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Australia was the first country in the world to hand down a decision ruling AI can be an inventor under its patent law. On 13 April 2022, the Full Federal Court delivered its decision in Commissioner of Patents v Thaler - AI cannot be an inventor under Australian patent law.

Intellectual property law, patents & the rise of artificial intelligence

Author: Ersel Akpinar, Principal Lawyer

21 February 2022 * Updated 13 April 2022

Australia was the first country in the world to hand down a decision ruling AI can be an inventor under its patent law. On 13 April 2022, the Full Federal Court delivered its decision in Commissioner of Patents v Thaler - AI cannot be an inventor under Australian patent law.

What is Artificial Intelligence?

Think of artificial intelligence (AI) and we might think about terrifying robots that have become self-aware and are set on destroying the human race. We’ve all seen the movies, but it’s not that dramatic.

AI is a branch of computer science dedicated to building smart machines and systems that can process enormous volumes of complex data and synthesize it to make decisions humans usually would – only better. The output can be valuable, used to launch new products, improve existing technologies and deliver enterprise a cutting edge. And we use it every day.

AI: intellectual property law and patents

Pre AI, intellectual property was about people. Now, machines can make autonomous decisions using data, and the results often create patentable inventions. A patent is a legal right to exploit the invention for the life of the patent.

But can AI be an inventor?

The Federal Court of Australia delivered a world-first decision in 2021 in Thaler v Commissioner of Patents [2021] (Thaler). It held that an AI system could be an inventor under the Patents Act 1990 (Cth) (the Act). This decision overturned an earlier decision made by IP Australia that artificial intelligence cannot be named as an inventor for an Australian patent.

The Commissioner of Patents appealed the Federal Court decision in Thaler to the Full Federal Court of Australia. The world is talking about it. It has global ramifications.

Enterprise is transforming through AI

Businesses are embracing AI at explosive speeds and the law is racing to catch up.

The government in its Australian AI Action Plan encourages Australians to develop and adopt AI to transform their businesses. It offers a range of financial incentives to embrace and develop AI technology. The shift is enormous.

  • Enterprises are moving to the digital economy to take advantage of the AI displaying their business in front of the most suitable customers.
  • Manufacturers are using AI to improve quality control and production time.
  • Warehouses and logistics managers are using AI for efficient stock management and delivery.
  • Agriculture and farming use AI to predict weather and monitor plant quality to produce the best crops.
  • Pharmaceutical companies are using AI to develop better drugs quickly.
  • Healthcare is using AI to improve the accuracy of diagnoses and streamline workflows.
  • The finance industry is using AI to forecast market trends and improve returns.

Thaler v Commissioner of Patents

In the Thaler case, Dr Thaler developed the source code for the AI, owned the copyright to the code and hardware. But Dr Thaler didn’t control the invention created by the output of the AI.

Dr Thaler applied for a patent on the output of his AI.

The Deputy Commissioner of Patents denied the application, deciding Section 15(1)(a) of the Act and Section 3.2C(2)(aa) of the Patents Regulations 1991 (Cth) required the inventor to be human.

Dr Thaler sought a judicial review of the decision. The Federal Court held that an AI system could be an inventor under the Act because:

  • “Inventor” is an agent verb meaning a human or a thing can invent
  • It reflects the reality of other patented inventions where common sense tells us a human didn’t do the inventing: pharmaceuticals, for example
  • Nothing in the Act dictates a contrary intention

It’s important to note the Act requires the owner of the patent to be a person, organisation or company, but the application requires details of the inventor.

Australia is Pioneering Patent Law

Australia was the first country in the world to hand down a judicial decision ruling AI can be an inventor under its patent law.

The United States Patents and Trademarks Office and its federal courts require inventors to be human.

The United Kingdom and the European Patent Offices follow the United States approach. Higher courts in the United Kingdom have also upheld these views.

Dr Thaler lodged patent applications in the United States, the United Kingdom and the European Union. They were all denied. The High Court of the United Kingdom went a step further by deciding the AI was not a natural person, thus incapable of transferring proprietary rights in the patent to Dr Thaler. His application in South Africa received approval at the administrative level. Now it is undergoing formal review.

Dr Thaler’s patent application in New Zealand is the latest to be denied. The recent decision made by the Intellectual Property Office of New Zealand in January 2022 aligns with decisions made to date in the United States, the United Kingdom and the European Union. It was determined that the AI system could not be considered an inventor on the basis that it is not a natural person as necessitated by legislation. It is to be seen whether Dr Thaler will appeal this decision to the High Court of New Zealand.

The Commentary

Global commentary on the Thaler decision and artificial intelligence has raised concerns about the capacity of people to innovate and invent in the face of the sheer processing power of AI.

  • Will information technology companies form monopolies over invention?
  • Will it discourage people from creating and innovating?
  • Or will it encourage investment in AI development in Australia?

Where to now

If you’re planning a patent application for an invention made by AI, we recommend caution. Until the Full Court hands down its decision, there is a risk. There is also a significant risk it will be rejected in any overseas application. Talk to us first. We will update you as soon as we get the decision.

*Update: The decision in Thaler

The Commissioner of Patents’ appeal of the decision in Thaler went before the Full Federal Court of Australia on 9 February 2022. On 13 April 2022, the Full Federal Court delivered its decision in Commissioner of Patents v Thaler [2022]. The Court allowed the appeal, finding that for the purposes of the Act, an inventor named on a patent application must be a natural person. This now brings Australia in line with the global position. AI cannot be an inventor under Australian patent law.

As always, we are here to help guide you through the best approach, so please don’t hesitate to get in touch with the Lawthentic team for any patent needs you have.

About Lawthentic | Commercial Lawyers

Based in Sydney, Lawthentic provides high-level, specialist, commercial and corporate legal advice to business Australia-wide and across APAC. We deliver progressive end-to-end commercial law services that address the full spectrum of legal issues a business may encounter, driving “Real Progress for Enterprise”. Our legal services cover all areas of Commercial law, Corporate law, Intellectual Property law, Data and Technology law, Regulatory Compliance, and Dispute Resolution. We work with medium to large corporate businesses looking for friendlier and more cost-efficient legal services without compromising on expertise. We provide in-house, face-to-face, or remote support from our offices in Sydney.

About the Author

Ersel Akpinar, Principal Lawyer

Ersel is a Principal Lawyer, Founder and the Director of Lawthentic. He is a commercial lawyer with over 20 years’ experience working with a wide range of businesses in Australia and across the Asia Pacific region. Having started his career at top-tier US and Australian law firms, he is an accomplished, specialist and progressive legal advisor who is uncompromisingly dedicated to his clients. As a business enabler, a critical thinker and an interpreter of the law, Ersel believes in helping business to do business. Read more about Ersel >

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