Federal Court of Australia

Dei Gratia Pty Ltd v Commissioner of Patents [2024] FCA 1145

ORDERS

THE COURT ORDERS THAT:

1.    The Notice of Appeal dated 24 October 2023 be dismissed.

2.    The appellant pay the respondent’s costs of the proceeding, to be taxed in absence of an agreement.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

ROFE J:

1.    INTRODUCTION

1    By its Notice of Appeal dated 24 October 2023, the appellant, Dei Gratia Pty Ltd, appeals the decision of a delegate of the respondent, the Commissioner of Patents, in refusing the appellant’s application for a standard patent, Application No. 2019200581 entitled “Last Mile Logistics”. The refusal by the delegate was made pursuant to s 49(2) of the Patents Act 1990 (Cth). The version of the Act applicable to the patent in suit is that which follows the commencement of the Intellectual Property Laws Amendment (Raising the Bar) Act 2012 (Cth).

2    The sole ground of refusal by the delegate was that the Application did not claim a manner of manufacture under s 18(1)(a) of the Act.

3    While this proceeding is characterised as an appeal, it has been commenced in the original jurisdiction of this court and thus, is a hearing de novo: Imperial Chemicals Industries Pty Ltd v Commissioner of Patents (2004) 63 IPR 476 at [49] (per Crennan J). As such, this Court essentially will ‘stand in the shoes of’ the respondent and consider the Application afresh.

4    The appellant advanced the following grounds of appeal.

(a)    The delegate erred in:

(i)    holding that claim 1 of the Application did not disclose a manner of manufacture within the meaning of s 18(1)(a) of the Act;

(ii)    holding that the remaining claims of the Application did not add any patentable subject matter to the substance of the invention; and

(iii)    refusing to accept the Application.

(b)    The delegate ought to have concluded that claim 1 of the Application discloses a manner of manufacture within the meaning of s 18(1)(a) of the Act, that it and each of the remaining claims of the Application contains patentable subject matter, and that the Application should be accepted.

5    For the reasons that follow, I find that the invention described and claimed is not a manner of manufacture for the purposes of s 18(1)(a) of the Act and accordingly, the Notice of Appeal ought to be dismissed with costs.

2.    BACKGROUND

6    The following facts have been taken from the parties’ Statement of Agreed Facts filed on 21 February 2024 pursuant to s 191 of the Evidence Act 1995 (Cth).

7    The Application was filed on 30 January 2019 and claims priority from Provisional Application No. 2011900956, filed on 17 March 2011.

8    The Application has been the subject of five examination reports as detailed below:

(a)    first examination report dated 25 March 2020;

(b)    second examination report dated 22 June 2020;

(c)    third examination report dated 6 August 2020;

(d)    fourth examination report dated 31 March 2021; and

(e)    fifth examination report dated 30 June 2021.

9    On 21 September 2020, following receipt of the third examination report, the appellant requested a hearing in respect of the objections to acceptance of the Application set out in that report.

10    The objections set out in the third examination report were broadly that:

(a)    the invention claimed was directed to a ‘mere collocation’ and consequently was not directed to a manner of manufacture, as required by s 18(1)(a) of the Act; and

(b)    the invention claimed lacked an inventive step in light of the combination of:

(i)    US 2003/0177072 A1 (BARED) 18 September 2003 (D1); and

(ii)    US 2003/0036848 A1 (SHEHA et al) 20 February 2003 (D2).

11    On 16 March 2021, the delegate issued the First Decision, Dei Gratia Pty Ltd (2021) 163 IPR 282, which found that:

(a)    the invention claimed was not a mere collocation; and

(b)    the invention claimed comprised an inventive step in light of common general knowledge and either prior art documents D1 or D2.

12    The First Decision was not appealed.

13    Following the above findings, the delegate extended the period for the Application to obtain acceptance to 16 September 2021, and referred the Application for further examination to consider whether the invention claimed:

(a)    lacked an inventive step in light of US 2004/0153370 A1 (YANG) 5 August 2004 (D3) and any further documents located; and

(b)    was directed to a computer-implemented scheme or business method and consequently not a manner of manufacture.

14    On 13 August 2021, following receipt of the fifth examination report, the appellant requested a hearing in respect of the objections to acceptance of the Application set out in that report.

15    The objections set out in the fifth examination report broadly were that the invention claimed:

(a)    lacked an inventive step in light of the combination of D1 and D3; and

(b)    was directed to a computer-implemented scheme or business method and consequently not directed to a manner of manufacture.

16    On 3 October 2023, the delegate issued a Second Decision: Dei Gratia Pty Ltd [2023] APO 50. For the reasons given in the Second Decision, the delegate refused the Application. The delegate found that the invention claimed:

(a)    comprised an inventive step in light of the common general knowledge and D1 and D3 alone or in combination; and

(b)    was not a manner of manufacture, but rather in substance a logistics system.

17    The Second Decision is the subject of this appeal.

3.    THE PATENT APPLICATION

18    The field of the invention relates to ‘last mile logistics’ and in particular a logistics facility and related systems and methods for the provision of goods and/or services to an end user. ‘Last mile logistics’ concerns the delivery of goods from the last point in a distribution chain to an end-user or consumer.

