Aristocrat Hits the Jackpot – Full Court Resurrects Computer-Implemented Inventions from the Patent Graveyard

Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2025] FCAFC 131

Introduction

In a significant development in the long-running Aristocrat patent saga, the Full Court of the Federal Court has allowed Aristocrat Technologies Australia Pty Ltd’s (Aristocrat) appeal against the Commissioner of Patents and set aside the primary judge’s decision on remittal.  The decision marks a dramatic reversal in the battle over the patentability of Aristocrat’s electronic gaming machine (EGM) technology, with the Full Court now holding that the residual claims in Aristocrat’s innovation patents are indeed a manner of manufacture.

The case, which has already seen multiple trips through the courts, including an equally divided High Court decision, centres on whether Aristocrat’s innovation patents claim a manner of manufacture within the meaning of s 18(1A)(a) of the Patents Act 1990 (Cth) (the Patents Act).

The latest Full Court decision tackles complex questions of precedent that arise when a matter has been remitted to the Federal Court after a High Court was equally divided, and provides guidance on the correct approach to assessing the patentability of computer-implemented inventions in Australia.

The Patents

The innovation patents in dispute concern embodiments of an EGM incorporating a player interface integrated with the hardware and software of an electronic game controller which includes feature games and configurable symbols.  The specific patents are as follows:

• AU2016101967 entitled “A system and method for providing a feature game” (967 patent);
• AU2017101097 entitled “A gaming machine and method for providing a feature game” (097 patent);
• AU2017101098 entitled “A gaming machine and method for providing a feature game” (098 patent); and
• AU2017101629 entitled “A system and method for providing a feature game” (629 patent).

The key inventive aspect is the feature game functionality, which includes “configurable symbols” – symbols that include a common component (such as a pearl image) and a variable component (such as indicia overlaying the pearl indicating price values).  When the feature game is triggered during play of the base game, the configurable symbols are held on the display, and non-configurable symbols are replaced by selecting new symbols from a second set of reels.

Procedural History

Given the complex procedural history of the case, we provide a refresher below.

The Commissioner of Patents, upon examining the innovation patents in dispute under s 101A of the Patents Act, revoked all four innovation patents finding that the relevant claims were not to a manner of manufacture within the meaning of s 18(1A)(a) of the Patents Act.

Aristocrat appealed the Commissioner’s decision to the Federal Court under s 101F(4) of the Patents Act.  Justice Burley heard the appeal and recorded the agreement of the parties regarding the issues to be determined and the conclusions to follow.  Notably, the parties agreed that the specification of the 967 patent was sufficiently similar to the specification of the other innovation patents such that if claim 1 of the 967 patent is a manner of manufacture, then so too were the rest of the claims in all of the patents in suit.  If none of the following claims were found to be a manner of manufacture – claims 1 or 5 of the 967 patent, claim 5 of the 629 patent, or claim 1 of the 097 patent – then no claims in any patent would qualify.   If only some, but not all these claims qualified, both Aristocrat and the Commissioner would seek leave to present further argument on the validity of the remaining claims.  Having determined that claim 1 of the 967 patent is a manner of manufacture, Justice Burley allowed the appeal, set aside the Commissioner’s decision and directed the Commissioner to issue, publish and register a certificate of examination for each patent.

The Commissioner sought and was granted leave to appeal Justice Burley’s decision to the Full Court of the Federal Court.  The Full Court allowed the appeal and delivered two judgments: a joint judgment delivered by Middleton and Perram JJ, and a separate judgment delivered by Nicholas J.  Both judgments arrived at the same conclusion that claim 1 of the 967 Patent is not a patentable invention, but had differences in their reasoning.  The Full Court set aside Justice Burley’s orders, and remitted the proceedings back to his Honour for determination of any residual issues in light of the Full Court’s reasons as follows:

The proceedings are remitted to the primary judge for determination of any residual issues in light of the Full Court’s reasons including any issues which concern the position of claims other than claim 1 of Innovation Patent No. 2016101967 (referred to at [8] of the reasons of the primary judge dated 5 June 2020) and the costs of the hearings before the primary judge.

Aristocrat subsequently applied for and was granted special leave to the High Court.  The Appeal was heard by six justices who were equally divided in opinion.  Kiefel CJ, Gageler and Keane JJ held that claim 1 of the 967 patent was not a manner of manufacture and that the appeal should be dismissed.  Gordon, Edelman and Steward JJ decided that claim 1 of the 967 patent was a manner of manufacture and that the appeal should be allowed.  As a result of this split decision, and in accordance with s 23(2)(a) of the Judiciary Act, the decision of the Full Court was affirmed.  Consequently, the orders of the Full Court remained operative, remitting the proceedings back to the primary judge.

