of total turnover on a previous day or period. It would not be necessary then to use a fixed jackpot maximum value.

159               The third problem was where a player has multiple wagers and the probability of a win is no longer proportional to the wager. His solution would be to implement a trigger mechanism in a remote jackpot controller whereby inputs from multiple EGMs would be compared against a random trigger value and jackpot prizes would be awarded when the trigger condition has been met. He goes on:

‘To overcome problems with network latency in this solution, I would enhance my earlier solution of aggregating bet amounts between inputs into the jackpot controller and require the jackpot controller to receive from the EGD the total amount of bets and the total number of games played since the last input into the jackpot controller. The controller would then calculate the average bet per play and use this to assess whether or not the trigger had been satisfied.’

160               Mr Spencer’s solution is based upon the average amount wagered on each game. The amount wagered between the time when information is received by the jackpot controller is aggregated. The EGM informs the controller of the total amount of bets and the total amount of games played and the average amount wagered on each game is calculated. That average is then used to determine the probability of a win. The average amount bet might be compared against a trigger value. His solution might involve a comparison between EGMs of the amount bet, but it might also be applied to each EGM.

161               It is possible to identify in Mr Spencer’s solution a period which has elapsed, given that it is concerned with the amount wagered in the time between information or ‘inputs’ to the jackpot controller. He would fix it by time and does not contemplate the period being fixed by events. Mr Spencer’s solution does not however use the amount wagered in that elapsed period in the probability calculation. His solution takes the average amount wagered on each game to influence the probability of an EGM winning. This would appear to be a game-based solution. It does not have the characteristics of the Neurizon patent.

conclusions