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The Emotional Perception AI decision, and how it may shape the future of software patents in New Zealand

1.  Why Software Patents Are Legally Contested

Both UK and New Zealand patent law exclude "programs for computers … as such" from patentability. The critical phrase is as such: not every software-based invention is excluded — only those that are nothing more than a computer program. The challenge is drawing that line between a genuine technical invention implemented in software and a bare computer program seeking a monopoly on abstract logic.

The core tension is between protecting genuine technical innovation and preventing broad monopolies over mathematical methods or business logic that would stifle the wider software industry. Getting the balance right has produced decades of litigation in the UK, Europe, and New Zealand.

2.  The Aerotel Four-Step Test  (UK, 2006)

In Aerotel Ltd v Telco Holdings; Re Macrossan's Application [2006] EWCA Civ 1371, the UK Court of Appeal laid down a four-step methodology for assessing software patent claims. The core idea was to look past the form of the claim and identify what the inventor had actually contributed to human knowledge.

  1. Construe the claim — determine what the claim actually covers on its true interpretation, not what the drafter says it covers.
  2. Identify the actual contribution — what has the inventor really added to human knowledge, as a matter of substance? The contribution must be real and specific.
  3. Does it fall solely within excluded matter? — is the actual contribution nothing more than a computer program, mathematical method, or business method? If yes, the claim is unpatentable.
  4. Is the contribution technical in nature? — a final consistency check ensuring the earlier steps have not led to an incorrect result.

 

"The contribution is to provide a computer program which can be used to carry out the method. The hardware used is standard and is not part of the contribution." — Court of Appeal, applying Aerotel to reject an automated company-formation system.

3.  How IPONZ Applied the Test Under Section 11  (2023)

New Zealand's Patents Act 2013 (s11) codified a similar framework. Where a claim involves a computer program, the Commissioner must identify the actual contribution and decide whether it lies solely in being a computer program. Section 11(4) directs attention to: the substance of the claim; the problem addressed; how it is solved; and the advantages gained. IPONZ applied this framework in two recent decisions.

Diane Mould — iDose System  [2023] NZIPOPAT 3

Invention: A computer-implemented method for determining patient-specific medication dosing regimens using Bayesian modelling and pharmacokinetic simulation.

Applicant's argument: The software outputs concrete recommendations that improve real-world patient outcomes.

IPONZ finding: The recommendations are informational only — a clinician may follow or disregard them. No real-world dosing effect is an inevitable consequence of running the program. Unlike a washing machine controller (which inevitably controls the machine), iDose merely advises. The actual contribution lies solely in the computer program.

Outcome: Application refused.

Yodlee Inc. — Financial Web Scraping  [2023] NZIPOPAT 4

Invention: A computer-implemented method using a trained machine-learning classifier to automatically generate scripts for extracting financial data from bank websites.

Applicant's argument: The system interacts with external websites and creates new products — site maps and scripts — beyond the computer itself.

IPONZ finding: Site maps are XML files produced by the program. Scripts are themselves computer programs. Downloading a webpage does not 'affect' that website. The skills needed are entirely within computer programming — no expertise outside the digital domain is required.

Outcome: Application refused.

A key principle from both decisions: the actual contribution must result in a real-world effect that is not simply the output of the program running, and must be an inevitable consequence of working the invention — not something contingent on a third party's discretion.

4.  Emotional Perception AI: The Test Has Changed  (UK, 2026)

In Emotional Perception AI Ltd v Comptroller General of Patents [2026] UKSC 3, the UK Supreme Court handed down a landmark ruling overturning the Aerotel framework entirely. The case concerned an artificial neural network (ANN) trained to recommend media files by replicating how humans subjectively perceive similarity between files, using only objectively measurable physical properties. The UKIPO had refused the application as a computer program 'as such'. The Supreme Court allowed the appeal and replaced Aerotel with the approach endorsed by the EPO Enlarged Board in G1/19 (Bentley Systems, 2021).

The three steps that were set out:

Stage 1 — Is there an invention? (the "any hardware" threshold) Does the claim involve any hardware at all — a computer, server, database, network, user device? If yes, the subject matter has technical character and qualifies as an invention under Article 52 EPC. This threshold is intentionally low. Almost all software and AI claims will clear it (if drafted properly).