On remittal to the Federal Court, Justice Burley identified the issues for determination as follows:

In broad terms the issues for determination concern: the operation of s 23(2)(a) of the Judiciary Act; the effect of the remittal order; the relevance, if any, of the High Court decision to the determination of the residual issues; and whether, in light of these matters, any of the residual claims are a manner of manufacture.

The parties had agreed that the residual issues concerned whether claim 5 of each of the 967, 629 and 097 patents are to a manner of manufacture, and that if none of those residual claims were found to be, then none of the claims in any of the four innovation patents will satisfy that requirement.

Justice Burley found that the effect of s 23(2)(a) of the Judiciary Act was to affirm the Full Court’s decision, which required his Honour to consider the residual claims in light of the Full Court’s reasons, and not the High Court’s reasons.  Justice Burley summarised his reasoning as follows:

The consequence of these two matters is that, even if I were disposed to consider that a relevant principle of law emerges from the decision of the High Court, by virtue of the operative language of s 23(2)(a) and the remittal order, this Court is not permitted the latitude that might apply to other courts to discern from the High Court decision a relevant binding principle: I am bound by s 23(2)(a) and the terms of the remittal order to apply the reasons of the majority decision.

Applying the reasoning of the Full Court joint judgment to the residual claims, Justice Burley concluded that they provided “no additional features that would warrant a conclusion different to the conclusion reached by the majority decision in respect of claim 1 of the 967 patent”.  Consequently, Justice Burley dismissed the appeal from the original decision of the Commissioner.

Following Justice Burley’s decision on remittal, Aristocrat sought leave to appeal under s 158(2) of the Patents Act to the Full Court of the Federal Court.  On 30 August 2024, Justice O’Bryan granted Aristocrat leave to appeal, citing the arguable nature of Aristocrat’s grounds of appeal which raised novel questions about the operation of s 23(2)(a) of the Judiciary Act in unusual circumstances, and the effect of the primary judgment in finally determining that the innovation patents would not be granted.

On 6 February 2025, all seven Justices of the High Court refused an application by Aristocrat for removal of the whole of the cause pending in the Federal Court, noting that the appeal did not raise an issue of wide and significant public importance which required urgent resolution that would justify interrupting the appellate process of the Full Court.

The present appeal then proceeded before the Full Court, bringing us to the decision reported on here.

Key Issues on Appeal

During the Full Court hearing, Aristocrat sought, and was granted, leave to amend its Notice of Appeal to raise alternative grounds that went beyond challenging errors made by the primary judge.  The key amended ground asserted that the Full Court ought to find that the two-step analysis proposed in the majority decision of the earlier Full Court was plainly wrong or that there was reason to depart from it in determining whether the residual claims were a manner of manufacture.

This raised a threshold question: was the present Full Court bound by the majority decision’s two-step approach, or could it depart from that earlier Full Court authority?

The Commissioner argued that the Full Court lacked jurisdiction to allow the appeal without a finding of error on the part of the primary judge.  The Commissioner submitted that the primary judge correctly found himself bound by the majority decision, and there was no error in applying that binding authority to the residual claims.

Aristocrat submitted that the fact that all six High Court judges had rejected the two-step analysis (albeit for different reasons), provided a compelling reason for the Full Court to depart from the majority decision.  Aristocrat argued this constituted a “constructive error” that the Full Court had jurisdiction to correct.

Consideration

The Effect of s 23(2)(a) and the Doctrine of Precedent

The Full Court held that s 23(2)(a) of the Judiciary Act did not itself affirm the reasoning of the majority decision, but only the order of the earlier Full Court.  Section 23(2)(a) was described as an “expedient” – a rule appropriate to produce an outcome on pragmatic rather than principled grounds.  Similarly, the remittal order’s requirement to determine the residual issues “in light of” the full Court’s reasons meant no more than “having regard to” those reasons.

However, the Full Court held that the primary judge was bound by the majority decision by reason of the doctrine of precedent, not by s 23(2)(a) or the remittal order.  The equal division in the High Court did not create any binding precedent, so the primary judge correctly concluded he was bound by the majority decision.

Departure from Earlier Full Court Authority

The Full Court then addressed whether it was itself bound by the majority decision.  Unlike a primary judge, a Full Court is not necessarily bound by previous Full Court decisions.  The Full Court adopted the principle that it should depart from an earlier Full Court decision only where there is a compelling reason to do so.

The Full Court found that such a compelling reason existed – all six High Court judges had criticised the majority decision’s two-step analysis, albeit for different reasons.  The Full Court stated that it would be “perverse” to follow an approach “disapproved of by all judges of the High Court who have considered it” and that “such a court would also be productive of very substantial uncertainty in the law”.

