High Court favours software patents, but can applicants ‘cash-in' at IP Australia?

On 5 February 2026, the High Court unanimously refused an application for special leave to appeal a decision from the Full Federal Court, ending the long-running dispute between Aristocrat and the Commissioner of Patents concerning the question of whether computer implemented inventions are patentable subject matter (Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd [2026] HCADisp 15 S153/2025). 

All seven judges of the High Court have taken the view that the decision of the Full Court in Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents [2025] FCAFC 13 (Aristocrat II), finding that Aristocrat's patent claims were directed to patentable subject matter, is clear and does not merit reconsideration. 

While the Full Court's decision, which the High Court has decided not to consider or disturb, should make it easier to obtain patents for software inventions in Australia, applicants for Australian patents may need to persuade IP Australia of the significance of the decision and its implications when prosecuting patent applications. 

The 2025 Full Court (Aristocrat II)

On 16 September 2025, the Full Court rejected the reasoning of the majority in the 2021 Full Court (Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd  [2021] FCAFC 202) (Aristocrat I)). The reasoning of the majority in Aristocrat I involved a two-step test which required that, for computer implemented inventions to constitute patentable subject matter, there needed to be an advance in computer technology. On that basis, the 2021 Full Court found the patent claims in question were not directed to patentable subject matter. 

As reported in our earlier articles, following the 2021 Full Court decision Aristocrat secured special leave to appeal to the High Court. Unusually, the High Court bench comprised six judges (rather than five or seven) and was evenly split – three judges finding in favour of patentability and three judges finding against (Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents  [2022] HCA 29).¹ The matter was then remitted to Federal Court to resolve residual patent claims which led to the latest Full Court decision (Aristocrat II).

The 2025 Full Court (Aristocrat II) expressly endorsed the reasoning of Gordon, Edelman and Steward JJ in the 2022 High Court decision in favour of patentability (2022 High Court at [122]). In doing so, the Full Court emphasised that: 

• an abstract idea manipulated on a computer is not patentable subject matter;
   
• an abstract idea which is implemented on a computer to produce an artificial state of affairs and useful result is patentable subject matter; and
   
• the implementation of an idea in a computer, using conventional computer technology for its well-known and well-understood functions, should not be excluded from patentable subject matter.

Commissioner of Patent's application for special leave 

On 13 October 2025 the Commissioner of Patents sought special leave to appeal Aristocrat II  to the High Court. The Commissioner's special leave application sought special leave on the basis that Aristocrat II  represents a substantial departure from the earlier cases. In seeking special leave, the Commissioner acknowledged that: 

• the reasoning in Aristocrat II  is inconsistent with the earlier Full Court decisions;
   
• Aristocrat II  disapproves of the finding made in earlier decisions that there is a requirement for the invention to involve an advance in computer technology; and
   
• Aristocrat II  identified "artificial state of affairs and a useful result" as the appropriate test.

In its very brief reasons for rejecting of special leave (which are not binding), the High Court has taken the view that leave to appeal is not warranted because the Full Court in Aristocrat II "applied established principles concerning the assessment of manner of manufacture and reached a unanimous and clear conclusion as to characterisation" (Commissioner of Patents v Aristocrat Technologies Australia Pty Ltd [2026] HCADisp 15 S153/2025 at [2]). 

As special leave decisions by the High Court do not create binding precedent,² a new Full Court could theoretically depart from Aristocrat II  if it found it to be clearly incorrect or there was a compelling reason for so doing.

IP Australia's practice 

Following the Full Court's judgment (Aristocrat II, now described as clear by the High Court and not meriting special leave), Australian patent applicants (and their advisors) anticipated that the decision would make it easier to secure patents for software inventions. The Full Court had expressly rejected the requirement of an "advance in computer technology" and returned to the framing of an "artificial state of affairs" for patentable subject matter (developed outside the area of computer implemented inventions) in the High Court decision of National Research Development Corporation v Commissioner of Patents (1959) 102 CLR 252 – which was established to be a low threshold. 

However, on 14 October 2025 IP Australia updated the Patent Manual of Practice and Procedurewhich sets out the approach to be taken to the assessment of patentable subject matter in light of Aristocrat II. In doing so, the Manual: 

• reiterates that Aristocrat II  "is in keeping with prior authorities on manner of manufacture" and maintains that the application of "existing case law" is appropriate;
   
• continues to emphasise that a previous Full Court (Encompass Corporation Pty Ltd v InfoTrack Pty Ltd (2019) FCAFC 161) made clear that "the mere presence of a physical effect in an invention directed towards a computer implemented scheme was insufficient to confer patentability"; and
   
• maintains a list of "relevant indicia" derived from earlier case law updated to include "whether the invention produced an artificial state of affairs" as one factor. The list of factors continues to include "whether the invention results in improvement in the functioning of a computer", "whether the method requires generic computer implementation", "whether there is ingenuity in the way in which a computer is utilised" and "whether the invention involves steps that are foreign to the normal use of computers". 

The Manual proceeds on the basis that the reasoning in Aristocrat II  is consistent with prior case law. However, Aristocrat II rejected the reasoning in earlier decisions but identified (at [132]) that the results  in the earlier cases were nevertheless correct. This presents an obstacle to patent applicants seeking protection for computer implemented inventions.

There is, however, a prospect that IP Australia will introduce further amendments to the Manual. Following the rejection of special leave, IP Australia has called for feedback on the form of the Manual stating, "We are working closely with a range of stakeholders and will ensure that our practice, and the Patent Manual of Practice and Procedure, reflects the Full Federal Court's decision in this matter."  

Takeaways for patent applicants 

While the High Court has, in rejecting special leave, confirmed that the law in Aristocrat II  is clear and correct, patent applicants may well continue to face challenges from IP Australia when prosecuting patent applications. The rejection of special leave by the High Court reinforces the need for IP Australia to reconsider its practice and make clear in the Manual that it will apply the test embraced in Aristocrat II  (i.e. "artificial state of affairs and a useful result").

If IP Australia maintains its current interpretation of Aristocrat II  as set out in the Manual (or adopts an interpretation that does not fully reflect Aristocrat II), patent applicants may well need to challenge that interpretation including, potentially, before the Federal Court. 
 

Footnotes

¹ With the effect that the decision under appeal, Aristocrat I was upheld pursuant to s 23(2)(a) of the Judiciary Act 1903 (Cth), despite all members of the High Court disagreeing with the reasoning process of the majority in Aristocrat I.

² Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104, [54], [112], [119]

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