IP Spotlight - December 2025

A TURNING POINT FOR SOFTWARE PATENTS IN AUSTRALIA The patentability of computer implemented inventions (CIIs) in Australia has long been obscured in uncertainty. A complex raft of legal precedents has left patent applicants without clear guidance on how to protect inventions involving software and digital technologies. This uncertainty has now been resolved with the Federal Court Appeal decision in Aristocrat Technologies v. Commissioner of Patents FCAFC 131 which has significantly clarified the position, resetting the “manner of manufacture” test as it applies to CIIs. KEY TAKEAWAY: A WIN FOR PRACTICAL INNOVATION In a major win for Aristocrat, the Court allowed its appeal and ruled that the claims in four innovation patents relating to electronic gaming machines (EGMs) do indeed constitute a “manner of manufacture” under section 18(1A)(a) of the Patents Act 1990 (Cth). In reaching this conclusion, the Court reaffirmed that the central test for determining whether an invention qualifies as a manner of manufacture is whether it brings about an artificially created state of affairs with economic utility – a test grounded in the seminal High Court decision in National Research Development Corporation v Commissioner of Patents [1959] HCA 67 (NRDC). Crucially, the Full Court rejected the restrictive and mechanical “two-step” approach previously applied to CIIs, which had required courts to first identify the substance of the invention and then determine whether it involved a technical contribution. That approach, criticised by all six judges in the split High Court decision on Aristocrat in 2022, was found to be unnecessarily complicated and inconsistent with established principles. WHAT THE DECISION MEANS FOR PATENT APPLICANTS For patent applicants, this means that if the hardware and software are combined to produce observable, practical and economically significant results, then the use of conventional computer technology does not preclude an invention from being patentable.

The decision affirms that simple schemes or abstract ideas executed on conventional computer technology remain ineligible for patent protection, but inventions where the computer technology is necessary to achieve results will be of patentable subject matter, such as Aristocrat’s EGMs in question. These EGMs combine hardware displays, feature games, credit metres, and configurable symbols to create dynamic gameplay and prizes. The Courts approach also resolves the anomaly where a mechanical invention (e.g. an EGM with mechanical reels) would be considered patentable whereas a computerised invention (having software generated reels) would not, despite having the same artificial effect/utility. This finding aligns with the goals of the Patents Act to encourage invention and innovation with emerging technologies [134]. DRAWING THE LINE: PATENTABLE VS NON PATENTABLE CIIS This decision provides an innovation-friendly framework on patentable subject matter of CIIs, characterising the difference [131]: between Not Patentable: CIIs that describe “ an abstract idea manipulated on a computer ”. Examples include: Asset protection schemes ( Grant v Commissioner of Patents [2006] FCAFC 120) Securities indices ( Research Affiliates [2014] FCAFC 150) Competency assessments ( RPL Central [2015] FCAFC 177) Information display systems ( Encompass [2019] FCAFC 161) Digital marketing methods ( Rokt [2020] FCAFC 86) Patentable: CIIs where “an abstract idea is implemented on a computer in a way that creates an artificial state of affairs and produces a useful result”. Examples include: Curve-drawing algorithms ( IBM v Commissioner of Patents (1991) 33 FCR 218) Chinese character retrieval ( CCOM Pty Ltd v Jiejing Pty Ltd (1994) 51 FCR 260)

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