19    The specification describes logistics as concerned with managing the movement of goods between a point of origin, such as a factory, and the end user, such as a customer, within various time, resource and cost constraints. Logistics typically involves the integration of factors such as material handling, packaging, warehousing, inventory, transportation, information, security and financial transactions. To the extent that “services” are mentioned in the specification, they appear to be services associated with these logistical factors.

20    The Application outlines several problems with existing methods of delivery for online shopping.

21    First, for items not suitable to be left on the doorstep, the consumer needs to be home when the item is delivered, or attend a post office or distribution centre to collect the item.

22    Second, with perishable items such as groceries, the goods may spoil in high temperatures if left outside. Also, goods left outside may be stolen. Alternatively, the groceries are delivered in a particular delivery window, with the cost of delivery being tied to the specificity of the window. Shorter delivery windows increase the complexity of the delivery task.

23    Third, items purchased online may need to be sent back, for example if sizing is wrong, requiring the consumer to make a special trip to the post office or courier depot.

24    Fourth, where there are multiple customers in close proximity, or a customer orders goods from several suppliers, there are inefficiencies in delivery and duplication of resources. Partial solutions to these problems, such as drive through or drive-up or pack stations, still require the customer to make a special trip.

25    The object of the invention is to ameliorate one or more of these problems with the delivery of items purchased online by providing an improved system (method or apparatus) of delivery to a selected convenient modified local outlet.

26    A modified local outlet is described as being a local outlet, such as the neighbourhood convenience store or petrol station, that has taken on the new role of a local distribution centre for last mile logistics.

27    The modified local outlets offer at least three types of goods:

(a)    a core range of goods carried for daily consumption at the modified local outlet on an order today, deliver today basis;

(b)    a further or extended range of goods not necessarily related to the core products and which are available on an order today, deliver tomorrow basis; and

(c)    goods ordered online by the customer which are offered by vendors other than the selected modified local outlet.

28    The summary of the invention comprises three consistory clauses conforming to the three independent claims: Application at pp 8 to 10. Additionally, a detailed description of the preferred embodiments of the invention is provided: Application at pp 11 to 18.

29    The system is said to comprise a processor coupled to be in communication with the logistics facility over the communications network for receiving orders for goods and/or services from customers via their respective communication devices: Application at p 9, lines 12 to 30. The specification states that the processor can be in a server coupled to and/or comprising a database for storing orders from customers: Application at p 13, lines 24 to 28. There is nothing special about the computer processor or the communication devices to be used in implementing the system. The specification states that the communications devices can be any form of known computing device having suitable known communication and processing capabilities, such as personal computers, tablets, smart phones, mobile communication devices, personal digital assistants and the like.

30     The specification further states (Application at p 17, lines 1 to 7):

It will be appreciated that embodiments of the present invention can be implemented using one or more processors operatively coupled to respective storage media in the form of computer memory. Computer memory comprises a computer readable medium having computer readable program code components stored thereon, at least some of which are selectively executed by the one or more processors and are configured to cause the execution of the embodiments of the present invention described herein.

31    The Application ends with 21 claims of which claims 1, 13 and 18 are independent claims: respectively, to a method, a logistics system and a facility.

32    The appellant’s counsel noted in oral submissions that, for the purposes of this appeal, the appellant accepts that it is sufficient to consider the manner of manufacture requirement by reference to claim 1. If claim 1 does not pass the test then the dependent claims, and the other independent claims, do not add anything sufficiently that would change the outcome. The classification of claim 1 is the sole focus of this appeal.

33    Claim 1 describes a method as follows:

A method for delivering to a selected modified local outlet (i) goods from a core range of products carried by the selected modified local outlet; (ii) goods from a further-extended range of products that can be unrelated to the core range of products; and (iii) goods that have been ordered directly by a customer over a communications network from one or more of a plurality of other vendors unrelated to the selected modified local outlet, the method comprising:

providing the (i) goods from a core range of products that are carried for daily consumption at an availability that is order today, deliver today at the selected modified local outlet for purchase by the customer;

automatically calculating the selected modified local outlet to be a collection point that creates the least deviation from a route input by the customer on their communication device, wherein the selected modified local outlet is selected from a plurality of modified local outlets serving their local surrounding area, wherein the automatic calculation is performed by a processor coupled to be in communication with a website or other suitable interface over a communications network for receiving orders for the (ii) goods and the (iii) goods from the customer via their communication device;

receiving at the selected modified local outlet the (ii) goods from a further extended range of products that have been ordered directly by the customer over the communications network wherein the (ii) goods have an availability that is order today, deliver tomorrow and wherein the (ii) goods are ordered by the customer and the selected modified local outlet is automatically calculated and specified to be the collection point; and

receiving at the selected modified local outlet the (iii) goods ordered directly by the customer over the communications network from the one or more of a plurality of other vendors wherein the (iii) goods ordered directly by the customer include the selected modified local outlet as a destination specified by the customer; and

providing at the selected modified local outlet the (i) goods from a core range of products; the (ii) goods from a further-extended range of products; and the (iii) goods that have been ordered directly by the customer over a communications network to the customer.

4.    THE SECOND DECISION

34    The delegate considered the invention as claimed in claim 1 to be in substance, a logistics system directed to organising and administering human activity based on business decisions to improve customer experience.

