Good news for inventors of computer technologies – Perram J redefines manner of manufacture following Aristocrat

Motorola Solutions, Inc. v Hytera Communications Corporation Ltd (Liability) [2022] FCA 1585

23 December 2022
(full reasons published 29 June 2023)

Federal Court of Australia

Perram J

Highlight

Subject to the outcome of Hytera’s appeal, Perram J has served good news for computer-implemented inventions in the wake of the Aristocrat High Court 3:3 decision, finding a manner of manufacture exists in patent claims directed to a method which “improves the way a particular class of computers….scan frequencies”.

Background

Motorola Solutions, Inc commenced proceedings in 2017 against several Hytera corporate entities for patent and copyright infringement.  This dispute is part of a global battle between the parties, spanning China, the US, Germany and the UK.  On the patent issues, Hytera cross-claimed for revocation on various grounds including lack of manner of manufacture, inventive step, and fair basis.  Hytera also denied copyright infringement.

The issues are complex and were part-heard in a five-week trial in 2019, with a second-phase hearing in 2020.  The 564 page decision was handed down more than five years after commencement, with the reasons withheld for six months whilst the parties agreed suitable redactions and other orders to protect confidential information disclosed in the proceedings.

The Court found the first of three patents valid and infringed, the second valid but not infringed, and the third invalid and not infringed.  Motorola succeeded in its copyright infringement claim, and established Hytera’s actions amounted to industrial theft entitling Motorola to additional damages for copyright infringement (a similar patent infringement was rejected).   Hytera filed an appeal to the Full Federal Court in July 2023, which was heard in November 2023, and we are awaiting the appeal Court decision.

Interestingly, the decision was delivered by Perram J who formed part of the majority in the Full Federal Court decision in Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd [2021] FCAFC 202 (Aristocrat FFCA) (reported in our 2021 Patent Case Summary), which was by default, upheld by the High Court in Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCA 29 (Aristocrat HCA) (reported in our 2022 Patent Case Summary).  Even though the outcome of Aristocrat FFCA was unchanged, the High Court was critical of the approach taken by the majority in Aristocrat FFCA .  It is noteworthy that in this decision Justice Perram did not specifically refer to the ‘two-step’ test set out in Aristocrat FFCA (which was criticised by the High Court), and ultimately held that the relevant processes in the Patents were an ‘improvement in computer technology’ much like Kiefel CJ’s approach in Aristocrat HCA.  Moshinsky J also recently wrestled with the Aristocrat decision in addressing the patent-eligibility of a system incorporating a car park app in UbiPark Pty Ltd v TMA Capital Australia Pty Ltd (No 2) [2023] FCA 885 (reported in our 2023 Patent Case Summary) , finding similarly here that the claimed invention was a manner of manufacture.

The Motorola patents relate to digital mobile radios (DMRs) used by first responders, and in the hospitality, transport and construction industry, and specifically to improvements in technology which permits a frequency band within the radio spectrum (a channel) to be divided into timeslots so that more than one person may use the same channel at the same time (known as Time Division Multiple Access or, more commonly, TDMA).

DMRs may communicate with each other or via fixed base stations with a repeater function to extend their range.  Motorola alleged that Hytera’s importation and supply of DMRs and base stations infringed the method claims of the three patents.  The asserted claims of the patents and the findings of the Court are summarised below:

• AU2005275355 (355 Patent) is to a method which improves the time taken to scan a DMR channel to determine whether there is activity on that channel [Finding: valid and infringed];
• AU2009298764 (764 Patent) is to a method for efficiently synchronising to a desired timeslot through incorporating timeslot identity data in the synchronisation signals [Finding: valid but not infringed]; and
• AU2006276960 (960 Patent) is to a method and system for accessing a de-keyed base station (ie a station whose transmissions have been paused to save spectrum capacity) [Finding: invalid (lack of inventive step) and not infringed].

Notably, Hytera’s redesign program, although incomplete in its implementation, was sufficient to avoid patent infringement going forward.

Key Issues

In the patent portion of the proceedings, Hytera disputed Motorola’s construction of the patent claims and infringement allegations, and cross-claimed for invalidity on the basis of inventive step, manner of manufacture and other grounds.

Manner of manufacture

Undoubtedly the key issue was how the single judge of the Federal Court would apply the manner of manufacture principles at the heart of a split High Court decision in Aristocrat HCA (and therefore by force of s 23(2)(a) Judiciary Act 1903 (Cth), the findings in Aristocrat FFCA).   Hytera submitted that the 355 Patent lacked manner of manufacture, arguing that “what is claimed merely involves the new use of a known thing for a purpose for which its known properties made it suitable” (citing Commissioner of Patents v Microcell Ltd (1959) 102 CLR 232 at 249-250; NV Philips Gloeilampenfabrieken v Mirabella International Pty Ltd (1995) 183 CLR 655 at 663-664).  It also argued that the invention was a scheme, working directions or directions for use, rather than as an ‘improvement in computer technology’, and it did not involve or contribute to any new hardware or software.  Submissions regarding the two other patents were not set out in the judgment, as Perram J succinctly confirmed that his findings in relation to manner of manufacture of the 355 Patent applied to the 764 and 960 Patents.

Construction

As is common for computer-implemented inventions, construction of common English terms used in the claims to define procedural steps was required, and determinative of infringement.  Disputed terms in the 355 Patent related to steps in the scanning process – ‘determining whether the activity [on a channel] is of interest’ to the DMR unit, and ‘remaining on the channel… to receive the activity’.  Construction issues for the 764 Patent related to determining which of the mobile and base units fell within the scope of ‘transmitting device’ and ‘receiving device’ and the term ‘rest timeslot’.  The construction dispute on the 960 Patent concerned the term ‘in proper synchronisation’.

