MasterCard provides a Manner of Manufacture Master Test for CIIs

The Delegate of the Commissioner of Patents has released a decision Mastercard International Incorporated [2023] APO 42 (2 August 2023) dealing with manner of manufacture and computer implemented inventions.

Mastercard International Incorporated (“Applicant) filed a patent application no. 2020239627 (“Application”) entitled “ACH transaction authentication systems and methods” on 21 September 2020 as a divisional application of patent application no. 2018247245. A first examination report was issued by the Australian Patent Office (“APO”) on 26 November 2021 which raised objections regarding manner of manufacture and inventiveness issues of the claims. The Applicant responded to the APO on 20 July 2022 with proposed amendments to the claims. Subsequently, a second examination report was issued by the APO on 18 August 2022 maintaining their stance on the objections regarding manner of manufacture, in response to which the applicant requested to be heard on 03 November 2022. The Applicant submitted a written submission to APO on 02 March 2023.

The subject Application relates to systems and methods for authenticating payment transactions made through the automated clearing house (“ACH”) network. As stated in the specification of the Application, the claimed invention seeks to address at least one of the following technical problems:

1. lack of authentication for ACH transactions;
2. higher risk associated for a user/payor in providing actual checking or savings account numbers when making ACH payment;
3. lack of ACH transaction utilization for retail (e.g., items/goods-based) merchants;
4. higher risk associated for a merchant utilizing ACH transactions for payment when no indication of sufficient funds in payor account is available;
5. longer transaction processing time for merchants and -6- consumers utilizing non-ACH payment methods; and
6. higher transaction processing costs for merchants utilizing non-ACH payment methods.

Claim 1 of the subject Application reads as:

An authentication computing device for authenticating an ACH transaction processed over an ACH network, the authentication computing device including a processor in communication with a memory, said processor programmed to:

register a payee with the authentication computing device;

receive an ACH authentication request for an electronic ACH transaction to transfer funds from a payor account to a payee account, the request received from a first application associated with the payee and executing on a first client computing device, the request including an account identifier associated with the payor account;

retrieve, by the authentication computing device, in response to receiving the ACH authentication request, account data from an issuer of the payor account by performing a lookup using the account identifier at a database associated with the issuer, wherein the account data is stored in the memory and is not accessible to the payee;

cause to be displayed, in response to receiving the ACH authentication request, via a second application associated with the authentication computing device and executing on a second client computing device, an ACH authentication challenge prompting the payor to respond to the ACH authentication challenge via the second application,

wherein the second computing device is different from the first computing device and is associated, based on the retrieved account data, with a user of the payor account, wherein the ACH authentication challenge requests account data from the payor that is known to a legitimate payor associated with the payor account and is not known to the payee, and wherein the ACH authentication challenge is not accessible to the payee;

receive, via Internet communication from the first application executing on the first client computing device, an ACH challenge response to the ACH authentication challenge, wherein the ACH challenge response is not accessible to the payee;

determine, by the authentication computing device, whether the ACH transaction is authenticated including determining that the payor is the legitimate payor associated with the payor account by comparing the received ACH challenge response with the account data retrieved from the issuer; and

transmit, from the authentication computing device via Internet communication to the first application associated with the payee, an ACH authentication response based on the determination.

The Delegate construed independent claim 1 as an authentication computing device that communicates with a first client computing device, and a second client computing device. The Delegate noted that the key features of claim 1 are that the second client computing device is different to the first client computing device and is associated with a user of the payor account, and that the authentication response comes from a device different to what the authentication challenge is sent to. The Delegate distinguished the function of the authentication device as merely determining whether a request is authenticated, and not the actual transferring of funds.

The Delegate construed independent claim 7 as a method of authenticating an ACH transaction in a similar vein to the computing device of claim 1 set forth above. Essentially, the steps of the method defined in claim 7 are the same as the steps performed by the processor defined in claim 1. The Delegate likewise construed independent claim 13 as software for performing the method as defined in claim 7, and for programming the processor to perform the steps as defined in claim 1.

The Delegate stated that the only outstanding objection is that the claims are not for a manner of manufacture, and cited that the examiner had consistently characterised the substance of the claimed invention as being:

“…an abstract computer-implemented scheme for authentication of a transaction based on a challenge-response scheme with the challenge incorporating account information”.