35    For the purposes of the inventive step analysis, the delegate described the problem to be overcome as (Second Decision at [70]):

… the final stage of getting a product to the customer requires the customer to go out of their way and make a special journey to pick up their goods. This special journey could either be the customer attending a drive-up location or having to attend a location such as a distribution centre when there has been a failed to your door delivery for example, they are not home to take delivery of a parcel.

36    As to documents D3 and D1, or a combination thereof, the delegate concluded that claims 1 to 21 were inventive, as he did not consider that the person skilled in the art would reasonably be expected to have arrived at the claimed invention, stating (Second Decision at [85]):

D3 is directed to overcoming the same problem as the applicant and shares some of the route planning elements and modified local outlets. D1 teaches many aspects of how modified outlets operate and how users order goods. Neither document, nor the [common general knowledge], teaches automatically calculating the selected modified local outlet to be a collection point that creates the least deviation from a route input by the customer on their communication device.

5.    PRINCIPLES

37    Section 18(1)(a) of the Act stipulates that, for a claimed invention to be considered patentable, the claims in any claim must be a manner of manufacture within the meaning of s 6 of the Statute of Monopolies 1624 (21 Jac 1 c 3). Further, Schedule 1 to the Act defines “invention” as “any manner of new manufacture the subject of letters patent and grant of privilege within section 6 of the Statute of Monopolies, and includes an alleged invention”.

38    The common law principles governing s 18(1)(a) of the Act are conveniently formulated in Commissioner of Patents v Aristocrat Technologies Pty Limited (2021) 163 IPR 231 (Aristocrat FCAFC) at [2] (per Middleton and Perram JJ). In particular, it is well-established that any attempt to give precise meaning to the expression ‘manner of manufacture’ is misconceived: National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 (NRDC) at 271 (per Dixon CJ, Kitto and Windeyer JJ); D’Arcy v Myriad Genetics Inc (2015) 258 CLR 334 at [20] (per French CJ, Kiefel, Bell and Keane JJ). What is patentable is therefore to be determined on a case-by-case basis in accordance with common law methodology developed through the cases: Myriad at [18] (per French CJ, Kiefel, Bell and Keane JJ).

39    As a consequence of the equally split High Court decision in Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (2022) 274 CLR 115 (Aristocrat HCA), the Full Court decisions in the area of computer-implemented inventions continue to apply. The decision of the High Court does not create any binding precedent because only unanimous or majority decisions of that Court have binding authority: Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (No 3) (2022) 177 IPR 73 at [105] (per Burley J), citing Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 336 at 432 (per Aickin J) and Milne v Federal Commissioner of Taxation (1976) 133 CLR 526 at 533 (Barwick CJ, Gibbs and Stephen JJ agreeing). The relevant Full Court decisions on this matter which continue to apply include Research Affiliates LLC v Commissioner of Patents (2014) 109 IPR 364, Commissioner of Patents v RPL Central Pty Ltd (2015) 115 IPR 461 and Aristocrat FCAFC (as affirmed by virtue of s 23(2)(a) of the Judiciary Act 1903 (Cth)).

40    As formulated by the majority in Myriad at [28] (per French CJ, Kiefel, Bell, and Keane JJ), alluding to the principles from NRDC, the first two factors necessary to characterise an invention claimed as a manner of manufacture are whether the invention as claimed:

(1)    is for a product made, or a process producing an outcome as a result of human action; and

(2)    has economic utility.

41    This requires consideration of whether what is claimed results in some artificially created state of affairs — something which results from human action — in the field of the useful arts, as opposed to the fine arts, and has economic utility: NRDC at 275, 277 (per Dixon CJ, Kitto and Windeyer JJ). Where, as in this case, the invention falls within the existing concept of manufacture as it has been developed over the years through the cases, these two factors will ordinarily be sufficient: Myriad at [28] (per French CJ, Kiefel, Bell, and Keane JJ).

42    Mere schemes, plans, discoveries, abstract ideas or information are not patentable subject matter: Re Cooper's Application for a Patent (1901) 19 RPC 53 at 54 (per Sir Robert Finlay A-G). Business, commercial and financial schemes have never been considered patentable: Grant v Commissioner of Patents (2006) 69 IPR 221 at [14] (per Heerey, Kiefel and Bennett JJ). Notwithstanding, a practical means for implementing the scheme or idea may be patentable subject matter where it results in a new machine or process or a new and improved result, or an improvement in the operation of the computer: Grant at [18] (per Heerey, Kiefel and Bennett JJ), citing Burroughs Corporation (Perkins’) Application [1974] RPC 147; International Business Machines Corporation’s Application [1980] FSR 564; Aristocrat HCA at [24], [75]–[77] (per Kiefel CJ, Gageler and Keane JJ) and [121]–[122] (per Gordon, Edelman and Steward JJ).

43    Both pluralities in Aristocrat HCA observed that when considering whether there is patentable subject matter, the Court should focus on the substance of what is claimed, and not the form. Accordingly, the first step is to characterise the claimed invention: at [73] (per Kiefel CJ, Gageler and Keane JJ) and [101]–[103] (per Gordon, Edelman and Steward JJ). Characterisation of the substance of the claimed invention involves construction of the claims read in light of the specification as a whole and the common general knowledge at the priority date: Myriad at [12], [87]–[88] (per French CJ, Kiefel, Bell and Keane JJ) and [144]–[145] (per Gageler and Nettle JJ); Ariosa Diagnostics, Inc v Sequenom, Inc (2021) 159 IPR 371 at [139] (per Middleton, Nicholas and Burley JJ). Characterisation of the substance of the invention must take into account all the integers of the claim and not disregard or discount any of those integers which are part of the common general knowledge: Aristocrat FCAFC at [52] and [55] (per Middleton and Perram JJ).