Stage 2 — The intermediate step (filtering features) Before assessing novelty and inventive step, identify which features of the invention actually contribute to its technical character, viewed as a whole. Non-technical features that do not interact with the technical subject matter are filtered out and cannot support inventive step. Non-technical features that do interact with the technical subject matter stay in. This is a feature-by-feature analysis — quite different from Aerotel's holistic contribution approach.

Stage 3 — Novelty and inventive step Assess novelty and inventive step in the usual way, but only by reference to the features that survived the intermediate step filter.

Importantly, this three step test aligns UK patent law with European patent law under the European Patent Convention (which the UK is a part of).

Three Key Holdings

First: Aerotel is overruled. Steps 2–4 of the Aerotel methodology cannot be maintained. The contribution approach impermissibly conflates the threshold 'invention' test with novelty and inventive step, which are separate requirements under the EPC.

Second: ANNs are computer programs. An artificial neural network is an abstract model — a set of instructions to manipulate data — and therefore constitutes a "program for a computer". How those instructions were generated (human coding vs machine learning) is irrelevant.

Third: But these claims are not excluded. Because the claimed system involved hardware (a computer, database, communications network, and user device), it was not a computer program "as such". The claims qualified as an invention and should proceed to novelty and inventive step assessment.

Under the new approach, a claim passes the patentability threshold simply by involving any hardware. Since virtually every software or AI system runs on some form of computer hardware, this threshold is now very easy to clear. The serious analytical work shifts to an 'intermediate step' — identifying which features contribute to the invention's technical character — before assessing novelty and inventive step.

Old Test vs New Test — At a Glance

First question asked: Under Aerotel, the first question was what the inventor actually contributed to human knowledge. Under the new approach, the first question is simply whether the claim involves any hardware.

Role of novelty: Aerotel placed novelty at the centre of identifying the 'contribution'. Under the new approach, novelty is assessed separately, after the threshold test.

Software and AI claims: Under Aerotel, many such claims were excluded because the contribution was seen as 'just the program'. Under the new approach, claims are generally not excluded if hardware is involved.

Technical analysis: Aerotel required a holistic check of whether the whole contribution was technical. The new approach requires a feature-by-feature intermediate step to filter non-contributing features before the inventive step assessment.

Practical effect: Aerotel set a high threshold, resulting in many AI and software claims being refused at the eligibility stage. The new threshold is low — the focus moves to inventive step.

5.  What This Means for New Zealand

The Current Position: Uncertain but Significant

New Zealand is not bound by UK Supreme Court decisions. Section 11 of the NZ Patents Act 2013 is a domestic statutory provision, and its interpretation ultimately rests with IPONZ and the New Zealand courts. That said, the Supreme Court's decision is highly persuasive authority, and New Zealand patent law has historically drawn heavily on UK jurisprudence — including Aerotel itself, which formed the basis of both the 2023 IPONZ decisions, and other decisions over the last two decades.

Whether and how s11 will be reinterpreted in light of Emotional Perception AI remains to be seen. The question of whether the 'any hardware' threshold should replace the contribution analysis under s11(3) and (4) is genuinely open. Section 11's statutory language — which explicitly directs the Commissioner to identify the 'actual contribution' — may be harder to sidestep than the UK's non-statutory approach. On the other hand, IPONZ has never treated itself as entirely independent of the policy underpinnings shared with the UK and EPO, and the new framework may well prove persuasive.

In the meantime, applicants who received s11 refusals — including in cases analogous to Diane Mould or Yodlee — may wish to consider their options carefully. It would be unwise to assume that the New Zealand position will automatically mirror the UK change, but equally unwise to assume it will not shift at all.

Practical Takeaways for Applicants

  • In the UK, the 'any hardware' threshold is now the test — the presence of a computer, server, database, or user device in the claim is sufficient to clear the Article 52 hurdle. Strategic focus should now be on novelty and inventive step.
  • In New Zealand, the position under s11 is currently unsettled. Applicants facing s11 objections should preserve their appeal rights while monitoring how IPONZ and the courts respond to the new UK approach.
  • For AI and machine learning claims, the Supreme Court confirmed that ANNs are computer programs — but because they always require hardware to run, they will not be excluded at the threshold stage under the new UK test.
  • Claim drafting should ensure non-technical features are shown to interact with technical subject matter if they are to support inventive step under the new intermediate step analysis.

