Aerotel Ltd v Telco Holdings Ltd

Aerotel v Telco and Macrossan's application is a judgment by the Court of Appeal of England and Wales. The reasoning in the judgment forms the basis for the current practice of the United Kingdom Patent Office when assessing whether patent applications are for patentable subject matter.

Summary of the judgment

The judgment was passed down on 27 October 2006 and relates to a patent granted to Aerotel and a patent application filed by Neal Macrossan but refused by the UK Patent Office and the High Court. Aerotel’s patent is GB 2171877 , and has a January 1985 priority date. Macrossan's GB application 2388937  has a December 2000 priority date.

The judgment approves a new four-step test to be used when assessing whether or not an application actually describes an invention. The four-step test is as follows:

• Properly construe the claim;
• Identify the actual contribution;
• Ask whether the contribution falls solely within excluded subject matter; and
• Check whether the contribution is technical in nature.

The second step, that of identifying the contribution, was highlighted as being the most problematical since it may be difficult to determine what the contribution actually is.

Aerotel v Telco

Aerotel's patent related to a "special" telephone exchange. A caller has an account with the owner of that exchange and deposits a credit with him. The caller has a code. To make a call he calls the number of the special exchange and inputs his code and then the callee's number. If the code is verified and there is enough credit he is put through: the call will be terminated if his credit runs out.

Aerotel's patent was found to relate to a patentable invention in principle because the system as a whole was new in itself, not merely because it is to be used for the business of selling phone calls. While this system could be implemented using conventional computers, the key to it was a new physical combination of hardware. The judge felt that this was clearly more than just a method of doing business as such. The method claims were construed as relating to a use of the new system and were also deemed to relate to a patentable invention in principle. The additional questions of whether the claimed invention was novel and involved an inventive step were not considered directly by the judge, although the implication is that the invention was at least novel.

Macrossan's application

Macrossan's patent application, GB 2388937 , was for a new automated method of acquiring the documents necessary to incorporate a company. It involved a user sitting at a computer and communicating with a remote server, answering questions. By posing questions to the user in a number of stages, enough information was gleaned from the user's answers to produce the required documents. Questions posed in the second and subsequent stages were determined from previous answers provided and the user's answers were stored in a database structure. This process was repeated until the user had provided enough information to allow the documents legally required to create the corporate entity to be generated. A number of document templates were also stored and the data processor was configured to merge at least one of these templates with the user's answers to generate the required legal documents. The documents could then be sent to the user in an electronic form for the user to print out and submit, mailed to the user, or submitted to the appropriate registration authority on behalf of the user.

The UK patent office did find that Macrossan's process was both novel and involved an inventive step, but nonetheless rejected the application for a patent since the claimed subject matter was not patentable subject matter under UK patent law.. The UK patent examiner found that the inventive aspects of the claim were directed only to either a method of doing business or a computer program. Macrossan appealed but the Court affirmed the holding of the examiner.

Reasoning

In both cases, the judgment does not explain in detail how the contributions provided by the claimed inventions were identified and provides little guidance for how the second step of the test could be carried out in other cases. Instead, the reader is directed to the lengthy summary of past case law that is included as an Appendix to the judgment to understand the reasoning of the judges fully. Based on this summary of the case law, the judgment rejects the notion set out in the earlier judgment concerning Fujitsu's application that the UK Courts should be guided by the case law of the EPO since the judges were of the opinion that EPO case law was too unsettled. The judgment proposes several questions to be put to the Enlarged Board of Appeal in an effort to resolve the perceived conflicts between the different decisions of the Boards of Appeal.

The judgment briefly mentions the TRIPS agreement and the fact that its lack of a list of exclusions from patentability and its requirement that patents should be available in "all fields of technology" puts political pressure on Europe to remove or reduce the categories of non-inventions. However, it has already been well-established in previous case law that TRIPS is not self-enacting and therefore the judgment rightly ignored any impact that agreement might have on current UK law and practice.

Reaction of the UK Patent Office

Main article: Software patents under United Kingdom patent law

Following this judgment, the United Kingdom Patent Office issued a Practice Note on 2 November 2006 announcing an immediate change in the way patent examiners will assess whether inventions relate to patentable subject matter.

Parallel procedure before the European Patent Office

Main article: Software patents under the European Patent Convention

A European patent application, namely EP application 1346304 , in the patent family of patent application GB 2388937 filed by Macrossan, is currently pending at the European Patent Office (EPO).

On 7 November 2006, the Search Division of the EPO in charge of establishing a search report for the European patent application issued a declaration under Rule 45 EPC that a search could not be established.. The declaration indicates that the EPO search examiner is of the opinion that Macrossan's application contains nothing of technical merit, but only commonplace technical features (i.e. a computer) for implementing a business method. As a consequence, no meaningful search was considered to be possible.

Current EPO practice when examining computer-implemented inventions is that any technical feature in a claim, such as a computer, results in the finding that there is "an invention", but only those features which provide a technical solution to a technical problem (as opposed to a business problem) can contribute to an inventive step. In contrast to the UK Patent Office and courts, therefore, the EPO is unlikely to refuse the application as relating to a computer program or a method of doing business as such (Article 52(2) and (3) EPC), but will probably use reasoning relating to the question of whether the invention involves an inventive step (Article 56 EPC).

Appeal to House of Lords

Citing as reasons this clear divergence in reasoning between the UK courts and the European Patent Office, Neal Macrossan sought leave to appeal the refusal of his patent application to the House of Lords. Within the patent profession it was hoped that a ruling by the House of Lords would clarify the extent to which patent protection is available to computer-implemented inventions. The House of Lords had already tackled fundamental questions such as novelty, inventive step, claim construction and sufficiency during 2004 and 2005.

The House of Lords refused leave to hear the appeal, citing the reason that the case "does not raise an arguable point of law of general public importance".

Some patent attorneys have expressed surprise at this decision since, while the merits of Macrossan's case might have been arguable, it was felt that there are issues with the law that require resolving. Consequently, there is disappointment at this missed opportunity to better establish where the boundary lies between patentable and non-patentable software. The Foundation for a Free Information Infrastructure have expressed the view that the decision of the House of Lords confirms that the correctness of the Court of Appeal.

See also

• Software patent
• Business method patent
• Software patents under United Kingdom patent law

External links

• Collection of materials relating to the Macrossan case collated by Neal Macrossan
• TheLawyer.com commentary
• Withers and Rogers commentary
• FFII analysis