In a recent development, Australia’s stance on computer-implemented business methods has been reinforced by the rejection of PayPal’s artificial intelligence (AI) patent. The decision of PayPal, Inc.  APO 54 (27 October 2023) sheds light on the challenges faced by companies seeking to patent AI innovations with business applications in the Australian jurisdiction.
The crux of the matter revolves around the ongoing debate on the patentability of computer-implemented inventions, especially those pertaining to business methods that influence consumer behaviour. The rejected PayPal patent sought protection for an AI system designed to predict user behaviour and tailor recommendations based on those predictions at the point of completing an online purchase. The purpose being to boost future consumer purchases and donations.
The system was rejected as it was not a ‘manner of manufacture’ within s 18 of the Patents Act 1990 (Cth). The rejection aligns with Australia’s historical position, emphasising the need for inventions to demonstrate a ‘technical effect’ or ‘technical solution’ to be deemed patentable. As such, PayPal’s business method, despite utilising computational involvement, was not patentable.
This development carries significant implications for businesses operating in the tech and AI sectors. It highlights the importance of carefully crafting patent applications to emphasise the technical aspects of innovations rather than purely focusing on their business utility. This is the second decision rejected by the patent office concerning patentable artificial intelligence and machine-based learning systems and companies investing in AI technologies need to navigate the evolving legal landscape appropriately in the hopes of securing intellectual property protection.