44    Recent Full Courts have held that in order for a computerised business method or scheme to be patentable, the invention must lie in that computer implementation and there must be an improvement or advancement in the computer “technology”: Research Affiliates at [103]–[104] and [118] (per Kenny, Bennett and Nicholas JJ); RPL Central at [96], [107] and [110] (per Kenny, Bennett and Nicholas JJ); Aristocrat FCAFC at [26] and [29] (per Middleton and Perram JJ).

45    These considerations were conveniently summarised by the Full Court in RPL Central at [96] (per Kenny, Bennett and Nicholas JJ):

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

(Emphasis added.)

46    This passage was endorsed by subsequent Full Courts in Commissioner of Patents v Rokt Pte Ltd (2020) 152 IPR 1 at [84] (per Rares, Nicholas and Burley JJ) and Encompass Corporation Pty Ltd v InfoTrack Pty Ltd (2019) 145 IPR 1 at [95] (per Allsop CJ, Kenny, Besanko, Nicholas and Yates JJ).

47    Where the invention is directed to a scheme or plan implemented by means of a computer, a key consideration will be whether there has been any advancement or improvement in the computer technology by which the method is implemented, in which case the invention may be patentable; or whether such ingenuity as exists lies in what is otherwise an unpatentable business method or scheme implemented using a computer for its well-known and understood functions, in which case the invention will not be a manner of manufacture: Aristocrat FCAFC at [26] and [29] (per Middleton and Perram JJ). However, following Aristocrat HCA, the advance or technical contribution may not be limited to a technical contribution in the field of computer technology, but may be in some other field of technology to which the invention belongs: Aristocrat HCA at [78] (per Kiefel CJ, Gageler and Keane JJ) and [122] (per Gordon, Edelman and Steward JJ); Aristocrat FCAFC at [119] (per Nicholas J).

48    The presence of some sort of physical effect or separate physical integer in the claimed invention will not necessarily mean the invention amounts to being a manner of manufacture within itself. Recent authorities recognise that the artificial or physical effects seen in the workings of a computer, such as storage in RAM or communications over the internet, are insufficient to render an invention patentable subject matter: RPL Central at [96]–[98] (per Kenny, Bennett and Nicholas JJ); F45 Training Pty Ltd v Body Fit Training Company Pty Ltd (No 2) (2022) 165 IPR 111 at [49]–[51] (per Nicholas J).

6.    EVIDENCE

49    As preliminary matter, I note the parties chose not to file any evidence in these proceedings.

50    Pursuant to orders made by consent on 11 December 2023, the parties were given the opportunity file any evidence on which they intended to rely by way of affidavits. The appellant did not file any evidence in examination in the Australian Patent Office, nor did it file any evidence in chief on appeal. Correspondingly, the respondent did not file any evidence in answer in this appeal.

51    Accordingly, this appeal is to be determined on the proper construction of the specification and characterisation of the claimed invention in the context of the applicable principles. This is a legal question, not a question of evidence: Rokt at [72]–[73] and [93] (per Rares, Nicholas and Burley JJ).

7.    SUBMISSIONS

7.1    Characterisation of the invention claimed

52    The appellant describes the claimed invention as an improved logistics system involving the provision of a network of “modified local outlets” and the provision of goods ordered by a customer to the modified local outlet which has been automatically calculated by the ordering system as involving the least deviation from the route of an upcoming journey identified by the customer. The selected modified local outlet may not be the closest to the customer’s residence but will be the most convenient point along the customer’s forthcoming journey, for example, their commute to work.

53    The appellant contends that the logistics method of claim 1 involves a combination of seven integers which broadly involve:

(a)    a network of modified local outlets;

(b)    a customer ordering various types of goods and inputting the route of an upcoming trip;

(c)    a computer processor automatically selecting the modified local outlet most convenient to that route; and

(d)    the goods being delivered to that outlet and collected by the customer.

54    According to the appellant, claim 1 is not simply an idea for delivering goods more efficiently. It is a detailed, practical implementation of physical components to achieve that idea, of which the computer processor is just one component.

55    The appellant submits that the invention claimed satisfies the test of patentability in NRDC and the first two factors for an existing concept of manner of manufacture in Myriad at [28] (per French CJ, Kiefel, Bell, and Keane JJ). It involves an artificially created state of affairs resulting from human action: the bringing together of the network of modified local outlets, and a technical effect in the use of the computer to generate the automatic selection of the local outlet involving the least deviation from the customer’s preferred route of travel. Further, the invention claimed has economic utility as consumers are not forced to wait at home all day for their delivery, or risk it being stolen or perishing or, alternatively, being put to the trouble and expense of having to travel to a re-directed collection point.

