Biosimilars Deals 2021

EIS Gmbh v LELO Oceania Pty Ltd (Liability Trial) [2025] FCA 1111

Introduction

In a victory for LELO, Justice Downes of the Federal Court has declared invalid and ordered the revocation of EIS GmbH’s (EIS) patent relating to feminine pressure wave massagers.  EIS had brought infringement proceedings against LELO Oceania Pty Ltd, LELOi AB and distributor Calvista Australia Pty Ltd (together, LELO) over LELO’s pressure wave massage products.  LELO then cross-claimed seeking the revocation of EIS’ patent and alleging unjustified threats and misleading conduct.  EIS has subsequently filed an appeal to the Full Court.

Background

The dispute concerns EIS’s patent AU2018200317 (the Patent), entitled “Pressure Wave Massager”.  The Patent describes a compression wave massage device with a single-chamber cavity that generates a stimulating pressure field through volume changes.  A key feature is the volume change ratio (VCR) which requires that the ratio of volume change to minimal volume must be between 1/10 and 1.  The Patent stated that this range was critical to ensuring the pressure field was stimulating but not painful.

EIS initiated Federal Court proceedings alleging infringement of claims 1-7, 9, 10, 15, 19-22 and 31 of the Patent by LELO’s products.  LELO denied infringement and cross-claimed for invalidity on multiple grounds.  LELO also alleged that EIS made unjustified threats and engaged in misleading conduct in its various communications to distributors and industry publications.

The proceedings generated two key interlocutory decisions.  In July 2024, Justice Downes granted LELO leave to rely on experimental evidence conducted in China, and in December 2024, her Honour ruled that one of LELO’s witnesses was not permitted to participate in the joint expert conferences concerning novelty and inventive step.  This article reports on the decision following the liability trial heard in February 2025.

Key Issues and Considerations

Construction and Infringement

EIS alleged the LELO products incorporated all essential integers of the asserted claims.  LELO denied infringement, arguing the products did not have the following integers: defined “ends” because the cavity is made from a single piece of silicon; a “single chamber” due to the cavity having a round or “honeypot” shape and a narrowing space towards the opening; and the VCR requirements when being used as intended.

Key to the infringement claims was the construction of the integer “a compression wave massage device when used on the clitoris” in claim 1.  EIS contended that the reference to “a compression wave massage device when used on the clitoris” meant the device must be capable of such use, but that the claimed features (including VCR) which are described in the subsequent integers of claim 1 are not referable to its use on the clitoris.  EIS’ construction was premised on the alleged practical inability to measure these features (including VCR) when the device is being used on the clitoris.  LELO disagreed, arguing the claim required all features to be present when the device is used on the clitoris.

Justice Downes agreed with LELO, holding that the phrase “compression wave massage device when used on the clitoris” in claim 1 limits the scope to a device that functions as a compression wave massager when used on the clitoris and has the features identified in the subsequent integers when so used.  Her Honour rejected EIS’ argument that the features identified in subsequent integers need only be present in the standalone device, noting that:

the words “when used on the clitoris” govern all of the features of the device that follow those words, such that each of those features must be present when the device is used on the clitoris when it is performing its function as a compression wave massage device.

The specification’s references to the VCR affecting whether the vacuum becomes “too strong and perhaps even painful” or whether “the suction effect becomes too low” could only refer to pressure generated when used on the clitoris.  Further, the amendment from “for use” to “when used” had a narrowing effect.

Given this finding on construction, Justice Downes held that EIS had not established that the LELO products infringed claim 1.  The testing of LELO products in laboratory conditions with a virtual planar surface did not establish that they infringed claim 1 when actually used on the clitoris, given insufficient information in the Patent about how to measure VCR in actual use conditions.  As all claims depended on claim 1, none of the LELO products infringed.

Clarity / Definition

LELO challenged whether the VCR feature provided a workable standard for defining the invention, arguing that VCR alone was an imprecise proxy for pressure and failed to account for critical variables.  Justice Downes found claims 1, 4, 6, 9 and 22 were invalid for lack of clarity and definition.

In making her finding in relation to claims 1 and 22, her Honour stated that:

… there is insufficient information in the Patent to enable the PSA to achieve the claimed stimulating pressure field, and the PSA cannot objectively ascertain whether what they propose to do falls within the ambit of the claims of the Patent as they do not identify a workable standard suitable to the intended use.

