Monday, September 19, 2011

A not so cool invention

It’s been a few years since Cool 123 combined a well known marketing technique with an SMS platform and applied for patent protection in New Zealand.  In this post I’ll cover the opposition hearing reported as Cool 123 Limited v Telecom Mobile Limited, Vodafone New Zealand Ltd, The Hyperfactory Limited, Bulletin Wireless Limited, Lateral Profiles Limited [2006] NZIPOPAT 11 (13 March 2006).  In the next post I’ll cover the appeal to the High Court.

Cool 123 has now been struck off the register.  All patents and patent applications in the name of Cool 123 have lapsed.  So we should all have a pretty good idea of the outcome of this case.

The patent application

Cool 123 Limited (the applicant) filed a patent application back on 7 April 2000 with a provisional specification titled “Interactive marketing system”.  The applicant followed this up with a complete specification on 5 April 2001.  The application was allowed and published for opposition purposes on 30 May 2003.

The application was opposed by Telecom Mobile Limited, Vodafone New Zealand Limited, The Hyperfactory Limited, Bulletin Wireless Limited, and Lateral Profiles Limited.

Claim 1 of the patent application, including amendments made on the day of the hearing, read as follows:
1. An interactive marketing and/or survey system utilising a short message systems protocol (SMS) provided on a mobile or cell phone including in combination:
presentation means for presenting an advertisement of an advertising campaign, the advertisement inviting a participant to respond with a defined short text message to be sent as a call to a defined destination telephone number, the defined short text message being distinct for each advertising campaign and containing a distinct pre-allocated character string and the defined destination telephone number being the same for multiple campaigns, computerised means associated with said defined telephone number for receiving the participant's short text message and processing the received message by comparing selected data from the received message with data contained in one or more retained reference records, said reference records constituting pre-allocated character strings, wherein in operation, if the selected data from the received message matches data contained in the one or more retained reference records then information relating to the call is stored in a database, and a reply message is sent by the computerised means to the participant’s mobile or cell phone number acknowledging the participant’s message.
The Hearing Officer found that the claims of the complete specification (as amended) were entitled to the priority date of 7 April 2000, the date of filing the provisional specification.

Prior publication

The opponents collectively raised 14 documents to support the ground of prior publication.  Not all the documents were found to be published in New Zealand before the priority date.  However, those that were did not prior publish the claims.

Prior use

There were four instances of alleged prior use raised by the opponents.  None of these were found to invalidate the claims.


The Hearing Officer considered obviousness with regard to prior publication and prior use.

He followed the usual test for obviousness set out by Oliver LJ in Windsurfing International Inc v Tabur Marine (Great Britain) Ltd [1985] RPC 59.  This involves the steps of:

  1. Considering the inventive concept of the invention as claimed,
  2. Considering the cited published matter and the alleged prior use,
  3. Identifying the differences between the cited published matter, or alleged prior use, and the invention as claimed, and
  4. Asking whether these differences would have been obvious to a “normally skilled but unimaginative addressee”.

The inventive concept

The Hearing Officer defined the concept of the invention as “a viable interactive marketing and/or survey system based on SMS messages, transmitted to mobile or cell phones, including the features of Claim 1”.

Common general knowledge

The notional “skilled addressee” in this field was held to be a marketer with some knowledge of direct response marketing using telecommunications.  He or she would be part of a team containing a technical expert (or experts) able to advise on suitable telecommunication solutions, or at least able to call on such a person for advice.

At the priority date of the complete specification the following were clearly part of the common general knowledge in the appropriate field:

  • Advertisements inviting a response from the public
  • The use of text messaging (or SMS)
  • The use of a single telephone number for the response to several advertising campaigns
  • “Pull” advertising.

Obviousness with respect to prior publication

The Hearing Officer acknowledged that “pull” advertising using many forms of advertisement (such as billboards, newspaper advertisements, and radio and TV advertising) was well-known at the priority date.  Text messaging was also widely advertised and used.  The use of a single telephone number for multiple advertising campaigns was part of the common general knowledge.

He observed that:
“the claimed invention uses existing known interactive “pull” marketing techniques, combined with known methods of storing and processing replies received from potential customers.  The only difference between the invention claimed and the prior art …  is that the process claimed uses text messaging, a well-known technology, rather than mail or telephone, for receiving replies”.
He agreed that “no special skill is required to substitute SMS technology for the more usual mail or telephone”.

This ground was made out against all claims.

Obviousness with respect to prior use

The Hearing Officer observed that the VisionNet system, operating in New Zealand from 1996 to 2000,
“had all the features of the present invention except that it used DTMF (Dual Tone Multi-Frequency), rather than SMS, technology, which could be accessed by the participant using either landline or cell phone. It seems to me that this is an example of ‘analogous use’, substituting one well-known technology for another.”
This ground was made out against all claims.

Not an invention

Julian Miles, counsel for Vodafone, submitted that “the door was opened to the issuing of business method patents” by the earlier decision in Hughes Aircraft Company [1995] NZIPOPAT 3 (3 May 1995) .  The Hughes case adopted the approach of the Australian Federal Court in International Business Machines Corporation v Commissioner of Patents [1991] FCA 625; (1992) 22 IPR 417, in requiring simply “a commercially useful effect”.  I covered Hughes in an earlier blog post.