56    Conversely, the respondent submits the amelioration of the costs inherent in prior logistics systems does not demonstrate economic utility for the purposes of characterising the invention in accordance with NDRC. As the majority of the Full Court held in Aristocrat FCAFC, “[o]ne cannot patent an idea for … a method of doing one’s laundry more efficiently”: at [5] (per Middleton and Perram JJ). The respondent emphasises that devising a method of delivering goods more efficiently is not patentable subject matter as ultimately, the invention claimed is simply improved logistics concerned with managing the movement of goods.

57    The respondent submits that the fact that goods are delivered to a particular location that is more convenient is not a technical contribution, instead it is a business or commercial contribution. The respondent says to consider this as patentable, as on the appellant’s construction, would be inconsistent with the authorities.

58    In addressing the various concepts that are identified by the specification, including inventory holding points, sorting centres and retailers, the respondent maintains that these concepts are confined to the background. There is no suggestion that these concepts are new to the delivery of goods to particular outlets. In fact, the respondent says, these are all part of the well-established field of logistics.

7.2    Patentability of a business scheme

59    The appellant emphasises that claim 1 is not simply an idea for delivering goods more efficiently; it is a detailed, practical implementation of physical components to achieve that idea, of which the computer processor is just one component. The appellant submits that the invention claimed is elevated from merely a scheme when the claims are considered as a unitary concept rather than disaggregated artificially into separate parts: Ariosa at [114] (per Middleton, Nicholas and Burley JJ), citing Hickton’s Patent Syndicate v Patents and Machine Improvements Co Ltd (1909) 26 RPC 339.

60    The respondent maintains that the appellant has failed to establish that the invention goes beyond the parameters of an abstract idea. The mere use of the modified local outlets and the classification of certain types of goods to be delivered to, or stocked at, those outlets are not in and of themselves patentable subject matter. They are abstract concepts; and it is the identification of those outlets based on automatic selection by the ordering system that is the subject of the invention.

7.3    Use of a computer in the claimed invention

61    While the appellant accepts that the mere use of a computer or a mere change in state in the computer is insufficient to provide the artificially created state of affairs required for a manner of manufacture; it maintains that the involvement of the computer in the claimed invention is but only one component of a unitary concept comprised of a number of integers and resulting in the delivery of goods to the customer at a point which removes or ameliorates the costs in prior systems.

62    The appellant draws attention to the observations of Middleton and Perram JJ in Aristocrat FCAFC at [54]–[57] in considering whether there was any technological advancement or improvement to the computer in circumstances where all the features were common general knowledge. Specifically, at [55], their Honours say:

[t]he correct characterisation of the invention must therefore be one which accounts both for the fact that the invention is something which includes not only the [electronic gaming machine] … but which also requires the composition of computer code providing for the feature game on that [electronic gaming machine] …

63    Drawing on the above observation, the appellant says that all features of the claim must be taken into account when attempting to correctly characterise the invention claim, consistent with propositions set out in Ariosa at [114] (per Middleton, Nicholas and Burley JJ).

64    In addressing the respondent’s reliance on [96] of RPL Central (per Kenny, Bennett and Nicholas JJ) for the proposition that the invention must lie in the computerisation, the appellant submits that there is no suggestion that computerisation should be limited specifically to improving the technology or the computer technology itself as considered in Research Affiliates at [103]–[105] (per Kenny, Bennett and Nicholas JJ), another Full Federal Court decision where the bench was constituted of the same members.

65    The appellant asserts that the approach of the majority in Aristocrat FCAFC at [26]–[27] (per Middleton and Perram JJ) is inappropriate for the present Application. In distinguishing the present case from that in Aristocrat FCAFC, the appellant says that unlike the invention in suit in that matter, the claimed invention here does not involve the use of a computer merely to gather, process and present financial or business information. The computer is only one component of the invention which is a technological solution to a pervasive problem.

66    The respondent criticises the appellant’s claim that a computer is involved in only one component of the concept of the invention. The respondent says that the entire inventive concept of the Application is driven by and centres upon the ability of the invention claimed to identify a modified local outlet collection point that creates the least deviation from a route input by the customer on their communication device. In referring to the claims, the respondent notes that computer technology is involved in almost every, if not every, step. The computer technology is central to the invention and, in particular, the key step of automatically calculating the selected modified local outlet is carried out using the computer technology. It relies on the customer having inputted on their communication device a route, and it is performed by a processor, coupled to be in communication with a website or other suitable interface over a communications network.

67    According to the respondent, the invention is, in substance, a business scheme or method for delivering goods that has been implemented using a computer. In circumstances where this is done by way of generic computer technology used for its well-known and understood functions, with no invention or ingenuity in the computerisation itself, the respondent maintains that the claims lack manner of manufacture.

68    The respondent maintains that whilst the delegate held that the prior art did not teach calculating a pick-up location providing the least deviation from a user’s route, and the person skilled in the art would not be reasonably expected to have arrived at the claimed invention, that does not mean that there is any ingenuity in the way the computer is used in the requisite sense. That calculation is still performed using generic computer technology.

7.4    A physical outcome from the claimed invention

69    The respondent submits that whilst the claimed invention brings about a physical outcome and is not limited to merely inputting a scheme into a computer, the substance of the invention resides not in the actual physical delivery of the goods to the chosen location or the physical nature of the modified local outlets themselves, but rather in the computer-implemented scheme which enables that delivery to be made and the modified local outlet to be selected.