 

This guide is a summary for informational purposes only and does not constitute legal advice. Key cases: Aerotel/Macrossan [2006] EWCA Civ 1371; Diane Mould [2023] NZIPOPAT 3; Yodlee Inc. [2023] NZIPOPAT 4; G1/19 Bentley Systems [2021] EPOR 30; Emotional Perception AI Ltd v Comptroller General of Patents [2026] UKSC 3.

Aristocrat 2025: The New Test for Patentability of Computer Implemented Inventions

A summary of Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2025] FCAFC 131 Full Federal Court of Australia  |  16 September 2025

Introduction

Few patent law questions have generated as much judicial energy in Australia as this one: when is a computer-implemented invention a patentable "manner of manufacture"? After a decade of contested litigation, a delegate's revocation, two primary judge decisions, two Full Federal Court decisions, a divided High Court and a remittal, the Full Federal Court in Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2025] FCAFC 131 has finally brought the matter to rest. With the High Court refusing leave to appeal on 5 February 2026, this decision now represents settled Australian law.

The case concerned four innovation patents held by Aristocrat — one of the world's largest electronic gaming machine (EGM) manufacturers — covering a gaming system and method for providing a "feature game". The core legal question was whether the inventions claimed in those patents constituted a "manner of manufacture" within s 18(1A)(a) of the Patents Act 1990 (Cth), which incorporates s 6 of the Statute of Monopolies 1623 (UK).

The answer, definitively, is yes. But getting there required the Full Court to navigate an extraordinarily complex doctrinal path through the wreckage of a 3-3 divided High Court, the doctrine of precedent, and decades of contested case law on computer-implemented inventions.

What Is a "Manner of Manufacture" and Why Does It Matter?

Australian patent law requires that an invention, to be patentable, must satisfy a number of requirements. One of the most fundamental — and the one at the heart of this case — is that the invention must be a "manner of manufacture" within the meaning of s 6 of the Statute of Monopolies 1623 (UK), as incorporated into Australian law by s 18(1A)(a) of the Patents Act 1990 (Cth).

"Manner of manufacture" is essentially the Australian law's threshold test for patentable subject matter: it asks whether what is claimed is the kind of thing that the patent system was designed to protect in the first place. Think of it as a gateway. An invention that does not qualify as a manner of manufacture cannot be patented, no matter how novel, inventive or useful it might be. Conversely, an invention that does qualify clears the gateway and may then be assessed against the other requirements — novelty, inventive step and utility.

The concept is broad and has been developed by the courts over centuries. It extends well beyond physical manufacturing to include new processes, new applications of existing technology, and computer-implemented inventions. However, it has always excluded things that are purely abstract — bare ideas, schemes, plans or mental processes — because these are regarded as the common property of humanity, not proper subjects for monopoly. The central challenge in cases like Aristocrat is determining where a computer-implemented invention sits on the spectrum between a concrete, patentable product or process and a mere abstract idea dressed up in technical language.

Background: The Patents and Their Journey Through the Courts

The Patents

Aristocrat held four innovation patents (Nos. 2016101967, 2017101097, 2017101098 and 2017101629), each entitled "A system and method for providing a feature game" with a priority date of 11 August 2014. The patents described EGMs incorporating a feature game that could be triggered during a base game, using "configurable symbols" — symbols with a common component and a variable component displaying prize values — that accumulated during play and determined a payout when the feature game concluded.

The machines were not conceptually exotic. They were physical devices — with displays, credit input mechanisms, random number generators, gameplay buttons, processors and memory — that ran game program code to manage a base game and trigger a feature game. What was new was the configurable symbol mechanic: a player could watch prize values accumulate on symbols in real time as play progressed towards the feature game, significantly enhancing the player experience.

The Delegate's Decision (2018)

A delegate of the Commissioner of Patents revoked the patents on 5 July 2018, finding that none of the claims constituted a manner of manufacture.

