business method patents

How to Protect Your Business Method in Australia: Patent or Trademark?

Under Australian patent law, there is no statutory position on whether a business method is
patentable subject matter, and so it is legal precedent that provides guidance.

The watershed NRDC (1) case opened the door to what can be considered patentable subject matter in Australian law, to beyond merely ‘vendible products’ (2), and now includes things such as living organisms, genetic materials, computer software and methods of treating humans.

Those principles were applied in the 2006 case of Grant v Commissioner of Patents (3) which involved a method for restructuring financial trusts to the benefit of members. In denying the patent, the Full Court said that the patent must results in some kind of physical phenomenon or transformation in order to be patentable. In this instance, as there was no physical effect or application, the patent was not allowed. The case is relevant in that it qualifies the broad NRDC by requiring some physical effect to be brought about by the patent.

The policy of IP Australia is to treat business methods like any other subject matter, in that they are
not specifically excluded so long as they meet all the other requirements of patent law. (4) Thus, the current position of business methods as patentable subject matter in Australia is that a business
methods may be patentable long as it has some physical phenomenon or manifestation. IP
Australia makes the following statement:

“A patent may be granted for a business method where the method directly involves a physical form or device to bring about a useful product. The application of technology for conducting a business method must be directly involved in a substantial way, not an incidental way.” 

See here for more.

In regards to the legislature making a statement on this rather than the judiciary, a 2003 review (5) by Australia’s Advisory Council on Intellectual Property of the appropriateness of patenting business methods which found it may not be desirable said the issue was not significant enough to warrant a change to Australian patent law. So a legislative statement any time soon looks unlikely.

In any case, patents are both very difficult and very expensive to obtain. You may have other
intellectual property rights in your business that you can identify. A trademark is a different (not
alternative) form of intellectual property protection for your business. A trademark will protect your
name or brand which in many cases is more important than any business method underlying the
function of the business.

1 National Research Development Corp v Commissioner of Patents (1959) 102 CLR 252; 1A IPR 63 at CLR 275; IPR 74 (High Court of Australia)
2 As ruled under Morton’s Rules.
3 Grant v Commissioner of Patents [2006] FCAFC 120
4 See para of the IP Australia Patent Examiner’s Manual
5 Australia’s Advisory Council on Intellectual Property, Report on a Review of the Patenting of Business Systems, September 2003

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