70    The respondent draws on the reasoning in F45 where the arrangement of the exercise stations, which was a physical thing outside the computer, was not regarded as conferring any technical or practical result that was indicative of patentable subject matter: at [49] (per Nicholas J). His Honour found that the physical arrangement was a result of the scheme being implemented in the computer, and therefore the result of a scheme. Relying on this finding, the respondent argues that the presence of physical outcomes, such as the delivery of goods to a particular location that is more convenient, does not itself confer patentability.

71    The respondent identifies that the appellant’s invention does not lie in the computerisation; nor is there an improved algorithm for determining the least derivation or any other improvement or invention in computer technology disclosed. Accordingly, the respondent contends that the invention can be put no higher than a business scheme or method implemented by generic computer technology used for its well-known and understood functions. As such, this case is analogous to F45.

72    The respondent draws attention to the appellant’s concession before the delegate that the invention does not reside in overcoming any technical problem or difficulty within the computer: the Second Decision at [43]. The respondent submits that nowhere in the specification is it suggested that the ability to select the modified local outlet, or any other aspect of the invention, requires any specialised computer technology or invention or ingenuity in any program or operation of that computer technology. For example, there is no disclosure of a route optimisation algorithm to determine the local modified outlet. Indeed, there is no disclosure of any particular algorithm.

73    The appellant addressed the respondent’s reliance on F45 by contrasting the findings in that case with those in UbiPark Pty Ltd v TMA Capital Australia Pty Ltd (No 2) (2023) 177 IPR 254 at [204]–[207] (per Moshinsky J), which was upheld on appeal on grounds unrelated to manner of manufacture in TMA Capital Australia Pty Ltd v UbiPark Pty Ltd [2024] FCAFC 85.

74    In UbiPark, the claimed invention was to an access control system including three components: a type of communication system, a computer program and a smartphone configured to determine signal strength. Together, when the smartphone of an account holder approached sufficiently closely to a car park barrier, and entry criteria were met, the barrier was raised allowing entrance to and exit from the carpark. Moshinsky J found that to be a sufficient concrete, tangible, physical and observable effect to qualify as patentable subject matter in the face of the objection based on the Research Affiliates line of cases.

75    The appellant points out that no new technology in the sense of improved functioning of computer equipment was involved in UbiPark. Rather, the invention lay in the manner of use with appropriate, physically observable effects, and the appellant submits that the same may, and should, be found in the present case.

76    The appellant points to the following, which it submits are examples of an artificially created states of affairs produced by the claimed invention:

(a)    the network of modified local outlets;

(b)    the technical effect of the processor being used to generate the automatic selection of the appropriate outlet, which involves the least deviation from the customer's preferred upcoming travel route, which the delegate held to be inventive; and

(c)    the physical manifestation of a different, more convenient delivery location. The goods are delivered to a location different to what would have otherwise been the case, being a more convenient location based on the customer’s planned movements.

7.5    The delegate’s finding on inventive step

77    The appellant contends that the delegate’s rejection of the inventive step objection shows that there is invention in the way in which the method is carried out and there is also ingenuity in the way the computer is used. The appellant says this is not a case that simply involves taking advantage of the computer’s speed of processing or the creation of information for which the relevant field computers are routinely used. Further, the finding of inventive step ought to be considered against the backdrop of computer advancements in 2011.

78    The respondent submits that the appellant’s reliance on the delegate’s finding of inventive step is not material as it is irrelevant to the present inquiry.

79    The respondent submits that what the appellant claims is inventive and leads to a finding of manner of manufacture is effectively the idea that is embodied in the step of automatically calculating the location of the preferred selected modified local outlet, which enables a more efficient delivery of goods to customers. The respondent says that that is not technical subject matter at the level at which it is dealt with in the claim and in the specification; it is at the level of a scheme.

80    According to the respondent, the references to the inventive concept in the manner of manufacture authorities dealing with computer-implemented inventions, are references to an assessment of what is the inventive concept at the heart of the invention and the substance of the invention as based on a review of the specification. These are not references to whether or not there is an inventive step considered against the background of evidence on the common general knowledge and/or particular prior art.

81    The respondent submits that the question of inventive step is separate to that of manner of manufacture, and the finding of inventive step should not be taken as indicative of conferring manner of manufacture on a claimed invention: Lockwood Security Products Pty Ltd v Doric Products Pty Ltd (2004) 217 CLR 274 at [48] (per Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ).

82    Further, the respondent does not consider there to be any difference between the well understood functions of computers in 2011 compared to the present day.

83    Particularly, the respondent submits the appellant has not demonstrated the invention or ingenuity lies in the computerisation as contemplated in RPL Central at [96] (per Kenny, Bennett and Nicholas JJ); nor has it proved that there is any advance or improvement in the computer technology by which the method is implemented as put in Aristocrat FCAFC at [26] and [29] (per Middleton and Perram JJ).