First Primary Judge Decision — Burley J (2020)

Burley J reversed the delegate's decision. His Honour characterised the invention as a machine of a particular construction that implements a gaming function, yielding a practical and useful result. He found it was not a mere scheme or plan, but a physical device combining hardware, firmware and software. His Honour declined to engage with the "mere scheme" line of inquiry at all, concluding that the preliminary question — whether the invention was a mere scheme — should be answered in the negative.

First Full Court Decision (2021)

The Full Court reversed Burley J. Two sets of reasons both concluded the claims were not a manner of manufacture, but for different reasons.

Middleton and Perram JJ (majority) proposed a new two-step alternative approach:

(a) Is the invention claimed a computer-implemented invention? (b) If so, can the invention claimed broadly be described as an advance in computer technology?

Applying this test, their Honours found that while the invention was computer-implemented, it was not an advance in computer technology — only, at most, in gaming technology — and was therefore not patentable subject matter. The matter was remitted to the primary judge for consideration of residual issues.

Nicholas J (minority) declined to follow the two-step approach, preferring to ask whether the invention solved a technical problem or made a technical contribution, whether inside or outside the computer. His Honour found that the specification identified no technological problem and that the purpose of the invention was merely to create a more enjoyable game experience. He agreed with the remittal.

The High Court (2022)

The High Court granted special leave and six Justices heard the appeal. They divided 3-3.

Kiefel CJ, Gageler and Keane JJ (dismissing reasons) held the claims were not a manner of manufacture. Their Honours emphasised that characterisation must be undertaken by reference to the face of the specification, and that in the absence of any adaptation or alteration of computer technology to accommodate the exigencies of the new game, the invention was properly characterised as a claim for a new system or method of gaming — an unpatentable game operated by a wholly conventional computer. They also criticised the majority Full Court's two-step approach as "unnecessarily complicating" the analysis.

Gordon, Edelman and Steward JJ (allowing reasons) held the claims were a manner of manufacture. Their Honours emphasised that characterisation must consider all integers of the claim — not just the inventive aspects — viewed in light of the specification as a whole. They found the Commissioner's characterisation of the invention as a "mere scheme" was achieved only by impermissibly stripping out essential integers, including as basic as the display on which the symbols appeared. Their Honours reformulated the test, rejecting the "advance in computer technology" requirement and substituting the question of whether the subject matter is:

(i) an abstract idea which is manipulated on a computer; or (ii) an abstract idea which is implemented on a computer to produce an artificial state of affairs and a useful result.

All six judges, notably, criticised the Full Court majority's "advance in computer technology" two-step approach.

By operation of s 23(2)(a) of the Judiciary Act 1903 (Cth), the equal division meant the earlier Full Court decision was affirmed. The matter was remitted to Burley J.

Second Primary Judge Decision — Burley J on Remittal (2024)

On remittal, Burley J was bound to apply the Full Court's majority reasoning. He reluctantly did so and dismissed the appeal. The Full Court in 2025 later described his approach as displaying "self-effacing and restrained" judicial conduct, commending the manner in which he performed his duty "despite what must have been significant misgivings".

The 2025 Full Court Decision: Settling the Law

Precedent Questions

Before reaching the merits, Beach, Rofe and Jackman JJ had to resolve a series of intricate precedent questions.

Was the primary judge bound by the earlier Full Court's reasoning? Yes. The earlier Full Court's reasoning, even if criticised by the High Court, had not been formally overruled by a binding majority. The primary judge had no choice but to follow it.

Is the present Full Court bound by the earlier Full Court's reasoning? No. The present Full Court found there was a "compelling reason" to depart from the earlier majority decision: all six High Court Justices had expressly criticised the "advance in computer technology" two-step approach, albeit for different reasons. It would, the Court said, be "perverse" to follow a proposed alternative approach that had been disapproved by every member of the High Court who considered it.

Can the appeal be allowed without finding error by the primary judge? Yes. Drawing on the concept of "constructive error", the Full Court held that in an appeal by way of rehearing, the correctness of the judgment below must be assessed in light of the law as it stands at the time of appeal. Because the Full Court itself was now rejecting the majority reasoning that bound the primary judge, there was a constructive error justifying intervention — even though no criticism of the primary judge was warranted.

