On 13 April 2022, the Full Federal Court in Commissioner of Patents v Thaler [2022] FCAFC 62 (Thaler 2022) overturned Justice Beach’s decision handed down a year earlier in Thaler v Commissioner of Patents (2021) 160 IPR 72 (Thaler 2021), in which his Honour found that an ‘inventor’ under the Patents Act 1990 (Cth) (Patents Act) can be an artificial intelligence (AI) system or device. Instead, the Full Federal Court held that only a natural person can be an inventor for the purposes of the Patents Act. Dr Thaler has recently sought special leave to appeal to the High Court.

The Federal Court’s judgment aligns with the current jurisprudential position and the approach taken by patent offices in the United Kingdom, the United States, New Zealand and Europe. It highlights important policy questions around AI and inventorship, including raising the question of whether there may be scope for patents to be granted where an invention built by an AI system could still be viewed as having a human inventor (in this case, no human inventor was asserted).

Thaler v Commissioner of Patents (2021) 160 IPR 72

The applicant, Dr Stephen Thaler, filed Australian Patent Application No. 2019363177 for ‘Food container and devices and methods for attracting enhanced attention’ (Application) and named the AI system ‘DABUS’ as the inventor. The Deputy Commissioner of Patents (Deputy Commissioner) determined that the Application did not comply with reg 3.2C(2)(aa) of the Patents Regulations 1991 (Cth) (Regulations), finding that an AI system could not be an inventor.

Dr Thaler sought judicial review of the Deputy Commissioner’s decision in the Federal Court, where Justice Beach found that an AI system can be an inventor for the purposes of the Patents Act and Regulations because (Thaler 2021 at [10]):

1. the word ‘inventor’ is an agent noun – an agent can be a ‘person’ or ‘thing’ that invents;
2. the potential for an AI system to be an inventor reflects the reality that a human inventor cannot be ascribed to many otherwise patentable inventions; and
3. nothing in the Patents Act dictates the contrary conclusion.

Commissioner of Patents v Thaler [2022] FCAFC 62

On appeal, the Full Federal Court considered whether the primary judge was incorrect in concluding that the Deputy Commissioner had erred in law by finding that DABUS could not be the inventor pursuant to reg 3.2C(2)(aa). The Court adopted a conventional, pragmatic approach whereby it viewed the ‘duty to resolve an issue of statutory construction’ as a ‘text-based activity’ (Thaler 2022 at [83]). Although the Court acknowledged that questions of policy may inform its task of statutory construction, it noted that the most certain guide to discerning legislative intention is the language of the text itself.

The Court also looked to case law, which did not deal with the specific question that arose before Justice Beach (i.e. whether or not the ‘inventor’ could include an AI system). However, it demonstrated that the law relating to a person’s entitlement to a patent grant is based on an invention for the purposes of the Patents Act arising from the mind of one or more natural persons. That is, those who supply the inventive concept are entitled to the grant, and the grant rewards their ingenuity.

Moreover, the Court considered that the reference to an inventor under reg 3.2C(2)(aa) must have the same meaning as used in the Patents Act..

Section 15(1) of the Patents Act provides that a patent for an invention may only be granted to a person who:

1. is the inventor; or
2. would, on the grant of a patent for the invention, be entitled to have the patent assigned to the person; or
3. derives title to the invention from the inventor or a person mentioned in paragraph (b); or
4. is the legal representative of a deceased person mentioned in paragraph (a), (b), or (c).

The Court noted that on a natural interpretation, each of ss 15(1)(b), (c) and (d) describe circumstances where a person becomes entitled to the grant of a patent by receiving that entitlement from the inventor. Accordingly, there must be a legal relationship between the inventor and the person entitled to the grant. For example, with respect to s 15(1)(b), something without a legal identity cannot give effect to an assignment. The Court explained that this approach to the construction of s 15 is supported by the legislative history of the development of the law of patents in Australia.

The Court ultimately concluded that the primary judge erred in his construction of s 15(1), and that an ‘inventor’ for the purposes of the Patents Act and Regulations must refer to a natural person. Although the Court recognised the importance of the debate as to the role of AI within the Patents Act and Regulations, such contemplation ‘clouded consideration of the prosaic question before the primary judge, which concerned the proper construction of s 15 and reg 3.2C(2)(aa)’ (Thaler 2022 at [119]).

Key policy implications and special leave application

The Full Federal Court’s judgment opened up a number of policy questions which it considered to be ‘urgent’, given the facts in these cases. These policy questions were primarily focused on whether a person who is an inventor should be redefined to include an AI system.

The Court inquired further into the broader repercussions of such a legislative change, including:

1. Patent grantees: if such an amendment were to proceed, to whom should a patent be granted in respect of the AI system’s output? The Court considered some potential grantees, which included ‘the owner of the machine upon which the artificial intelligence software runs, the developer of the artificial intelligence software, the owner of the copyright in its source code, the person who puts the data used by the artificial intelligence to develop its output, and no doubt others’ (Thaler 2022 at [119]).
2. Inventive step: currently, a key prerequisite for an invention claimed in a standard patent is that it must involve an ‘inventive step’, meaning that it is not an obvious thing to do for someone with knowledge and experience in the field of the invention. If an AI system were to recognised as an inventor, the standard of an ‘inventive step’ might have to be reshaped so that it is ‘no longer judged by reference to the knowledge and thought processes of the hypothetical uninventive skilled worker in the field’ (Thaler 2022 at [119]).
3. Revocation for misrepresentation: the role of revocation for false suggestion or misrepresentation may need to be reconsidered where the inventor is an AI system.

The Full Federal Court’s judgment will undoubtedly trigger a policy debate around this issue in Australia, and may prompt consultations or proposed legislative changes. In the meantime, as noted above, Dr Thaler has filed an application seeking special leave to appeal to the High Court of Australia. We will continue to update on developments in this case.

Authors: Sara Liu, Stephanie Essey, Lesley Sutton