In relation to claims 1 and 22, her Honour noted that there were various deficiencies in the Patent, including:

• (i)   Insufficient information about measurement: The Patent taught measurement using a “virtual planar surface” in laboratory conditions but provided no method for measuring VCR when the device is used on the clitoris, where the cavity will have limited air exchange with the environment and the clitoris will occupy part of the cavity volume.
• (ii)   Starting position of membrane not specified: Expert evidence established that the starting position of the flexible membrane critically affects the pressure generated. If the membrane starts forward, only negative pressures are produced.  If it starts rearward, only positive pressures result.  The Patent did not specify the starting position.
• (iii)   Presence of clitoris not accounted for: The clitoris protrudes into the cavity, reducing the minimum volume and thereby increasing vacuum pressures. Given substantial anatomical variation, the resulting pressures will significantly vary, yet the Patent’s measurement method using a virtual planar surface did not account for this.
• (iv)   Air leakage when used on skin: EIS’ expert witness acknowledged that when used on skin, the device is “essentially closed” but there is “a limited exchange of air between the cavity and the outer environment. This means VCR measured in airtight laboratory conditions will not accurately predict pressure when used on skin, as the entry and exit of air will affect the resulting pressure.
• (v)   Use underwater: The Patent contemplates underwater use, however, LELO’s expert witness explained that water is incompressible, so there can be no effective volume change when the cavity is full of water. Specifying a VCR range is therefore meaningless for underwater use.

In relation to claim 6, her Honour found that the reference in claim 6 to the lateral wall of the chamber being “free from discontinuations” was unclear, noting that, if it was intended to claim something different to claim 3, then it was uncertain what that difference was intended to be, as there were many possibilities. In relation to claims 4 and 9, her Honour found that the reference to length in claim 4 was unclear and that the meaning of “the ratio of the width of the cavity of the chamber…to the length of the cavity of the chamber” in claim 9 was similarly unclear.

Insufficiency and Lack of Support

For the same reasons relating to VCR measurement, Justice Downes held that the Patent failed to enable the person skilled in the art to make the device without undue burden, and that the claims lacked support because there was no experimental data justifying the VCR ranges claimed.

Novelty and Inventive Step

LELO’s novelty challenge based on a Japanese patent in the name of Panasonic Electric Works Co failed because the VCR integers were not disclosed.  Similarly, all inventive step challenges failed because the experts agreed that the VCR integers and certain other claim features were not obvious based on common general knowledge, prior art documents, or prior use of other pressure wave massage devices.

Best Method and Utility

LELO’s best method challenge, which asserted that EIS knew of a method that would not be useful (a geared motor with high torque), failed.  While LELO relied on emails showing EIS rejected geared motors as “noticeably louder” with “unsatisfactory” operating noise, Justice Downes held that EIS was “not required to disclose idiosyncratic features of the motor which it has decided not to use in relation to its commercial embodiment of the invention”.  This was merely a design choice and the disclosed motor (without gears) was the best method.

The utility challenge also failed.  LELO alleged the Patent promised a simple and effective design with improved hygiene, easy handling with lubricant or underwater, and other features.  However, Justice Downes found the claimed device met the stated objectives.  While LELO argued that device could not be waterproof based on limited evidence of rust in one particular device and alleged leakage during experiments, her Honour found this evidence wholly inadequate to discharge LELO’s burden of proving the “waterproof promise” had not been met.

Unjustified Threats and Misleading Conduct

LELO alleged that EIS had made unjustified threats and misleading representations in its correspondence to distributors and press releases referencing victories in German courts, which LELO claimed incorrectly suggested that these victories were relevant to Australia.

Despite her Honour’s finding of no infringement, Justice Downes did not consider that any of the cited correspondence or press releases constituted unjustified threats or misleading representations. In particular, while a November 2023 email to distributor Calvista constituted a threat under section 128 of the Patents Act, it was not unjustified given:

• (i)    the European Patent Office’s rejection of LELO’s opposition and the similarity between the Australian and European patents; and
• (ii)   EIS’ infringement contentions not being unarguable.

Subsequent press releases to industry magazines were also not misleading, as statements about German court victories providing support for Australian proceedings were statements of opinion that would be perceived as such, and incorrect opinions did not constitute misleading conduct.  Further, most of the communications did not constitute threats as the Australian proceedings had already been commenced or because the communications did not convey a threat to bring infringement proceedings against other recipients or readers of the press releases.