8.    CONSIDERATION

84    The issue here is whether the invention claimed in claim 1 is a manner of manufacture.

85    It is necessary to start by characterising the invention claimed. It is a matter for the Court to determine and characterise the invention having regard to the principles of construction as set out in Rokt at [71] (per Rares, Nicholas and Burley JJ), citing Jupiters Ltd v Neurizon Pty Ltd (2005) 65 IPR 86 at [67] (per Hill, Finn and Gyles JJ). The task of construing the specification involves arriving at a characterisation of the invention claimed in order to determine whether or not it is in substance for a manner of manufacture. As the Full Court elaborated in Rokt at [74] (per Rares, Nicholas and Burley JJ):

… [this] involves the application of the common law principles developed to separate patentable inventions from schemes or methods of business. The latter can, in the context of computer implementation, appear to be dressed in the clothes of invention. In each of Research Affıliates, RPL Central and Encompass, the Full Court found the computer implemented inventions not to be patentable; each was a case of the Emperor’s new clothes.

86    Properly characterised in light of the specification as a whole, the substance of the invention claimed is an improved logistics method or scheme for delivering goods to an optimal location (a modified local outlet) for a consumer to collect, wherein the identification of the optimum modified local outlet for delivery for a particular customer is calculated by a computer in response to the customer’s input route.

87    The Full Courts in Research Affiliates and RPL Central explained that a claimed method that is unpatentable does not change its legal character merely because the method is implemented by the instrumentality of a computer: Encompass at [91] (per Allsop CJ, Kenny, Besanko, Nicholas and Yates JJ).

88    While the Application does not use the phrase “computer-implemented” in the specification including the claims (cf F45), the method claimed relies on the practical use and implementation of a computer for its well-known and understood functions to perform the calculation of the optimum modified local outlet for the delivery of goods for collection by the particular customer according to their input route.

89    In having regard to the substance of the specification over the form, the contribution of the computer system to the invention claimed is not de minimis, nor can its role be downplayed to be simply considered as just one component of a combination invention. Whilst the claimed invention includes physical outcomes, being the delivery of ordered goods to the identified optimum point for collection, the computer system is central to the implementation of the improved logistics system claimed. As the appellant submitted, the inventive aspect of the claimed invention (as found by the delegate, and not challenged) is the automatic calculation of the optimum modified local outlet for the customer. The appellant accepted before the delegate that there was no technical ingenuity involved in the selection of the optimum modified local outlet: the Second Decision at [53].

90    As the respondent pointed out, the mere use of “modified local outlets” and the classification of certain types of goods to be delivered to, or stocked at, those outlets are not in and of themselves patentable subject matter. Nor is improved customer convenience per se. They are abstract concepts, being a part of a logistics scheme and a solution to a business problem. It is the identification of the optimum modified local outlet for delivery based on automatic calculation by the system that is the subject of the invention. Without a computer system essentially recording and feeding data through each point of the method, a customer would fail to receive their requested goods at their optimum modified local outlet for delivery.

91    As such, the invention claimed must be contemplated through the lens of a “computer-implemented” invention, and, following the approach of the Full Court majority in Aristocrat FCAFC at [26] (per Middleton and Perram JJ), it must be considered whether the invention or ingenuity lies in the computerisation such that there has been advancement or improvement in the computer technology by which the method is implemented, or whether it is no more than a mere scheme implemented by a computer.

92    The mere fact that a scheme cannot be carried out without the use of a computer is not sufficient to render an invention patentable subject matter if it simply involves the speed of processing and the creation of information for which computers are routinely used. As the Full Court observed in RPL Central at [104] (per Kenny, Bennett and Nicholas JJ), citing Research Affiliates a computer-implemented business method can be patentable where the invention lies in the way the method is carried out in the computer. This necessitates some ingenuity in the way in which the computer is utilised: RPL Central at [99], [104] and [109] (per Kenny, Bennett and Nicholas JJ).

93    It is not suggested that any ingenuity lies in the computerisation of the logistics scheme of the claimed invention. The implementation of the logistics scheme on a computer does not involve any advance in computer technology. The computer technology involved in the invention is conventional computer technology used for its well-known and understood functions. The references to computer systems in the Application are not technical and are in simple terms such as “computing device having suitable known communication and processing capabilities”. References to the hardware required is in similarly high level, general terms, such as “PCs, tablets, smart phones, mobile communication devices, PDAs and the like”: (Application at p 13, lines 25 to 28). The determination of the most convenient modified local outlet for delivery is described in very general terms. No algorithm or code is proffered in the Application by which the route optimisation method is to be implemented. There is no requirement for any specialised computer technology or any ingenuity in any program for the operation of that computer technology.

94    The fact that the computer technology is generic, in the sense of being purely conventional, and is utilised for its well-known and well understood effects, was identified by Nicholas J in Aristocrat FCAFC at [112] as providing a useful signpost when deciding whether, what began as an abstract scheme or idea, has been transformed into something that is sufficiently different to constitute an artificially created state of affairs. At [116], Nicholas J referred to the statements of the Full Court at [98] in RPL Central and [117] in Research Affiliates and observed that they recognised that it is not appropriate to adopt an excessively rigid or formulaic approach to the question of whether a computer-implemented scheme is a manner of manufacture.

95    The computer involved in the claimed improved logistics scheme is no more than the means through which the data is processed to determine the optimum modified local outlet for the customer. Like the scheme in Research Affiliates, even though the scheme might be inventive, there is nothing new or innovative about the way in which the computer manages or processes the data in the claimed invention such as to transform the invention into a patentable invention: Aristocrat FCAFC at [111]–[112] and [118] (per Nicholas J). As the Full Court observed in RPL Central at [96] (per Kenny, Bennett and Nicholas JJ), it is not a patentable invention simply to “put” a business method “into” a computer to implement the business method using the computer for its well-known and understood functions.

