Xero caught in patent dispute over automation software

Online accounting software vendor Xero has been caught in a patent dispute over a network-based automated prediction modeling software, with a Sydney-based fintech firm claiming to be a co-inventor.

Network-based automated prediction modeling helps customers predict business-critical information like sales receipts by making forecasts based on historical data.

The patent was first filed in August 2017, with Xero listed as the applicant and Alistair Grigg and Martin Kemka as inventors. The same patent was also filed in the US in February 2018.

The Sydney-based firm, Factor Financial Analytics also filed an application for the patent, asserting that the company should also be listed as an applicant alongside Xero and that company directors Aaron Wallace and Paul Reynolds be also credited as inventors.

On 13 January, Deputy Commissioner of Patents S.D. Barker ruled that Factor should file a one-page statement summarising their case, and that Xero also file a response within one week.

“[Factor Financial] are to set out who they contend are the inventors, who they contend are the applicants, when the inventive concept was conceived and how the applicants obtain entitlement from the inventors,” the ruling read.

Court documents reveal that “a large amount” of evidence was filed by both parties, including some filed by Factor Financial outside the formal evidentiary stages. The court has ruled it isn’t material “that can be relied on” in the dispute and has been labelled "supplemental evidence".

Xero moved that the supplementary evidence be inadmissible to the proceedings, which Deputy Commissioner Barker agreed.

The supplementary evidence relates to the Professional Services Agreement (PSA) between Xero and Factor as they were developing the product in question. The PSA was submitted in the form of a password-protected document, which IP Australia was unable to open in time.

Factor said the PSA regulates ownership of intellectual property created after 1 September 2016, and also recognises that ownership of pre-existing intellectual property is not altered.

Factor claimed the concept was conceived after the PSA came into operation and that Xero could obtain intellectual property rights by operation of the PSA. Xero denied the claim and said the concept was conceived before the PSA.