Outcome and Implications

Justice Downes declared the Patent invalid and ordered its revocation (subject to a 28-day stay for appeal), dismissed EIS’ infringement claims, and otherwise dismissed LELO’s cross claims for unjustified threats and misleading conduct.  EIS subsequently filed an appeal in October 2025.

Justice Downe’s decision illustrates the critical importance of claim construction, which in this case underpinned both the infringement finding and the lack of clarity, definition, support and sufficiency findings. As the patent claims were limited by result, the disclosure in the patent of abstract measurements serving as proxies for the claimed result did not account for critical variables.  Further, the deliberate choice to claim a device “when used” in a particular way meant all claim features had to be present and measurable during that defined use – and laboratory testing that did not replicate those use conditions was not enough.

About Pearce IP

Pearce IP is a specialist, life-sciences focussed, intellectual property/law firm offering lawyers and attorneys in Australia and New Zealand.

In 2025, Pearce IP was honoured by Australasian Lawyer and New Zealand Lawyer as a Top Specialist Firm, 5 Star Employer of Choice, and the “Standout Winner” for Inclusion and Culture (<100 employees).  Pearce IP and its leaders are ranked in every notable legal directory including: Chambers & Partners, Legal 500, IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WTR 1000, Best Lawyers, WIPR Leaders, Best Law Firms, among others.

Pearce IP is the only leading IP firm in Australia and New Zealand with a female founder, and is certified by WEConnect International as women owned.

CPC Patent Technologies Pty Ltd v Apple Pty Limited [2025] FCA 489

Introduction

Justice Burley of the Federal Court has delivered judgment in proceedings between CPC Patent Technologies Pty Ltd (CPC) and Apple Pty Limited and Apple Inc (collectively, Apple), concerning alleged patent infringement by Apple’s biometric security systems – Touch ID (fingerprint recognition) and Face ID (face recognition) – used for unlocking Apple devices such as iPhones, iPads and Macs (Apple Devices).  Apple cross-claimed seeking revocation of CPC’s patents on various grounds of invalidity.

The Court found that the Apple devices did not infringe any of the asserted claims, rejecting CPC’s construction of key claim integers that sought to impermissibly broaden their scope by reference to their functional characteristics.  Apple’s cross-claim, which was advanced defensively, was dependent on findings contrary to Apple’s primary non-infringement case, and so was mostly unsuccessful.

CPC has since appealed Justice Burley’s decision to the Full Court, with Apple filing a cross-appeal in response.  A hearing has been set down for 2 March 2026.

Background

The case concerns two Australian patents owned by CPC, AU2004301168 (‘168) and AU2009201293 (‘293), both entitled “Remote entry system” (together, the Patents).  The Patents relate to secure access systems using wireless transmission of security code information, and claim a priority date of 13 August 2003 based on Provisional Application AU2003904317.

The Patents address a security vulnerability in traditional access systems whereby a user enters a code or provides a fingerprint at a keypad/sensor, which sends a signal along a wire to a controller that checks the signal against a database and, if valid, sends a command to unlock the door or device.  The Patents identify that the wire connecting the keypad to the controller is a weak point, which can be physically tampered with by an attacker who could intercept, decipher and replay the signal to gain unauthorised entry.

The inventions the subject of the Patents seek to eliminate this weak point through two key features:

(i) By replacing the wire with encrypted wireless communication; and

(ii) Performing biometric authentication at the keypad/sensor itself, before any signal is sent.

In the patented system, when a user provides their fingerprint to a keypad, the keypad immediately checks it against stored biometric data.  If authenticated, the keypad then sends an encrypted wireless signal containing a “rolling code” (a code that changes each time to prevent replay attacks) to a receiver, which verifies the code and unlocks the controlled item or device.

CPC alleged that Apple infringed claims of both Patents through the use of Touch ID and Face ID for unlocking 70 different Apple Devices.  Apple advanced various invalidity grounds, including lack of novelty, inventive step, manner of manufacture, fair basis, sufficiency and clarity.

Key Issues

The dispute raised several construction issues, including the construction of the following key integers:

(a)   “controlled item” (all asserted claims);

(b)   “transmitter sub-system” and “receiver sub-system” (all asserted claims, although claims 27, 29 and 37 of the ‘293 patent do not refer to a receiver sub-system);

(c)   “accessibility attribute” (all asserted claims);

(d)   “secure access signal” (claims 5 and 6 of the 168 patent and all asserted claims of the ‘293 patent);

(e)   “means for receiving a series of entries of the biometric signal, said series being characterised according to at least one of the number of said entries and a duration of each said entry, means for mapping said series into an instruction and means for enrolling relevant signatures into the database according to the instruction” (all asserted claims of the ‘293 patent) (the Series Feature); and

(f)   “administrator signature” (claims 3 and 6 of the ‘168 patent).

