Australian Patent Office
in favour of Blockchain…
for the moment
Inspire September 2021
E-commerce giant
Alibaba has had a win
before the Australian
Patent Office in relation
to an application for
their technology which
improves privacy on
the blockchain. In
a recent decision 1 ,
the Delegate found
that Alibaba’s patent
application satisfies the
manner of manufacture
4 requirement, and
that amendments
made to address an
objection were valid
and supported by the
specification as filed.

1 A dvanced New Technologies Co.,
Ltd. [2021] APO 29 (21 July 2021)
The Invention
Background Broadly speaking, the invention
related to a solution to the
consensus problem by way
of blockchain. In blockchain
technology, transaction data needs
to be broadcast to consensus nodes
for the blockchain to work effectively.

However, broadcasting transaction
data can create privacy issues
since transaction data can contain
identifying information, such as
the subject matter of a transaction,
an account address, ID information
and other data, as well as
timestamps, and dates.

The invention was directed to a
method involving generation of a
transaction abstract derived from
the transaction data, but which
obfuscates transaction details
related to privacy. As part of the
method, the consensus nodes accept
the transaction abstract as being
authentic, meaning there would be
no need for all the consensus nodes
to perform consensus verification
on the transaction data per se.

During prosecution of the application,
the Examiner maintained an objection
based on manner of manufacture,
asserting that the invention was
directed to the application of
abstract rules associated with the
implementation of a mere scheme for
the management of transaction data.

Inventive step was initially raised
before being overcome by argument
and amendment by the Applicant.

The examiner then raised objections
on the ground that the specification
didn’t disclose the invention in a
manner which is clear enough and
complete enough for the invention
to be performed by a person
skilled in the relevant art and that
the claims were not supported
by specification. The Applicant
requested to be heard in the matter.




Conclusions
The Delegate agreed with the
Applicant’s arguments that the
specification clearly discloses
that the transaction abstract can
be achieved by way of a hash
function, and that obtaining digital
signatures is known in the art. They
were satisfied that there was no
deficiency in the disclosure of the
specification which would prevent a
person skilled in the art performing
the steps of the invention, without
difficulty or exercise of invention.

The Delegate was also satisfied
that the specification provided
a clear enough and complete
enough disclosure to perform the
invention across its full scope and
that the claims were supported
by the body of the specification.

This case illustrates some of the
issues that Examiners and Applicants
face in applying the manner of
manufacture test as it pertains to
computer implemented inventions.

Quite often, prosecution of an
application starts with a fundamental
disagreement between the Examiner
and the Applicant on what the
‘substance’ of the invention is,
whether it solves a technical problem,
as well as inventive step objections.

The latter are usually overcome by
argument or amendment, but the
manner of manufacture objection
remains. Substantive claim
amendments are then proposed
to positively recite technical
features to address the manner
of manufacture objection which can
result in disclosure or support issues.

While this decision is a good
result for those in the blockchain
space – it also highlights another
issue with how the manner of
manufacture test is applied to
computer implemented inventions.

The manner of manufacture test has
become a moving feast as many
features of computer implemented
inventions become “well known or
ordinary functions of a computer”
in the eyes of the Australian
Patent Office. For example, over
the last ten years, features like
gyroscopes and manometer sensors
in smartphones anecdotally have
become “well known or ordinary
functions of a computer”, as have
machine learning and AI more
recently. It is perhaps only a
matter of time before blockchain
technology suffers the same fate.

More than ever, a patent
specification which describes in
great detail the technical problem
being solved as well as detailed
examples of how that technical
problem is solved will go a long way
to support an argument for patent
eligibility and ensure that claim
amendments, if required, are valid.

While this decision
is a good result for those
in the blockchain space –
it also highlights another
issue with how the manner
of manufacture test is
applied to computer
implemented inventions.

The Delegate noted that a data
abstract from which transaction
data cannot be reversely obtained
can be achieved using a one-way
hash function, which although well-
Manner of Manufacture
known, is none the less technical.

Further, obtaining digital signatures
Applying the guidelines in Research
of all of the transaction nodes as
Affiliates LLC v Commissioner of
approval of the transaction and then
2 Patents , as summarised in Aristocrat
generating a transaction abstract
3 Technologies , the Delegate found
involves the application of encryption
that the ‘substance’ of the invention
techniques – which satisfied the
“ lies in a method of processing
Delegate that there was a technical
a transaction request within a
element to that step of the claim.

blockchain wherein the transaction
Finally, the Delegate found that
data is irreversibly converted into a
non-recognisable form (data abstract) the invention provided a practical
and useful result on the basis that
and using this data abstract to first
a breach of privacy is prevented
get approval for the transaction only
by converting the transaction data
from transaction nodes and then
into a transaction abstract, in which
use this approved data abstract
privacy information is obfuscated.

to then get consensus validation
from all of the consensus nodes”.

The Delegate noted that
“the present invention relates
However, the Delegate was not
to blockchains, a computer
persuaded that the invention solved
implemented technology that,
a technical problem as opposed to
in my view, is not inherently
a business problem relating to the
unpatentable” and “I can see no
content of the transaction data and
the administrative rules for consensus reason why technical improvements
validation within a blockchain. Further, to fundamental mechanisms related
to consensus within a blockchain
the Delegate was of the view that the
claimed method required only generic should not be patentable, even
though these improvements might
computer implementation and was
not necessarily be addressing
at pains to distance the invention from
technical problems. In my view,
the subject of Aristocrat Technologies
the balance of considerations
v Commissioner of Patents 4 .

weigh in favour of finding that
Nevertheless, the Delegate was
the claimed invention is a manner
persuaded that the invention provided
of manufacture.”
a technical solution to the problem in
It may however be a pyrrhic victory
that each of the steps of the claimed
for the Applicant as the Delegate,
invention related to the conversion of
transaction data into an indecipherable in researching the operation of
blockchain, cryptography and hash
form, or how this converted
functions, formed the view that
information is then sent to transaction
the claims lack an inventive step
nodes and consensus nodes for
and pushed the issue back down
digitally approving the transaction,
to examination to be resolved.

and for gaining consensus validation.

Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150
Aristocrat Technologies Australia Pty Ltd [2016] APO 49
4 Aristocrat Technologies Australia Pty Limited v Commissioner of Patents [2020] FCA 778
2 3
Inspire September 2021
The Decision
5 Mark Williams | Special Counsel
BCSE(Hons) MIP FIPTA
mark.williams@pof.com.au