Australian Patent Attorneys have been closely following the legal proceedings of Aristrocrat Technologies Australia Pty Ltd (“Aristrocat”) who is an Australian company based in NSW, Australia and is a market leader in the field of electronic gaming machines (“EGMs”).
Aristrocrat owned four (4) Australian innovation patents which were all revoked by the Australian IPO in July 2018 on the ground that none of the claims in any of the innovation patents was for a “manner of manufacture”, this being a quirk of the Australian patent system and refers back to the UK’s Statute of Monopolies of 1623 which forms the basis of patent law in many common law jurisdictions including Australia.
In Europe, there is a similar (but broader) provision in that inventions must be capable of industrial application pursuant to Art. 57 EPC. Essentially, this requires that patentable inventions are not theoretical or abstract but can actually be implemented in industry which includes agriculture and that they have some utility. The concept covers not only things which can be made physically but also things which can be used.
In Australia, patentable inventions need to meet the narrower requirement of being a “method of manufacture” which carries with it the concept that the invention needs to be capable of being manufactured and (as per case law) result in an “artificially created state of affairs” with economic significance.
In respect of all four (4) innovation patents, the Australian IPO held that all four (4) patents did not make any technical contribution to the art and that substance of all four (4) inventions was nothing beyond the games and the game rules of gaming machines and, as such, was not patentable subject matter.
Aristocrat appealed the refusal decision to the Australian Federal Court where, at first instance, a single Australian Federal Court judge, Justice Burley, allowed the appeal and determined that claim 1 of one of the four (4) innovation patents related to a method of manufacture and hence constituted potentially patentable subject-matter.
Importantly, this decision was based upon consideration of a single representative claim – the dependent claims were not considered.
Accordingly, in July 2020 Burley J reversed the decision of the Australian IPO and ordered that the four (4) innovations patents should be deemed granted.
The Australian IPO then sought leave to Appeal the decision to the full Federal Court comprising three judges. The full Federal Court then proceeded to issue two judgments (i.e. there was a split decision) allowing the Appeal, and reversing their fellow Federal Court judge’s decision on the specific issue the judge had decided upon but critically allowing the judge to decide any residual issues relating to the dependent claims.
In the meantime, the High Court of Australia (akin to the UK Supreme Court), granted special leave to appeal the decision of the full Federal Court. However, unfortunately, on the days of the hearing one judge was absent due to illness with the result that six judges proceeded to hear the case.
Having an even number of people is not a good idea when it comes to making decisions. In the present case, somewhat predictably, the High Court then proceeded to issue a split 3:3 decision.
Three judges of Australia’s High Court decided that claim 1 of one of the innovation patents was not patentable and that the appeal should be dismissed but the other three judges decided the opposite, namely that claim 1 of one of the innovation patents was potentially patentable and that the appeal should be allowed.
So, what do you do when you have a split decision of Australia’s highest court?
According to s. 23(2)(a) of the Judiciary Act the law states that if the High Court is equally divided in opinion in a case where a decision of the Federal Court is called into question on appeal then: “the decision appealed from shall be affirmed.”
This meant that the decision of the full Federal Court was affirmed i.e. that claim 1 of one of the four (4) innovation patents was unpatentable.
The full Federal Court having had their decision affirmed by the High Court then referred the matter back to Justice Burley for consideration of the “residual issues”.
Interestingly, although the case had gone up to Australia’s highest court, the High Court, Justice Burley took the position that he should not take into consideration any of the reasoning of the High Court in reaching their split decision. Accordingly, Justice Burley considered that he was bound only to follow the reasoning of the full Federal Court which is obviously lower than the High Court.
When Justice Burley did that, he then applied the reasoning of the majority of the full Federal Court in applying a two-step test which was formulated by the majority of the full Federal Court but which was either explicitly or implicitly rejected by all six judges of the High Court.
Justice Burley found all the remaining claims to be unpatentable.
Aristrocrat then drafted a notice of appeal putting forwards eleven (11) grounds of appeal.
The draft notice of appeal raised two questions.
Firstly, was Justice Burley correct to ignore all the reasoning of the High Court?
Secondly, was Justice Burley correct in rejecting the residual claims as lacking a manner of manufacture?
Aristrocrat sought leave to appeal the further decision of Justice Burley and for strategic reasons expressly sought that the application for leave to appeal be determined by a single judge which preserved Aristocrat’s option to have the appeal removed directly to the High Court.
Interestingly, leave to appeal was granted by Justice O’Bryan which opens the door for Aristrocrat to take this case back up to the High Court.
When considering whether or not to grant leave to appeal, Justice O’Bryan stated that: “the issues sought to be raised by Aristocrat are novel.” The judge continued: “I do not fully accept Aristocrat’s argument … [but] I have determined on balance that leave to appeal should be granted … Ultimately, two factors weigh marginally in favour of the grant of leave … that the grounds of appeal sought be raised by Aristocrat are arguable (raising novel questions …)”.
What next?
Aristrocrat have been granted leave to appeal so the case will now be heard either by the High Court or the full Federal Court (if the High Court declines to take the appeal directly).
One possible scenario is that the High Court may not like the idea of a lower court (the full Federal Court) deciding matters relating to the proper application of the Judiciary Act and may feel instead that this is a matter which is appropriate for them to decide.
Accordingly, it is possible that if the High Court takes the appeal directly then a majority of the High Court might find a way to deem some of Aristrocrat’s dependent claims to be allowable.