The Court’s resolution of integers (a) and (b) above proved determinative of the infringement case.

By way of example, Claim 1 of the ‘168 Patent claims the following (with relevant integers described above underlined):

A system for providing secure access to a controlled item, the system comprising: a transmitter subsystem for enrolling biometric signatures into a database and for providing an accessibility attribute if a legitimate biometric signal is received; and a receiver sub-system for providing access to the controlled item dependent upon said accessibility attribute.

Consideration

‘Transmitter Sub-System’ and ‘Receiver Sub-System’

The primary dispute concerned whether Apple’s Touch ID and Face ID systems contained separate “transmitter sub-system” and “receiver sub-system” components as required by all asserted claims.

CPC advanced a functional construction, such that the sub-systems:

(i)    are defined purely by the functionality they perform;

(ii)   may comprise overlapping hardware and software components; and

(iii)  need only include “key” or “quintessential” components responsible for the required functionalities, excluding ancillary or incidental components.

Applied to the Apple Devices, CPC identified the following:

(i)    the transmitter sub-system as comprising certain components within the Secure Enclave Processor (the dedicated security processor component integrated in Apple Devices for the Secure Enclave subsystem to perform security functions such as biometric matching); and

(ii)   the receiver sub-system as comprising components within the Application Processor (the main processor unit that runs the OS for the Apple devices) which controls access to the device.

Apple submitted that the claims require two separate and distinct sub-systems that are functionally and physically separate, with identifiable boundaries between them.

Justice Burley accepted Apple’s construction, finding that the claim language and specification required separate and distinct sub-systems.  His Honour emphasised that to be a “transmitter” sub-system, components must be capable of transmitting information, such that the word “transmitter” must be given work to do.  Similarly, the receiver sub-system must be capable of receiving information.  Claims requiring that the receiver sub-system receive an accessibility attribute “from” the transmitter sub-system, or receive “the transmitted” secure access signal, made clear there must be a functional relationship with a flow of information from one sub-system to the other.  Justice Burley stated at [161]:

These claims make clear that there must be a functional relationship between the transmitter sub-system and the receiver sub-system within the overall system.  In my view, they support the proposition that each sub-system is separate and distinct. There would be no need to refer to each as a “sub-system” if the functions of the two could be merged.

His Honour also rejected CPC’s “quintessential components” approach as having no basis in the claims or specification.  Expert evidence demonstrated that a “sub-system” is a component of a larger system typically performing a specific function, and the Court found this required identifiable boundaries between sub-systems.

Applied to the Apple Devices, Justice Burley found CPC’s characterisation to be unsupported by evidence.  The biometric enrolment and matching processes engaged numerous components in both the Secure Enclave Processor and Application Processor.

CPC’s attempt to exclude 15 other components as “ancillary” gave an arbitrary character to the alleged sub-systems.  Notably, CPC included a key security component (SKS) in its construction of the transmitter sub-system but excluded it from the receiver sub-system, despite evidence it had roles in both encryption and decryption processes required for the system to function.

Justice Burley was particularly critical of the shifting evidence of CPC’s expert regarding what components comprised each sub-system, identifying at least four different variants during testimony, none of which corresponded to CPC’s final construction.  His Honour observed that this suggested “that the construction advanced by CPC is with an eye to the infringing article, an approach that has repeatedly been abhorred by the authorities”.[1]

Because the claims required separate and distinct sub-systems with identifiable boundaries, and the Apple Devices integrated all functionality across both processors, Justice Burley concluded that CPC “failed to identify a coherent basis upon which it may be concluded that there exists any separate transmitter sub-system or receiver sub-system within the Apple Devices”.

This finding alone proved fatal to CPC’s infringement case as all asserted claims include a transmitter sub-system, and a majority also include a receiver sub-system.

Accessibility Attribute

The integer “accessibility attribute” appeared in all asserted claims.  The specification defined it as establishing “whether and under which conditions access to the controlled item should be granted to a user”.  The specification explained that the accessibility attribute could comprise various attributes, such as:

• an access attribute (granting unconditional access);
• a duress attribute (granting access but activating an alert);
• an alert attribute (sounding a chime); and
• a telemetry attribute (communicating system state information such as low battery).