The Correct Approach to Computer-Implemented Inventions

Having cleared the procedural thicket, the Full Court turned to the substantive question and adopted the approach set out in the High Court's allowing reasons.

Step 1: Characterisation

Both sets of High Court reasons agreed that the threshold question is characterisation of the claimed invention — to be decided on a proper construction of the claim in light of the specification as a whole and common general knowledge, and as a matter of substance rather than form.

The Full Court endorsed the characterisation in the allowing reasons as best reflecting the integers of the claim viewed as a whole. The invention was properly characterised as an EGM incorporating an interdependent player interface and game controller, with feature games and configurable symbols that interact with, and are entirely dependent upon, the physical integers of the machine. The configurable symbols — particularly the real-time display of prize values on their faces — were a significant and new enhancement of the player experience at the priority date.

Step 2: Manner of Manufacture

Once properly characterised, the question is whether that subject matter is:

(i) an abstract idea manipulated on a computer; or

(ii) an abstract idea implemented on a computer to produce an artificial state of affairs and a useful result.

The Full Court held the invention fell into category (ii). The EGM as claimed — with its display, credit input mechanism, random number generator, game controller and the interdependent software producing configurable symbols and feature games — produced an artificial state of affairs and a useful result. That result need not be an improvement in computer technology. The ingenuity may lie only in the idea, but when the idea is applied to produce an artificial state of affairs and a useful result, there is a manner of manufacture.

The Court expressly endorsed the analogy deployed in the allowing reasons: if the EGM had been implemented with cogs, physical reels and motors, it would unquestionably have been a manner of manufacture. In the 21st century, a law designed to encourage invention should not reach a different conclusion merely because software and hardware replace mechanical components.

The Residual Claims

The parties had agreed before the primary judge that if claim 1 of the 967 patent was a manner of manufacture, so were all remaining claims across all four patents. The Full Court applied this agreement. In any event, it separately characterised each residual claim and found each to be an EGM incorporating interdependent physical and software components that produce an artificial state of affairs and a useful result. All were manners of manufacture.

What Was the Old Law?

Prior to this decision, the law on computer-implemented inventions had been confused and unstable. Two competing strands of authority had emerged, and the 2021 Full Court exposed the tension between them without resolving it.

The foundational principle was well settled: a mere scheme or business method, even if implemented in a computer, was not a manner of manufacture unless there was something more. The computer had to be "integral to the invention, rather than a mere tool". The leading cases — Grant, Research Affiliates, RPL Central, Encompass and Rokt — all applied this principle to deny patent protection where a scheme was simply "plugged into" a generic computer using its well-known functions.

Where the law was uncertain was in identifying what that "something more" required. Two distinct approaches had developed:

The first strand — advance in computer technology. The 2021 Full Court majority (Middleton and Perram JJ) crystallised the law into an explicit two-step test: a computer-implemented invention was only patentable if it could broadly be described as an advance in computer technology. An invention that advanced gaming technology — or any other field — but not computer technology itself, was not patentable subject matter. This was a narrow test that effectively confined software patent eligibility to innovations in computer science itself.

The second strand — technical solution to a technical problem. A parallel line of authority, reflected in the minority decision of Nicholas J in the 2021 Full Court and drawn from cases such as RPL Central and Konami, asked instead whether the invention solved a technical problem — whether inside or outside the computer — or made a technical contribution in the field of the invention. On this approach, a gaming machine that solved a technical problem in the field of gaming technology could qualify as a manner of manufacture even if it involved no advance in computer technology as such. This was a broader test, but it still demanded an identifiable technical problem and a solution directed to that problem.

Both strands shared a common weakness in the context of this case: both permitted the "inventive concept" to be isolated from the physical integers of the claim before being assessed. Where an invention's purpose was characterised as improving player enjoyment or increasing operator revenue rather than solving a technical problem, neither strand offered a reliable path to patentability.

What Is the New Law?

