Return to Sender: Federal Court Rules ‘Last Mile Logistics’ System Unpatentable

Dei Gratia Pty Ltd v Commissioner of Patents [2024] FCA 1145

Introduction

In a recent Federal Court decision, Justice Rofe has dismissed an appeal by Dei Gratia Pty Ltd (Dei Gratia) against the Commissioner of Patents’ (the Commissioner) refusal to grant its patent application AU2019200581 (the Application) for a ‘Last Mile Logistics’ system.  The Application, which described a logistics system for delivering goods to consumers through “modified local outlets”, was rejected by the Commissioner on the basis that it did not constitute a manner of manufacture under section 18(1)(a) of the Patents Act 1990 (Cth).  This latest decision provides further clarity on the patentability of computer-implemented inventions following the equally divided High Court decision in Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2022] HCA 29 (Aristocrat has been granted leave to appeal the remitted Federal Court decision, as reported on here).

Background

The Application underwent five examination reports which involved two separate hearings by the delegate.  In the decision from the first hearing, the delegate found in favour of Dei Gratia, concluding that the invention was not a “mere collocation” and comprised an inventive step, contrary to the objections set out in the third report.  Following further examination, a second hearing was conducted, which focused on whether the invention comprised an inventive step in light of further prior art, as well as whether it was merely a computer-implemented scheme and thus not a manner of manufacture.  The delegate concluded that it was not a manner of manufacture and characterised the invention as a logistics system.

Key Issues 

Summary of the Invention

The claimed invention was to a system for delivering goods to consumers through “modified local outlets” (such as convenience stores or petrol stations).  Essentially, the system would allow for customers to input a planned travel route, and then automatically select the most convenient local outlet along that route as a collection point for their online purchases.  The system was designed to address several problems with existing delivery methods, such as the need for customers to be home for deliveries, risks of perishable items spoiling when left outside, theft of delivered items, inefficiencies in returning items and multiple deliveries to customers in close proximity.  The Application described the system as using standard computer technology – a regular server with a database to store orders, which communicates over a network with customers who can use any common device to place their orders.  There was nothing technologically special or innovative about the hardware and software being used.

Submissions

The parties made a number of competing submissions.

First, Dei Gratia argued that the claimed invention was not simply an idea for delivering goods more efficiently, but a detailed, practical implementation of physical components to achieve that idea.  The Commissioner contended that it was merely making logistics more efficient using existing concepts and technology, and did not go beyond the parameters of an abstract idea, citing the Full Court in Commissioner of Patents v Aristocrat Technologies Pty Limited (2021) 163 IPR 231 (Aristocrat FCAFC) that “[o]ne cannot patent an idea for … a method of doing one’s laundry more efficiently”: at [5] (per Middleton and Perram JJ).

Second, citing Research Affiliates LLC v Commissioner of Patents (2014) 109 IPR 364 at [103]–[105] (per Kenny, Bennett and Nicholas JJ), Dei Gratia argued that the law did not require inventions to specifically improve computer technology itself, and distinguished this case from Aristocrat FCAFC on the basis that the claimed invention here did not involve the use of a computer to merely gather, process and present financial or business information, but rather the computer processing was only one component of the invention.  The Commissioner disagreed, arguing that the entire inventive concept itself was driven by computer technology at almost, if not every, step.

Third, the Commissioner argued that although the invention brought about a physical outcome, and thus was not limited to inputting a scheme into a computer, the substance of the invention did not reside in the “modified local outlets” themselves or the physical delivery of the goods, but the computer-implemented scheme which enabled deliveries to be made.  The Commissioner noted that Dei Gratia had conceded during the examination stage that the invention did not reside in overcoming any technical problem or difficulty within the computer, and submitted that the specification did not disclose any specialised computer technology or algorithm for calculating route optimisation.

Consideration

Justice Rofe found that, while the claimed invention did create physical outcomes (the delivery of goods to collection points), the computer system was central to the entire invention and should not be downplayed “as just one component of a combination invention”.  Her Honour agreed with the Commissioner that the key innovation – automatically calculating optimal collection points – relied entirely on conventional computer technology used in a standard way.  Further, the mere use of “modified local outlets” and the classification of certain types of goods stocked or delivered, were not in and of themselves patentable subject matter, but were abstract concepts that were “part of a logistics scheme and a solution to a business problem” (emphasis added).

As such, her Honour observed that the claimed invention must be contemplated through the lens of a computer-implemented invention.  Following the approach of the Full Court majority in Aristocrat FCAFC at [26] (per Middleton and Perram JJ), Justice Rofe noted that it must be determined whether the invention or ingenuity lies in an advancement of the computer technology itself, or whether it is a mere scheme implemented by a computer.

Her Honour agreed with the Commissioner that the implementation of the logistics scheme involved the use of technology for its well-known and understood functions, and did not disclose any advancement in computer technology, specialised technical capabilities or algorithms by which the route optimisation method was implemented.  Citing Nicholas J in Aristocrat FCAFC at [112], Justice Rofe affirmed that the use of generic computer technology for its well-known and well understood effects provided a “useful signpost when deciding whether, what began as an abstract scheme or idea, has been transformed into something that is sufficiently different to constitute an artificially created state of affairs”.  Her Honour noted that the invention did not provide a solution to a technical problem, but rather a business or commercial problem that sought to save the consumer time and money through the use of “modified local outlets”.

Justice Rofe also addressed comparisons made to earlier decisions in the submissions.  Her Honour distinguished UbiPark Pty Ltd v TMA Capital Australia Pty Ltd (No 2) (2023) 177 IPR 254 (reported on here), noting the invention there created “concrete, tangible, physical observable effects” through the interaction of specific technical components (such as raising a barrier to a car park by determining whether certain entry/exit criteria was met via smartphone signals).  Her Honour found Dei Gratia’s system to be more analogous to the circumstances in F45 Training Pty Ltd v Body Fit Training Company Pty Ltd (No 2) (2022) 165 IPR 111 (reported on here), where adding physical elements to a computer-implemented business scheme was not sufficient to make the invention patentable.

Outcome

Justice Rofe dismissed Dei Gratia’s appeal, holding that the ‘Last Mile Logistics’ system was a computer-implemented business scheme and thus not a manner of manufacture.  Her Honour also directed Dei Gratia to bear the costs of the Commissioner in the proceeding.

Implications

Justice Rofe’s decision reinforces and clarifies several key principles regarding the patentability of computer-implemented inventions in Australia:

• Physical outcomes or physical aspects of an invention are not enough to transform a business scheme into a patentable invention.  Here, the use of “modified local outlets” in the delivery of goods was not patentable subject matter, but rather abstract concepts that were part of a broader logistics scheme that utilised generic computer technology.
• The fact that a computer-implemented system may be novel or innovative from a business perspective does not make it patentable subject matter – there must be a technical innovation in the computer-implementation itself.

The decision indicates that companies developing innovative computer-implemented business schemes will face difficulties obtaining patent protection unless they can demonstrate genuine technical advancement in how the computer implementation operates rather than what commercial solutions they might be able to achieve.

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