96    Nor can it be said that the invention provides a solution to any technological problem: RPL Central at [99] (per Kenny, Bennett and Nicholas JJ). Rather the appellant describes the invention as a technological solution to a pervasive problem. The problem solved is a business or commercial one, specifically providing a more effective delivery solution that saves the consumer time and money through delivery of ordered goods to the optimal modified local outlet for collection by a particular customer.

97    The appellant sought to distinguish the claimed invention from that in F45. The invention in F45 concerned a computer-implemented method for configuring and operating one or more fitness studios that required physically configuring the exercise stations dependent upon the received studio information program file. The method was implemented using generic computer technology. Nicholas J characterised the substance of the F45 invention as residing in the computer-implemented scheme which enabled the configuration of the exercise stations to occur on a periodic basis in accordance with the content of the studio information program files.

98    The patentee in F45 relied on the physical configuration of the studios as the relevant artificial effect to satisfy the requirements of NRDC. Nicholas J observed at [50] that the demonstration of a “physical effect” did not necessarily mean that an invention satisfied the NRDC requirement that the invention results in an “artificially created state of affairs”, concluding at [51] that the invention was the kind of scheme that historically had never been regarded as patentable. The mere fact that the invention contemplated (or required) that exercise stations be physically configured with fitness equipment was not sufficient to satisfy the NRDC requirement.

99    The appellant seeks to distinguish its invention from that in F45, on the basis that its claimed invention has been found inventive, whereas there was no suggestion of ingenuity in F45, or that the layout of the exercise stations constituted any more than the arrangement of known things.

100    A scheme may be inventive, but still not be a patentable invention. Whether the claimed invention involves an inventive step is a separate enquiry to whether the claimed invention is a manner of manufacture. The Full Court in CCOM Pty Ltd v Jiejing Pty Ltd (1994) 28 IPR 481 at 510 (per Spender, Gummow and Heerey JJ) noted that the High Court in NRDC (in the context of the Patents Act 1952 (Cth)), spoke of the concept of patent law being ultimately traceable to the use in 1623 of the words “manner of manufacture”, and spoke of novelty and inventive step as distinct matters. The Full Court in CCOM observed that the distinction was made clear by the use of the expression “manner of manufacture” in s 18 of the Act, and that the structure of s 18(1) emphasised that the grounds of manner of manufacture, novelty, inventive step, utility and secret use are each distinct requirements of a patentable invention, stating at 510:

Thus, whilst a claim for the ball point pen now would fail for anticipation and obviousness, it would still be for a claim for a manner of manufacture.

101    In the present case, the appellant relies on the establishment of the modified local outlets and the delivery of goods to the calculated optimum local outlet as the relevant artificially created state of affairs. I consider that the substance of the F45 invention is similar to the present invention. Properly construed, both involve the implementation of a scheme using generic computing technology. In both cases the invention contemplates a physical result or consequence following from the implementation of the scheme. In both cases the asserted physical effect: the configuration of the exercise stations, or the delivery of goods to the optimum collection point, are not sufficient to satisfy the NRDC requirement for an “artificially created state of affairs”. Both inventions are non-patentable schemes.

102    The appellant sought to align its invention with that in UbiPark, in which the invention was held to be a manner of manufacture. In that case, Moshinsky J characterised the claimed invention at [204] as being in substance a communications system, computer program and smartphone configured to determine signal strengths of entry signals and exit signals to control a user’s entry into and exit from a restricted area, in conjunction with the use of authorisation data. At [205] in UbiPark, Moshinsky J concluded:

While at one level the claims comprise a series of instructions to be executed by a computer, the invention as claimed does have some “concrete, tangible, physical, or observable effect” (Aristocrat at [25]), namely the opening of the entry barrier and the exit barrier. While this is not explicitly stated in claims 1, 11 and 16, it flows from the references to generating and transferring an entry request and exit request, read in the context of the specification as a whole. Similarly, and for the same reasons, the invention as claimed constitutes an abstract idea that is “implemented on a computer to produce an artificial state of affairs and a useful result” (Aristocrat at [122]). The artificial state of affairs is the opening of the entry barrier and exit barrier. The useful result is that the user associated with a vehicle is granted entry into, and exit from, a restricted area.

103    In contrast to the invention in F45, the invention in UbiPark was not a mere scheme. The implementation of the invention in UbiPark caused a “concrete, tangible, physical observable effect” being entry or exit from a restricted area such as a carpark, by, for example, the raising of a barrier. The implementation of the method required a computer program (a smartphone app) to process the signals received, to determine whether entry or exit criteria were met, and to interact with the computer controlling the access to the restricted area. Where the appropriate access or exit requirements were met, the access control element would facilitate entry or exit from the restricted area by, for example, the raising or lowering of an entry barrier.

104    Unlike the smartphone app in UbiPark, the present invention offers nothing more than an improved logistics method.

9.    CONCLUSION

105    The invention claimed is, in substance, a business scheme implemented via a computer. As such it is not a manner of manufacture and not patentable subject matter.

106    Accordingly, the Notice of Appeal should be dismissed. The appellant should bear the respondent’s costs of the proceeding.

Associate:

Dated:    1 October 2024