The Advisory Council on Intellectual Property (ACIP) has been reviewing Australia's approach to patenting inventions that encompass business systems -- the majority of which are software-implemented -- since July 2002 and expects to deliver its recommendations to the federal government next month.
The recommendations were expected to be delivered to Warren Entsch, Parliamentary Secretary to the minister for Industry, tourism and Resources, in June this year.
ACIP Secretary, Kay Collins, last week said they were now expected to be finalised and delivered the government after the council's next meeting in October.
"I would expect, if it's finalised at that meeting and cleared by the full council, then it would be given to the minister shortly after," said Collins.
Patents over business systems (known in the US as business methods patents) have been dogged by controversy as they make it possible to own the intellectual properties of the fundamental processes (or methods) that companies use to perform transactions involved in trade. Online shopping carts are an oft-used example of a business process that is now patentable.
For example, the council's recommendations may impact on patents belonging to the same family that IP Australia recently granted to Canada-based D.E. Technologies (DET).
DET's patent caused alarm in the information technology community as it appeared to hand the company the right to demand in excess of US$10,000 in licensing and royalties from any Australian or New Zealand company conducting commercial transactions electronically across international borders.
According to ACIP research, claims for patents over business methods began to grow exponentially in parallel with the information technology boom of the mid-90s. They took off again sharply in 1998 after a landmark decision by a United Sates court deemed business methods patentable.
The High Court formally embedded the arguments put forward by the US courts in Australian case law in 2001, and the European Commission is currently considering changes to its patent regime that would have a substantially similar effect; bringing its software patenting laws in line with US.
Research conducted by ACIP shows the number of applications for business method patents in Australia grew 1000 percent between 1995 and 2000, corresponding with a 30-fold increase in the US over the same period.
ACIP decided to conduct its review because of concerns that opening business methods to patent claims, coupled with relaxation of laws for testing validity of all patents in April 2002, might have a negative impact Australia's economy.
Sharply resonating with concerns that arose when DET's ecommerce patent was granted, the council's issues paper aimed to generate debate on such topics as whether business methods were too broad in nature to be patentable and could lead to heavy cost burdens for Australian businesses, and on the Australia patent office's readiness to deal with them.
ACIP's review has attracted 19 submissions from intellectual property protection groups, consumer groups and IT industry bodies from Australia and abroad.
Those calling for changes to the regime argue that the current scheme is vulnerable to exploitation, likely to result in increased operating costs and more uncertainty for Australian businesses.
Other groups argue against any radical changes to the patenting scheme. They say that business methods shouldn't be treated differently to innovations in other fields of technology and that doing so would lift protections on the commercial prosperity of local software companies.
The Australian Consumers Association (ACA) has taken the view that fundamental business methods shouldn't be patentable and challenged the notion that patents encourage innovation in all cases.
The ACA said patents can just as easily be seen as "wealth capture mechanisms" as they can wealth-generating engines.
The ACA and the Australian Computer Society (ACS) are aligned in the belief that patents that include business methods are too broad and would have the effect of inhibiting innovation rather than promoting it.
ACIP's review has raised debate similar to that before the European Parliament on the patentability of "computer-implemented" inventions.
The EU commission wants to place authority for patent disputes under the European Court of Justice, to eliminate ambiguity over which computer-related patents are allowable in Europe due to variation of views among its member states.
Under the proposal, the scope of software patentability would be widened to include underlying methods for structuring data and processing information including those used by business.
Scientists and developers have protested the proposal saying they would lead to software patents that were overly broad, breaching the spirit of the European Patent Convention.
There, as in Australia critics have argued, that granting patents over broad business methods would have a deleterious effect on Europe's innovation and competitiveness.
In Australia, opinion is firmly split as to how to approach business method patents but groups on both sides of the debate indicated that the federal government should ensure that they are subjected to tougher tests for validity than are currently applied.
Brendon Scott, a Sydney-based solicitor who works closely with the IT industry, said that the easing of US laws applying to business methods patents had eroded the credibility of patent offices.
According to Scott patent offices lack the necessary experience and access to records of prior art to make adequate judgements about business method patents.
Scott said many of his clients had already stopped giving assurances that their products are free from competing patent claims as patenting offices had failed to reject "spurious" applications during preliminary stages.
Philip Argy, senior partner in the Intellectual Property & Technology Group at law firm Mallesons Stephen Jaques, and chair of the ACS' Economic Legal and Social Implications Committee, agrees.
"Things like business processes have never had the benefit of learned journal of record about how things are done in the ecommerce space because the internet's never been that orderly or professional," said Argy.
Argy argues that business method patent applications need to be the subject of a public call for comments during the examination stage.
Otherwise, argues Argy, Australian companies could find themselves unknowingly infringing patents filed in the US for up to 18 months before becoming aware they exist.
According to Argy, Australia is a signatory to international patent cooperation treaties that allow claims filed in Australia to be back-dated to the time of they were filed in their country of origin. Companies can file for patents in Australia within 20 months of filing in their home country. As patents are not publicised until they are granted, a locally-based company could implement a solution within the 20-month window, unaware it infringes on intellectual property rights.
This has promted Argy to questioned the speed at which ACIP has moved to address the issue. He is concerned that patents filed in the US in the late 1990s are silently reaching a stage of advancement where they threaten local businesses.
Pointing to attempts to have DET's patent over-turned in Australia by the Administrative Appeals Tribunal, Argy said:
"If the ACS' recommendation had been adopted much of the evidence which is likely to be put to the Appeals tribunal on this patent could have been considered by the [IP Australia] before the decision to grant the patent was made".
A spokesperson for ACIP said that business process patents had been around since the 1970s and that its council members, which work on a voluntary basis, could only work at the speed that their prior commitments allowed.
