The patent application
Australian patent application 2005250809 titled “Certified offer service for domain names” started life as a PCT application filed 16 May 2005 claiming priority from US patent application 10/854,221. It was the subject of five adverse examination reports, eventually being set down for a hearing.
The applicant didn’t appear and instead filed written submissions. We saw this situation earlier this year in Discovery Holdings Limited  APO 56 (9 August 2011) (my blog post). Once again, this is usually a sign the applicant has either lost interest or exceeded its financial budget.
The Delegate scolded the applicant for having filed a divisional application claiming the same subject matter. He stated that:
“the practice of filing divisional applications in anticipation of adverse Office decisions appears to be contrary to the public interest in the prompt resolution of patent rights as well as effective use of Patent Office resources.”There seems to be an assumption that the divisional application was filed in anticipation of an adverse Office decision. I’m not sure I agree with that. Applicants file divisional applications for all kinds of reasons. Maybe the applicant had a co-pending application in another jurisdiction (like the United States) and wanted to co-ordinate claim scope.
The corresponding application
The Delegate acknowledges that the applicant claims priority from US patent application 10/854, 221. That application is still under examination. According to USPTO records the applicant last filed a response and claim amendments on 20 June 2011.
Claim 1 of the ‘221 application is not too dissimilar in scope to claim 1 before the Australian Delegate. No objection to patentable subject matter of claim 1 has been raised by the US examiner. The examiner instead rejected the claim as being obvious over two prior art documents.
The applicant, in its written submissions, asked the Delegate
“to identify any legal precedent (ie. other than recent APO decisions) that identifies a situation where a physical medium was regarded as failing the requirements of Section 18(1)(a). We specifically note that the Grant decision was concerned solely with the patentability of methods, and hence cannot be used as a basis to uphold an objection to [a] claim that defines a physical medium”.There isn’t any legal precedent. The applicant knew it. The Delegate knew it.
The applicant was told that his submissions misunderstood Grant and NRDC. There was no judicial authority, said the Delegate, that permitted a mere scheme or plan to be patentable solely because it involves a physical thing.
The Delegate cited with approval a recent decision of the US Court of Appeals for the Federal Circuit, CyberSource Corp. v. Retail Decisions, Inc. (Case No. 2009-1358) (covered in my earlier blog post). The Delegate noted a commonality in approach with the United States in relation to abstract ideas.
He acknowledged that there is no rule of materiality explicitly expressed in Australia. However he considers it to be an inherent requirement of the law which otherwise would elevate form over substance to the point of absurdity. This inherent requirement appears to have its origins in the Delegate’s own comments in Invention Pathways Pty Ltd  APO 10 (21 July 2010).
The Delegate refused the application, concluding that:
“In my view that is not to say that any effect produced in the operation of a computer is to be taken as conferring patentability. Rather, it is premised on the identification of a real substantive effect, “the new and improved result”, achieved in the operation of that apparatus … This is what distinguishes the subject matter of the application from a mere idea or intellectual information and results in it being considered a practical application of the idea in physical form”.What happens now?
I think this is a case that should have been decided on lack of inventive step rather than patentable subject matter.
We will watch with interest the progress of the corresponding US application to see if the examiner subsequently raises a subject matter rejection. If not, this will be an opportunity for IP Australia to demonstrate this “commonality in approach with the United States” and put the Australian divisional application through to grant.
In the meantime, I expect this decision will have little precedential value. It will be seen for what it is, another strained interpretation of “manner of manufacture” rather than a more sensible objection to lack of inventive step.