Mr Miles also pointed out that “a tangible result or product is required” and noted that in George N Haddad v The Commissioner of Patents [2000] NZIPOPAT 8 (2 May 2000) the Hearing Officer rejected an application for a method of wagering on the basis that the application disclosed only a new method for arriving at a winning number, based on mathematical manipulation of criteria.  I covered Haddad in an earlier post.

Greg Arthur, counsel for Telecom Mobile, pointed out that the present claims related to the collection and collation of data and were intellectual in character. The claims were for a scheme or plan for operating an interactive marketing and/or survey system whereby participants send a message to a telephone number and information relating to that call is processed and stored in a database. No technical details of how the system is implemented were described or claimed.

Mr Miles further pointed out that the outcome is identical, no matter which method (such as SMS, telephone, email, or post) is used.

Mr Arthur further submitted that this was a case of a “new use for an old technology”.  The High Court of Australia held in Commissioner of Patents v Microcell Ltd and Others (1959) 1A IPR 52 at 61-62:
“... it is not an inventive idea for which a monopoly can be claimed to take a substance which is known and used for the making of various articles, and make out of it an article for which its known properties make it suitable, although it has not in fact been used to make that article before. ...

... We have in truth nothing but a claim for the use of a known material in the manufacture of known articles for the purpose of which its known properties make that material suitable. A claim for nothing more than that cannot be subject matter for a patent, and the position cannot be affected either by the fact that nobody thought of doing the thing before, or by the fact that, when somebody did think of doing it, it was bound to be a good thing to do.”

The Hearing Officer agreed with the opponents that there was no invention in this case.  His reasoning would later be cited with approval by the High Court.  He observed that:
“[o]ne must, I think, be careful in equating ‘a new use for an old substance’ to ‘a new use for an old technology’. However, in the present case this is, as I see it, a valid argument. As discussed above under both Prior publication and Obviousness, all the features of the system claimed, including SMS technology and its properties, were individually known and it seems to me that it cannot be an ‘invention’ or ‘manner of new manufacture’ to replace the previously conventional means (telephone, email, or post) by the known SMS technology whose known properties or characteristics make it suitable for this use.”

None of the opponents pursued this ground.


Based on the evidence presented, the Hearing Officer came to the conclusion that he “cannot say categorically … that [the inventor] Mr Smith ‘obtained’ the alleged invention from Vodafone.”

Further steps

The Hearing Officer found the applicant’s amendments allowable and entitled to a priority date of 7 April 2000.  He also found all claims invalid based on the grounds of obviousness with respect to prior publication, obviousness with respect to prior use, and not an invention.

The applicant appealed to the High Court, which I will cover in the next post.

Photo courtesy of author plenty.r. under Creative Commons licence.


  1. I think you will find that the invention was a solution to the existing problem of spamming by advertisers using mobile phones to receive messages from businesses. The solution here was to get the user to initiate the text message to "PULL" a response from the server. Its a fine line but considering the concept was initially rejected by Vodafone on the basis that it was "not a viable process that they would be interested in" shows they had not thought of it. It then went on to become a major part of their revenue streams.
    Telecom were not in the business of messaing when it was first filed.
    In addition, many companies received "innovation" awards for operating methods specifically specified in the published application, This included the Hyperfactory.
    Lateral profiles director had no answer to his affidavit saying he was working on it prior to the when a document was produced proving he heard about the "cool123 invention while working on another unrelated project.

    1. The inventor's recollection is not correct. Vodafone was well acquainted with these concepts and had already discussed their use with multiple providers. One platform provider had visited in August 1999, and a senior marketing manager had visited Finland to view key word "pull" services in action, also in 1999. The "inventor' was party to this information, but not given authority to proceed. It was deemed more appropriate for a different department to develop the text messaging suite of key word marketing products. The inventor may feel aggrieved that they were ignored, but it was simply not their job to develop the solution. The inventor appears to have known this history when submitting the patent. The inventor questions whether they broke the law. Interesting question. A concept is developed and progressed to commercialization by a company. An ex- employee then uses that project as a basis for a patent application. Is that illegal? It would be interesting to see that tested. The apology was obviously an easier request that a law suit.

  2. Why would a former employer that absolutely discredited the concept outlined in the patent as being of no commercial interest to them in 2000 ask for an apology from the inventor for filing a patent?

    Did I break the law by filing a Patent that was accepted by IPONZ?

    I always maintain that SMS was fairly "old" when I developed the system so if it was 'obvious' someone would have been doing it by then - somewhere in the world - surely???.
    It was certainly not obvious to the top level directors, Shareholders & technical advisors I spoke too while employed by NZ's only SMS supplier. In fact, it was like trying to talk to Kindergarden kids with pictures and colourful pie charts to keep them interested! They still said they couldn't quite grasp the point of using SMS in such a way even though I had a working prototype they could try using a modem as they had no 'pull' services available.

    Maybe they just thought I was as stupid as I thought they were?

    The 'Inventor'.


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