Australia - Patent Revoked for Failing to Benefit Economy or Whole Society

In Grant v. Commissioner of Patents, the Federal Court of Australia affirmed the revocation of an innovation patent by a Deputy Commissioner of Patents on the ground that “[t]he performance of the invention will not add to the economic wealth of Australia or otherwise benefit Australian society as a whole.” Although the decision concerned a “business method” patent, it is not so limited.

Steven John Grant’s patent claims a method for protecting an individual’s assets (“presumably against the lawful claims of the individual’s creditors,” in the court’s words):

1. An asset protection method for protecting an asset owned by an owner, the method comprising the steps of:
(a) establishing a trust having a trustee,
(b) the owner making a gift of a sum of money to the trust,
(c) the trustee making a loan of said sum of money from the trust to the owner, and
(d) the trustee securing the loan by taking a charge for said sum of money over the asset.

The key precedent is the High Court’s 1959 decision in National Research Development Corp., which set forth principles regarding eligible subject matter consistent with the Statute of Monopolies, taking a broad view that an invention is patentable if “it consists in an artificially created state of affairs” and if its “significance … is economic. ” The Deputy Commissioner held that Grant’s patent failed the first test - an artificially created state of affairs did not result from an invention concerning “certain aspects of Australian law” - and thus revoked the patent.

On appeal, the Federal Court focused on the second test: whether the invention had economic significance. The Deputy Commissioner had readily accepted that Grant’s patent met this test: “I do not think that there can be any argument about the present method being of economic utility - clearly there are many professional advisers in society charged with looking after their client’s assets by making full use of the law.” But the court disagreed:

The economic utility identified by the Deputy Commissioner is not a utility of value to the country; it is a utility of value only to those whose assets are ultimately protected, and possibly to their professional advisers. The performance of the invention will not add to the economic wealth of Australia or otherwise benefit Australian society as a whole. For this reason, in my view, the invention is not a proper subject of Letters Patent according to the principles which have been developed for the application of S. 6 of the Statute of Monopolies.

The court also concluded that the subject matter was unpatentable because a claimed “method for protecting an asset owned by an owner” could “insulate [owners] from the operation of laws intended to serve the public interest,” and “[t]he social cost of conferring on the invention the protection of a patent would therefore not be counterbalanced by any resultant benefit to the public.” This is curious because, while discussing legal developments regarding patentable subject matter, the court noted the High Court’s 1998 explanation in Advanced Building Systems Pty Limited v. Ramset Fasteners (Aust) Pty Limited that “[e]xactly where the balance lies between the benefits and costs [of patents] is determined by the legislature in the terms of the [Patent] Act.” Rather than accepting the legislature’s balance and judging whether Grant’s invention was protectible under the Patent Act, the Federal Court seemingly applied its own societal cost-benefit analysis to the invention.

Nothing in the Federal Court’s decision apparently limits its patentable-subject-matter analyses to business method patents. It remains to be seen whether the Patent Office or the courts will require that every inventor - including non-Australian inventors - demonstrate that an invention will “add to the economic wealth of Australia or otherwise benefit Australian society as a whole,” or that “[t]he social cost of conferring on the invention the protection of a patent would … be counterbalanced by any resultant benefit to the public,” or both.