The Full Court rejected attempts to construct a binding ratio by aggregating separate High Court reasons, noting that the two sets of High Court reasoning reject the two-step approach for markedly different reasons, indicating an unsettled state of the law.  Nevertheless, the “coincident outcome” of all six judges criticising the two-step analysis provided compelling reason not to follow the majority decision.

Constructive Error

The Full Court held that in an appeal by way of rehearing, it must determine the primary judgment’s correctness “in retrospect” – on the basis of the law as it stands at the time of appeal.  The Full Court adopted the term “constructive error” for circumstances where the understanding of the law changes between the primary judgment and the appeal.  Here, the law had changed as the Full Court rejected the majority decision which had bound the primary judge.

Although the primary judge was bound to apply the majority decision, his reasoning perpetuated the error in that decision, giving the Full Court jurisdiction to correct it.  The Full Court commended “the self-effacing and restrained manner” in which the primary judge performed his judicial duty.

Proper Approach to Manner of Manufacture

Having departed from the two-step approach, the Full Court turned to the question of how the patentability of the residual claims should be resolved.

The Full Court noted that both sets of High Court reasons proceeded on the basis that the question whether an invention is a manner of manufacture depends on characterisation of the claimed invention, to be decided on construction of the claim in light of the specification as a whole and common general knowledge, and to be determined as a matter of substance.

The Full Court stated it would have adopted the reasoning in the allowing reasons of the High Court had it been able to decide claim 1 of the 967 patent on its merits, for several reasons.

First, the characterisation adopted in the allowing reasons – “an EGM incorporating an interdependent player interface and a game controller which includes feature games and configurable symbols” – better reflected the integers of the claim viewed as a whole, encompassing the combination of both inventive and non-inventive elements.  This characterisation gave due recognition to the physical elements which are non-inventive yet fundamental to the operation of the EGM, and did not give undue weight to inventive aspects over non-inventive aspects.

Second, the Full Court regarded the allowing reasons as better aligned with the seminal reasoning in National Research Development Corporation v Commissioner of Patents [1959] HCA 67; (1959) 102 CLR 252 (NRDC) at 277, which held that a manner of manufacture requires an artificially created state of affairs with economic utility.  The Full Court noted that in CCOM Pty Ltd v Jeijing Pty Ltd (1994) 51 FCR 260, the Full Court in that case applied the notion of an artificial effect of economic utility from NRDC to a computer-implemented invention concerning word processing for Chinese characters, and disapproved of asking whether the claim involved anything new and unconventional in computer use.

The Full Court held that it is “too rigid and narrow an approach” to say that implementation of an idea in a computer, using conventional computer technology for well-known and well-understood functions, cannot constitute a manner of manufacture.  The Full Court agreed with the formulation in the High Court’s allowing reasons that the proper question is whether the subject matter alleged to be patentable is:

(i) an abstract idea which is manipulated on a computer; or

(ii) an abstract idea which is implemented on a computer to produce an artificial state of affairs and a useful result.

Third, the Full Court emphasised that the High Court’s allowing reasons avoided the anomaly of treating a computerised EGM as unpatentable whereas it would be patentable if the EGM operated mechanically, stating that:

…in the 21^st century, a law such as s 18(1A) of the Patents Act, that is designed to encourage invention and innovation, should not lead to a different conclusion where physical cogs, reels and motors are replaced by complex software and hardware that generate digital images.

Application to Residual Claims

The Full Court noted that if it were able to decide claim 1 of the 967 patent on its merits, it would find that claim to be a manner of manufacture for the reasons given in the High Court’s allowing reasons.  However, the invalidity of claim 1 of the 967 patent had been finally determined by the operation of s 23(2)(a) of the Judiciary Act, which preserved the finding of the earlier Full Court decision as to invalidity even though the Full Court in the present case would have come to a different conclusion if it had been open to it to do so.  The Full Court accepted that each residual claim is a combination claim concerned with an altered EGM which produces an artificial state of affairs and useful result.  So characterised, the residual claims are a manner of manufacture.

Outcome and Key Takeaways

The Full Court allowed the appeal and directed the Commissioner to issue certificates of examination for the residual claims.  Notably, claim 1 of the 967 patent remains invalid – an oddity that follows from the procedural peculiarity of s 23(2)(a) preserving a finding this Full Court would not have made.

The Full Court’s decision represents a major victory for Aristocrat and provides important clarity on several fronts.  The Full Court has decisively rejected the two-step test, and confirmed that implementation of an idea using conventional computer technology can constitute a manner of manufacture, provided the idea is implemented to produce an artificial state of affairs and useful result, rather than merely using the computer to manipulate an abstract idea.

Further, the decision also establishes that a Full Court may depart from earlier Full Court authority where there is compelling reason to do so, and that universal High Court criticism of an earlier approach (even for different reasons), constitutes such compelling reasons.

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