The 2025 Full Court decision, now settled law following refusal of leave on 5 February 2026, establishes the following principles:

  • Characterisation is paramount. Whether an invention is a manner of manufacture depends first and foremost on proper characterisation of the claimed invention — undertaken by reference to all integers of the claim in light of the specification as a whole and common general knowledge, as a matter of substance, not form. The risk of artificially characterising a claim is particularly pronounced where it contains interdependent integers. No element should be stripped away prematurely.
  • The "advance in computer technology" test is rejected. The two-step approach requiring an advance in computer technology, proposed by Middleton and Perram JJ in the 2021 Full Court decision, is no longer good law. It was criticised by all six High Court Justices in 2022 and has now been expressly departed from by the present Full Court.
  • The correct test for computer-implemented inventions. Properly characterised, the relevant question is whether the subject matter is: (i) an abstract idea manipulated on a computer — not patentable; or (ii) an abstract idea implemented on a computer to produce an artificial state of affairs and a useful result — patentable.
  • The artificial state of affairs need not be an improvement in computer technology. It is enough that the artificial state of affairs and useful result are created by the way in which the method is carried out in the computer. The field of advancement — whether gaming, logistics, communications or any other — is irrelevant to the inquiry.
  • The ingenuity need not lie in the implementation. The ingenuity may reside only in the underlying idea. Where that idea, when applied through a computer, produces an artificial state of affairs and a useful result, there is a manner of manufacture — even if the computer implementation uses generic, conventional technology.
  • Physical integers of the claim must not be discounted. A characterisation that strips out physical components — display, credit mechanism, hardware — in order to expose a bare "abstract idea" is impermissible. Combination claims incorporating physical and software elements must be assessed as a whole.
  • The threshold for "an alleged invention" is low. This threshold is assessed by reference to the face of the claim in the context of the specification and imposes a less stringent requirement than novelty and inventive step.

Why the Change Matters

The significance of this shift is substantial.

Under the old law, patent eligibility for software and computer-implemented inventions in Australia had become effectively contingent on proving an advance in computer science. Novel game mechanics, medical diagnostic methods, logistical systems, financial tools and engineering applications — however genuinely inventive — risked being characterised as "mere schemes" if they relied on conventional computers for implementation. The word "computerisation" had become almost a term of art meaning something close to "innovation in computer hardware or architecture".

The new law restores focus to where it belongs: the invention as a whole, properly characterised. If a genuine idea — even a simple one — is implemented through a computer in a way that produces an artificial state of affairs and a useful result in the world, it is capable of being a manner of manufacture. The question is not whether the chips are faster or the memory architecture novel, but whether something has been created that did not exist before, and that has economic utility.

The decisions in Grant, Research Affiliates, RPL Central, Encompass and Rokt are expressly preserved and their results confirmed as correct — but they are now understood on the basis that in each of those cases, the computer was being used merely to manipulate an abstract idea, not to implement it so as to produce an artificial state of affairs and a useful result. The distinction is a meaningful one. A scheme for protecting assets from unsecured creditors (Grant) does not become a manner of manufacture when entered into a computer because the computer merely performs the calculations — no new state of affairs is created beyond the execution of the scheme itself. By contrast, an EGM that produces a new and engaging form of interactive gameplay, with configurable symbols displaying real-time prize values and a feature game mechanic previously unknown in the industry, creates something that did not exist before and produces it through the interdependent operation of hardware and software.

Practical Implications for Patent Applicants and Holders

Broader eligibility for software and computer-implemented inventions. Applicants no longer need to demonstrate that their invention represents an advance in computer science or architecture. A novel application of computing to produce a useful real-world result — in gaming, healthcare, logistics, finance, or any other domain — will satisfy the manner of manufacture requirement if the claim is properly constructed to capture the invention as a whole.

Claim drafting remains critical. The emphasis on characterisation means that how a claim is drafted still matters enormously. Claims that are too abstract — stripping out physical or implementation details — risk being characterised as mere ideas manipulated on a computer. Claims that capture the interdependence of hardware, software and output will fare better.

Existing patents should be reviewed. Patent holders in technology-adjacent industries whose patents were previously considered at risk under the "advance in computer technology" standard should reassess their position. Patents covering novel applications of computing that produce genuine real-world effects now have a stronger foundation.

The Commissioner's examination practice will need to align. IP Australia's examination approach to computer-implemented inventions has historically reflected the "advance in computer technology" standard. Examination practice should now align with the correct test as settled by this decision.