Infringement and redesign

As the asserted claims were directed to methods, Hytera’s supply of mobile and base units was not a per se infringement.  For this reason, Motorola argued that Hytera’s liability arose from its supply of the units under s 117 of the Patents Act 1990 (Cth) (Act) and as authoriser or joint tortfeasor.  Motorola argued that Hytera had reason to believe the devices would be used in an infringing manner because it supplied the devices with instructions to use them in accordance with the claimed method, i.e. to use a mobile and base unit station together with the mobile unit set to scan mode.

After Motorola commenced proceedings, Hytera undertook a reprogramming effort for all of its devices (mobile units and base stations) with the aim of avoiding infringement.  As unreprogrammed mobile units were still in circulation, Hytera implemented a project to encourage users and require dealers to have them reprogrammed, as reprogramming the base units alone was insufficient to avoid infringement.

Motorola’s copyright claim was based on allegations that ex-Motorola staff employed by Hytera copied Motorola’s computer code in the development of the Hytera products.  The copyright suit related to the firmware which was installed on Hytera devices and imported into Australia.  Motorola alleged that this binary code firmware was derived from object code compiled from Hytera’s source code, which in turn was copied from Motorola’s source code.  Motorola’s case was hindered by the fact that much of the Hytera source code had vanished, requiring Motorola to prove by indirect means that the missing Hytera source code had been copied from the Motorola source code.

Outcome

The Court found one of the three Motorola patents valid and infringed, that Motorola had succeeded in it is copyright claim, and that Motorola had established Hytera’s actions amounted to industrial theft entitling Motorola to additional damages.   The technical issues at play in both portions of the proceeding were exceedingly complex.

Significantly, in light of the split High Court decision in Aristocrat HCA on computer-implemented inventions, Hytera’s challenge based on manner of manufacture failed, affirming the position that an improvement in computer technology provides basis for patent eligibility in Australia.  Perram J dealt with this issue head-on, noting that Aristocrat “has no ratio decidendi and stands only for the proposition that the Full Court’s decision stands”.  His Honour went on to say “as a single judge, I am bound by that decision” and “what the Full Court is to make of the High Court’s decision is another matter but the approach for a single judge is clear”.

His Honour confirmed that he “[did] not read [Aristocrat FFCA] as departing from any of the authorities which preceded it” and subsequently considered whether the invention improved the way a computer functioned.  Perram J rejected Hytera’s submissions, finding that “the 355 Patent improves the way a particular class of computers – base stations and subscriber units – scan frequencies”.  He likened the case to International Business Machines Corporation v Commissioner of Patents (1991) 33 FCR 218 (IBM), finding that the problem of the scanning speed was a problem of computer programming that was relevantly indistinguishable from the problem in IBM of curve drawing on computers (which was found to be an improvement in computer technology).  On that basis, his Honour concluded that the 355 Patent was plainly an improvement in computer technology and therefore disclosed a manner of manufacture.

With regard to the other grounds and patents:

• 355 Patent: The Court preferred Motorola’s construction which was more consistent with the function of the patent, avoiding the limitations Hytera sought to impose, and found Hytera’s unreprogrammed products infringing. The Court held Hytera was not liable for infringement following the reprogramming, despite the continued circulation of unreprogrammed mobile units, concluding that the steps it took to arrange for the circulating mobile devices to be reprogrammed were reasonable.  Hytera’s validity challenge was unsuccessful: on inventive step the Court found that it would not have been obvious that combining prior art features would achieve the relevant outcome.
• 764 Patent: The Court rejected Motorola’s claim construction, with the consequence that infringement was not established. The Court also held Hytera had not met the burden of proof to establish obviousness.  The Court accepted that the prior art DMR standard disclosed the use of synchronisation patterns to convey control information but did not involve the identification of timeslots as part of a process of dynamic timeslot switching.  Interestingly, Motorola sought to rely on long felt want to support its inventiveness argument.  The Court rejected this, finding that while the problem was known it was not considered significant, and that whilst those drafting the DMR standards had not solved the problem by the priority date, it does not follow that those persons had been working on the problem without success.
• 960 Patent: As was the case for the 764 Patent, the Court rejected Motorola’s claim construction, with the consequence that infringement was not established. Although moot in light of the decision on infringement, Hytera’s inventive step argument was successful.  The invention was directed to addressing synchronisation resulting from the base unit’s de-keyed status and minimising lost transmissions resulting from this.  Hytera successfully argued that the problem of lost transmissions in these circumstances was known in the prior art, but was only a minor problem, and the only conceivable solution was for the base station not to insist on precise synchronisation.

Hytera filed an appeal in July 2023 which was heard in November 2023.

Implications

It is worth noting for potential infringers, or even those in active litigation, that a party can reduce its damages liability by mitigation.  Hytera’s decision to immediately redesign its product and re-program infringing products in light of commencement of patent infringement proceedings effectively ‘ring-fenced’ the damages payable (subject to any alternative conclusion on appeal).

The take home message for inventors of computer-implemented inventions is that demonstrating how the claimed invention provides an improvement in the computer technology may be useful in satisfying the manner of manufacture requirement.

Lawyers and patent attorneys alike did not glean much insight into how the courts will wrangle with the 3:3 split High Court decision in Aristocrat regarding manner of manufacture for computer-implemented inventions.  The Judge very succinctly applied well-known principles, and simply likened this case to the decision in IBM to neatly justify his conclusions.

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