CPC submitted that where a user identifies the specific condition of access sought (for example, by pressing a button to unlock a car trunk rather than the doors), the biometric match itself constitutes provision of an accessibility attribute because it establishes whether and under which conditions access should be granted.

Apple submitted that an accessibility attribute must be produced by authentication of biometric matching and must establish conditions in response to matching which cause the receiver sub-system to respond in different ways, not merely to determine whether preconditions to access are met.

Justice Burley rejected CPC’s construction.  The claim language made clear an accessibility attribute is produced only after a legitimate biometric signal is received or matching is authenticated.  The claims require the transmitter sub-system to “provide” or “output” an accessibility attribute, which tells against a construction whereby confirmation of a biometric match itself constitutes the attribute.  His Honour found the “attribute” must be an output, separate from the match, that establishes whether and under which conditions access is granted.

Applied to the Apple Devices, CPC argued that the accessibility attribute was produced following a positive biometric match, contending that cumulatively across three scenarios (accessing the home screen, accessing restricted applications, and accessing Apple Wallet), these represented different conditions of access to the device as a whole.

Justice Burley rejected this argument on two grounds.  First, it depended on the “controlled item” being the entire Apple Device, whereas his Honour found the “controlled item” when accessing the home screen is the home screen itself – not the device as a whole.  Obtaining access to restricted applications or Apple Wallet requires further and separate authentication to different controlled items, not conditions imposed by the initial biometric match to the home screen.

Second, examining the Apple Devices’ mechanics, the Court found they undertake a binary assessment determining whether there is a positive biometric match: match and unlock, or no match and remain locked.  The claims required an accessibility attribute establishing both whether to grant access and under which conditions (such as granting access with a duress alert, or sound a chime…etc).  The Apple Devices made no such conditional determination – they simply assessed whether the biometric matched and either granted or denied access to the home screen accordingly.

So, Justice Burley concluded that CPC had not established the Apple Devices contain an “accessibility attribute” within the meaning of the asserted claims.

Other Construction Issues

Justice Burley also found against CPC on the construction of the “series feature” and the “administrator signature”.

All asserted claims of the ‘293 patent required what became known as the “series feature” – a specific mechanism for enrolling biometric signatures into the database.  This feature required the system to:

(1)   receive a series of biometric entries characterised by their number and/or durations;

(2)   map that series onto a pre-existing instruction; and

(3)   enrol signatures according to that instruction.

The specification provided an example whereby an administrator could enrol a new user by pressing their finger on the sensor in a particular pattern (by duration or quantity of presses), which the system would recognise as the instruction to enrol a new user.  This provided a way to communicate commands to a system that had no other user interface (such as a keypad without a screen for unlocking a door).

CPC contended the Series Feature was simply designed to ensure a quality biometric signature by requiring multiple scans of sufficient duration (as most people have experienced when first setting up Touch ID or Face ID on Apple devices, as well as similar systems on non-Apple devices).  On this construction, any system that captured multiple fingerprint images (or face scans) during enrolment would satisfy the requirement.

Justice Burley rejected this construction, noting that the claim language specifically required mapping a series of entries onto an instruction, and the specification’s example showed this instruction must pre-exist in the system (like a stored command).  The Series Feature was not about ensuring quality imaging or scanning of biometric data, but was about using patterns of biometric entries to communicate instructions (such as enrolment itself).  While the Apple Devices captured sequential imaging and scanning during the enrolment phase for quality biometric signature, it did not map the sequential biometric entry to any stored commands.

Additionally, some claims required an “administrator signature” – a biometric signature stored in a database that would be recognised by the system as conferring administrator privileges, enabling functions like enrolling new users or deleting existing signatures.

CPC argued it was sufficient that a person has the ability to perform administrative functions.  For example, the first user to enrol their biometric authentication on an Apple Device had to set a manual passcode, and that person could later use their biometric authentication with the passcode to enrol or delete other users, and was therefore an “administrator” according to CPC.

However, Justice Burley found it insufficient that a person has the ability to perform administrative functions by virtue of being in possession of an enrolled signature and a passcode.  Rather, the signature itself must be recognised by the system as an administrator signature.  The Apple Devices did not tag signatures as conferring administrator privileges and always required passcode entry (not biometric authentication) to exercise administrative functions like enrolling or deleting users.  Stated simply, a user of an Apple Device cannot exercise administrative privileges simply by presenting a biometric signature.