Conclusion

Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2025] FCAFC 131 is the most important Australian patent decision on software and computer-implemented inventions in many years. It closes a decade of uncertainty, resolves a genuinely difficult precedent situation arising from a 3-3 divided High Court, and articulates a clear and principled test for patent eligibility.

The old law — which demanded an advance in computer technology — was too narrow, anomalous in its results, and inconsistent with the purpose of a patent system designed to encourage invention and innovation. The new law — which asks whether an abstract idea has been implemented on a computer to produce an artificial state of affairs and a useful result — is faithful to the foundational principles of NRDC, consistent with the weight of High Court authority, and workable in practice.

With the High Court's refusal of leave to appeal on 5 February 2026, the law is settled. Australia now has a clear, stable framework for assessing the patentability of computer-implemented inventions — one that rewards genuine innovation wherever it occurs, not merely innovation in computer science itself.

 

This article is intended as a general summary of the law for informational purposes. It does not constitute legal advice. Readers should seek independent legal advice in relation to specific patent matters.

AI Tools and patents - Home - IP Guardian Pty Ltd

AI Tools and Patents: Key Risks and Legal Safeguards for Australian Inventors and SMEs

Artificial intelligence tools are now part of the world at work. AI is being used by startups, researchers and SMEs to move faster and do more with fewer resources, replacing hours and hours of mind-numbing repetitive labour. In the patent space, however, this convenience comes with serious legal risks that are not always obvious at the time of use.

For Australian inventors and businesses, understanding how AI interacts with patent law is now essential. Used carefully, AI can support innovation. Used carelessly, it can destroy confidentiality, weaken patent rights, or even make an invention unpatentable altogether.

Recent guidance from The Chartered Institute of Patent Attorneys in the UK highlights just how high the stakes are when AI tools intersect with patents. Let’s take a deep dive into the risks and safeguards for inventors and SMEs.

To speak to a patent lawyer about the risks of AI, get in touch with IP Guardian. We are on the ground floor of using AI in all industries, and can help you institutionalise safe practices for using artificial intelligence.

AI tools are accelerating innovation, but also confusion

AI tools can be helpful in early-stage research, problem solving and administrative work. Some patent professionals use carefully controlled AI systems to assist with background searches or internal workflows. Patent offices themselves are also exploring AI to improve search efficiency.

The problem arises when generative AI tools are used without safeguards. Many widely available language models are not designed for confidential or legally sensitive work. Information entered into these tools may be stored, reused, or treated as publicly disclosed.

For patent law, confidentiality before filing is critical. Once an invention is disclosed to the public, even unintentionally, patent rights may be lost in Australia and in many overseas jurisdictions.This means if you disclose your invention to AI tools, it could be considered a public disclosure.

image 1 - AI Tools and Patents: Key Risks and Legal Safeguards for Australian Inventors and SMEs - IP Guardian Pty Ltd

 

Misinformation is on the rise

AI tools are designed to produce convincing language, not guarantee accuracy. This creates a real risk of misinformation in patent work.

Generative AI can produce technical descriptions that sound plausible but are incorrect, incomplete, or based on false assumptions. It may invent features, misstate how an invention works, or misunderstand prior art. 

Legal concepts such as inventorship or patent requirements may also be presented inaccurately.

Confidentiality breaches

AI tools can create serious confidentiality risks when used in connection with inventions.

Terms and conditions of AI platforms may change without notice. Some tools reserve the right to utilise user inputs as training data, which can result in permanent exposure of confidential information.

Once confidential invention details are shared, trade secrets may effectively enter the public domain. In a patent context, this can destroy novelty and make the invention unprotectable.

For inventors and SMEs, this risk arises even where disclosure is unintended or misunderstood.

Hidden inaccuracies

AI tools can generate content that appears credible but contains critical errors.

These systems are known to produce hallucinations and plausible sounding technical or legal statements that are not correct. In patent documents, these inaccuracies may go unnoticed for years.

Problems often only surface during patent enforcement, opposition, or litigation, when it is too late to fix them.

Reliance on AI generated content without expert verification can result in weak or invalid patent rights.

Patentability failures

AI tools may generate patent applications that look complete but fail to meet legal requirements.