Section 18(1)(a) of the Patents Act 1990 states that:

“(1) Subject to subsection (2), an invention is a patentable invention for the purposes of a standard patent if the invention, so far as claimed in any claim: (a) is a manner of manufacture within the meaning of section 6 of the Statute of Monopolies; and …”

The Delegate noted that a stepped approach for assessing manner of manufacture can be summarized as construing the claim, identifying the substance of the claimed invention, and then asking whether the substance of the claim lies within established principles of what constitutes a patentable invention. To further determine the substance of the claimed invention, the Delegate stated that it is useful to:

1. ascertain whether the contribution to the claimed invention is technical in nature;
2. consider whether the invention solves a technical problem within the computer or outside the computer;
3. consider whether the invention results in an improvement in the function of the computer, irrespective of the data being processed;
4. consider whether the invention requires merely generic computer implementation, as distinct from steps which are foreign to the normal use of computers; and
5. consider whether the computer is merely the intermediary, configured to carry out the method using program code for performing the method, but adding nothing to the substance of the idea.

The Applicant submitted that the contribution of the claimed invention resides in the authentication computing device being configured to transmit an ACH authentication challenge to a second client computing device and receive an ACH challenge response from a first client computing device from which an authentication request was transmitted, and that the foregoing configuration is technical in nature due to the requirement of the first and second computing devices performing their respective functions.

The Delegate considered that such difference of function between the first and second client computing devices are merely administrative in nature. The Delegate also cited that with respect to the method of the claimed invention, the mere number of devices used in the authentication steps and the number of challenges used are administrative arrangements.

While the Applicant conceded that security problems in the ACH environment may appear as merely business problems, the Applicant asserted that security issues addressed by the claimed invention were technical problems cited in the specification.

The Delegate opposed this view and argued that while security issues can arise from technical problems, the ‘technical’ problems sought to be addressed by the claimed invention do not have a technical nature. The Delegate asserted that the lack of authentication in the ACH environment is not a technical problem. In addition, The Delegate stated that problems sought to be addressed by the claimed invention such as high risks, increased costs and lack of utilization are not technical problems but purely business problems.

The Delegate likewise held that the claimed invention does not result in an improvement in the function of the computer, since simply applying authentication techniques of an administrative nature where there were none previously is not considered an improvement in the computer.

The Delegate asserted that authentication challenges are administrative arrangements for using the computer devices to transmit, receive, display, and input information which are not considered foreign to the normal use of computers. The Delegate supported this assertion by citing the reliance of the specification of the claimed invention on known and existing authentication challenges.

Furthermore, the Delegate considered that the computer is simply being used to carry out the method using ordinary program code. The role of the computer adds no technical feature or substance to the method and code itself.

Based on the findings and considerations of the Delegate, the Delegate held that:

• The substance of the claimed invention essentially lies in a method of validating ACH transactions which uses purely administrative authentication means through generic computing devices;
• The substance of the claimed invention is a business scheme to validate financial transactions;
• The scheme is not directed to any technological problem and the method of implementation does not involve and improvement in the computer technology; and
• The claimed invention is not directed to a manner of manufacture.

Broadly speaking, the substance of the arguments of the Delegate around manner of manufacture in this case appear to be correct. This matter provides a good reminder that before embarking on a patenting process, careful consideration needs to be given to the nature of the crux of the technological solution.

Usefully, the decision sets out a 5-step test for determining whether CIIs are a manner of manufacture:

1. ascertain whether the contribution to the claimed invention is technical in nature: Commissioner of Patents v RPL Central Pty. Ltd. [2015] FCAFC 177 (“RPL Central”) at [99], Research Affiliates LLC v Commissioner of Patents [2014] FCAFC 150 (“Research Affiliates”) at [114];
2. consider whether the invention solves a ‘technical’ problem within the computer or outside the computer: RPL Central at [99], Research Affiliates at 103;
3. consider whether the invention results in an improvement in the functioning of the computer, irrespective of the data being processed: RPL Central at [99], Research Affiliates at [118];
4. consider whether the invention requires merely ‘generic computer implementation’, as distinct from steps which are ‘foreign’ to the normal use of computers: RPL Central at [99], [102]; Research Affiliates at [101]; and
5. consider whether the computer is merely the intermediary, configured to carry out the method using program code for performing the method, but adding nothing to the substance of the idea: RPL Central at [99].

This test may be useful to companies considering filing patent applications for CIIs, in evaluating whether their product or service meets the requirement of including patentable subject matter.