Validity – Deferred Priority Date

Apple contended that the asserted claims were not entitled to claim priority from the provisional specification filed 13 August 2003, such that the deferred priority date of 13 August 2004 applied.

Justice Burley found the provisional specification did not meet the test for external fair basis, requiring real and reasonably clear disclosure of claimed subject matter.  Notably, there was a dispute as to whether the provisional specification sufficiently disclosed an “accessibility attribute” as claimed, which required that the transmitter sub-system provide or output an accessibility attribute that establishes whether access should be granted and under which conditions.

The provisional specification contained a ‘Tom Smith’ example which posited that the biometric sensor can authenticate a user, and after authentication, can check other access privileges against the user, such as whether ‘Tom Smith’ is able to use the door on weekends, but did not disclose the output of the authentication signal as also establishing whether and under which conditions access to the controlled item should be granted.  So, Justice Burley held that the provisional specification did not include a real and reasonably clear disclosure of an accessibility attribute.

His Honour also found insufficient disclosure of the “administrator signature” feature and Series Feature in the provisional specification.  Accordingly, the asserted claims could only claim the deferred priority date of 13 August 2004, bringing additional prior art into consideration.

Validity – Novelty

Apple’s novelty ground relied on six prior art items.  Much of the case was dependent on accepting CPC’s construction of contested integers.  Given Justice Burley’s rejection of CPC’s construction, most of Apple’s novelty case fell away.  Nevertheless, his Honour considered the novelty analysis on the assumption that CPC’s construction was correct.

The most notable finding concerned US patent 6,164,403 (Wuidart), which disclosed a portable biometric device for vehicle access.  In one embodiment, the unlock signal included a user number (1, 2, 3, 4, or 5) that identified which authorised user’s biometric signature had been recognised.  By transmitting this code, selected convenience functions in the vehicle could be activated, such as adjusting seat positions, mirrors, thermostat temperature and radio station according to that user’s predefined preferences.

Justice Burley found that Wuidart disclosed an “accessibility attribute” on both his Honour’s construction as well as CPC’s construction.  The unlock signal in combination with the user number established both whether access was granted and imposed conditions applicable to the access granted (by adjusting various settings).  His Honour rejected CPC’s submission that these settings were not relevant to ‘access’ per se, stating at [643]:

I see no difference in principle between a condition of access that sounds a chime indicating that a person of a certain type has entered and a condition that would turn on the lights or another feature of the building.

Accordingly, had the Court accepted CPC’s broader construction, significant validity concerns would have emerged from the prior art.  Justice Burley also found that further prior art references anticipated various other claim features on CPC’s construction.

Outcome and Implications

The Court dismissed CPC’s infringement case, finding CPC failed to establish that any Apple Devices fell within any of the asserted claims.  Apple’s cross-claim succeeded in part, with Justice Burley finding that none of the asserted claims were entitled to claim priority from the provisional specification.  However, most other invalidity grounds fell away, given his Honour’s findings on construction in favour of Apple.

Justice Burley’s decision reinforces that functional claim language does not permit purely functional constructions.  Where claims use terms entailing structural relationships (such as distinct ‘sub-systems’), the Court will construe the claims in light of those structural requirements and reject attempts to satisfy claim integers by selecting only key components while excluding others as merely ancillary.  Further, claim constructions advanced to capture allegedly infringing products may simultaneously expose patents to invalidity challenges from prior art.

[1] See CCOM Pty Ltd v Jiejing Pty Ltd [1994] FCA 396; (1994) 51 FCR 260 at 267–268 (Spender, Gummow and Heerey JJ); Hanwha Solutions Corporation v REC Solar Pte Ltd [2023] FCA 1017; (2023) 180 IPR 315 at [92] (Burley J).

About Pearce IP

Pearce IP is a specialist, life-sciences focussed, intellectual property/law firm offering lawyers and attorneys in Australia and New Zealand.

In 2025, Pearce IP was honoured by Australasian Lawyer and New Zealand Lawyer as a Top Specialist Firm, 5 Star Employer of Choice, and the “Standout Winner” for Inclusion and Culture (<100 employees).  Pearce IP and its leaders are ranked in every notable legal directory including: Chambers & Partners, Legal 500, IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WTR 1000, Best Lawyers, WIPR Leaders, Best Law Firms, among others.

Pearce IP is the only leading IP firm in Australia and New Zealand with a female founder, and is certified by WEConnect International as women owned.

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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