In particular, AI generated drafts may not properly describe how the invention works or how it can be carried out. This can result in patents that are invalid or impossible to enforce.

A patent that does not adequately disclose the invention provides little or no real protection, regardless of how polished the application appears.

Human inventorship requirements

Patents require named human inventors.

Over reliance on AI tools can make it difficult to identify human contributions to an invention. This creates risk around inventorship, ownership, and future enforcement.

If inventorship is incorrect or unclear, a patent may be vulnerable to challenge or revocation, even years after it is granted.

Clear identification of human inventive input is essential under Australian patent law.

Evolving legal landscaping

The legal framework around AI and intellectual property is still developing.

New regulations or court decisions may apply to patent applications filed today, creating unforeseen complications in the future.

In addition, the terms and conditions of many AI tools expressly prevent their use for legal advice or regulated professional services, which may create compliance issues for businesses relying on AI in patent work.

What is acceptable practice today may not remain so tomorrow.

Data training risks

In many cases, information entered into AI tools may be used to train future models.

This means confidential technical details could contribute to future AI outputs, potentially benefiting competitors.

There is also a risk that models trained on copyrighted material may generate corresponding output, creating additional legal exposure for users.

For inventors and SMEs, this raises serious concerns about loss of competitive advantage and downstream IP liability.

The role of IP Guardian in protecting AI-related inventions

At IP Guardian, we work closely with Australian inventors and SMEs navigating the challenges of AI and intellectual property. We understand how AI tools are being used in real-world innovation and where the legal fault lines lie.

Our approach focuses on:

  • Identifying and managing AI-related patent risks early
  • Ensuring confidentiality is preserved before filing
  • Clearly establishing human inventorship and contribution
  • Drafting patent specifications that are robust, accurate, and enforceable

We also stay across international developments, recognising that many Australian innovators operate globally and need protection that stands up beyond Australia.

image - AI Tools and Patents: Key Risks and Legal Safeguards for Australian Inventors and SMEs - IP Guardian Pty Ltd

 

Looking to the future

AI is not going away, and neither are the legal questions it raises. Regulators, courts and patent offices around the world are continuing to refine their approach to AI and intellectual property.

For now, the safest path for Australian inventors and SMEs is a cautious one. Treat AI as a tool, not an inventor. Protect confidentiality rigorously. Seek professional advice before relying on AI-generated content in patent work.

With the right safeguards in place, AI can support innovation rather than undermine it.

If you are using AI tools as part of your invention or product development process and want to understand how to protect your intellectual property, speaking with an experienced patent attorney early can make all the difference. IP Guardian is here to help you do that with clarity and confidence.

FAQ

What is the difference between a patent, trade mark and design?
Patents protect how an invention works, including new products, processes, or technologies. Trade marks protect brand identifiers such as names, logos, slogans, and sometimes sounds or colours. Design rights protect the visual appearance of a product, including its shape, configuration, pattern, or ornamentation. Each form of protection serves a different purpose, and the right choice depends on what you are creating and how it will be used commercially. In some cases you may be able to apply for a patent, a trade mark and a design.
In most cases, yes. While limited rights may exist without registration, such as common law trade mark rights, these are harder to enforce and offer less certainty. Registering your intellectual property provides clearer ownership, stronger legal protection, and makes it easier to take action if someone infringes your rights.
The cost of protecting intellectual property depends on the type of IP, the complexity of the matter, and whether protection is required in Australia only or overseas. At IP Guardian, we offer transparent, fixed fee pricing wherever possible so you understand the costs upfront and can make informed decisions.
Yes. We regularly assist clients with protecting patents, trade marks, and designs outside Australia. This includes advising on international filing strategies, coordinating overseas applications, and working with trusted international associates to ensure consistent and effective protection.
Trade marks are registered for 10 years initially and can last indefinitely, provided they are renewed and continue to be used. Patents generally last up to 20 years from filing, subject to renewal fees. Design registrations can last up to 10 years in Australia. We can advise on renewal strategies to help maintain protection for as long as it remains commercially valuable.

Speak With an IP Attorney

Have questions about patents, trade marks or design protection? Book a free, confidential discovery call with one of our registered IP attorneys. We will help you understand your options and the best way to protect your idea or brand.

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