Aerotel v Telco and Macrossan's Application
Encyclopedia
Aerotel v Telco and Macrossan's Application is a judgment by the Court of Appeal of England and Wales
Court of Appeal of England and Wales
The Court of Appeal of England and Wales is the second most senior court in the English legal system, with only the Supreme Court of the United Kingdom above it...

. The judgment was passed down on 27 October 2006 and relates to two different appeals from decisions of the High Court
High Court of Justice
The High Court of Justice is, together with the Court of Appeal and the Crown Court, one of the Senior Courts of England and Wales...

. The first case involved granted to Aerotel Ltd and their infringement
Patent infringement
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or...

 action against Telco Holdings Ltd and others. The second case concerned filed by Neal Macrossan but refused by the UK Patent Office (now operating as the UK Intellectual Property Office).

The reasoning in the judgment forms the basis for the current practice of the UK Intellectual Property Office, when assessing whether patent application
Patent application
A patent application is a request pending at a patent office for the grant of a patent for the invention described and claimed by that application. An application consists of a description of the invention , together with official forms and correspondence relating to the application...

s are for patentable subject matter
Patentable subject matter
Patentable, statutory or patent-eligible subject matter is subject matter which is susceptible of patent protection. The laws or patent practices of many countries suggest that certain subject matter is or is not something for which a patent should be granted.Together with novelty, inventive step...

.

The approach applied in the judgment has been criticized by a Board of Appeal of the European Patent Office
Appeal procedure before the European Patent Office
Decisions of the first instances of the European Patent Office can be appealed, i.e. challenged, before the Boards of Appeal of the EPO, in a judicial procedure , as opposed to an administrative procedure. These boards act as the final instances in the granting and opposition procedures before the...

 (EPO) as being "irreconcilable with the European Patent Convention
European Patent Convention
The Convention on the Grant of European Patents of 5 October 1973, commonly known as the European Patent Convention , is a multilateral treaty instituting the European Patent Organisation and providing an autonomous legal system according to which European patents are granted...

".

Application procedure

Zvi Kamil, an Israel
Israel
The State of Israel is a parliamentary republic located in the Middle East, along the eastern shore of the Mediterranean Sea...

i inventor, filed his UK patent application number 8600691 for a "telephone system" on 13 January 1986, claiming priority
Priority right
In patent, industrial design rights and trademark laws, a priority right or right of priority is a time-limited right, triggered by the first filing of an application for a patent, an industrial design or a trademark respectively...

 from two previous Israeli patent applications filed on 13 January 1985 and 10 November 1985. The application related to a "special" telephone exchange
Telephone exchange
In the field of telecommunications, a telephone exchange or telephone switch is a system of electronic components that connects telephone calls...

. A caller
Calling party
The calling party is a person who initiates a telephone call over the public switched telephone network, usually by dialing a telephone number....

 has an account with the owner of that exchange and deposits a credit
Credit (finance)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...

 with him. The caller has a code
Code
A code is a rule for converting a piece of information into another form or representation , not necessarily of the same type....

. To make a call he calls the number of the special exchange and inputs his code and then the callee
Called party
The called party is a person who answers a telephone call. The person who initiates a telephone call is the calling party....

'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.

The application was published as on 3 September 1986 and the patent was granted with effect from 21 December 1988. Kamil assigned his patent to Aerotel Limited on 12 April 1999. The patent expired on 12 January 2006.

High Court

Aerotel sued Telco Holdings Limited for patent infringement in February 2005 and Telco counterclaimed for revocation of the patent. The action started in the Patents County Court, but HHJ Fysh QC transferred it to the High Court in November 2005. In February 2006, Telco applied for summary judgment on its counterclaim, basing the application on the exclusion to patentability. This application succeeded before Lewison J who ordered revocation of the patent on 3 May 2006.
The patent was later restored under appeal, but then re-revoked at the subsequent hearing by HHJ Fysh QC on 23 May 2008.

Application procedure

Macrossan's has a December 2000 priority date. It was for a new automated method of acquiring the document
Document
The term document has multiple meanings in ordinary language and in scholarship. WordNet 3.1. lists four meanings :* document, written document, papers...

s necessary to incorporate
Incorporation (business)
Incorporation is the forming of a new corporation . The corporation may be a business, a non-profit organisation, sports club, or a government of a new city or town...

 a company
Company
A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be...

. It involved a user sitting at a computer and communicating with a remote server
Server (computing)
In the context of client-server architecture, a server is a computer program running to serve the requests of other programs, the "clients". Thus, the "server" performs some computational task on behalf of "clients"...

, 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
Database
A database is an organized collection of data for one or more purposes, usually in digital form. The data are typically organized to model relevant aspects of reality , in a way that supports processes requiring this information...

 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
Electronic document
An electronic document is any electronic media content that are intended to be used in either an electronic form or as printed output....

 for the user to print out and submit, mailed to the user, or submitted to the appropriate registration authority
Registration authority
A registration authority or maintenance agency is a body given the responsibility of maintaining lists of codes under international standards and issuing new codes to those wishing to register them...

 on behalf of the user.

The UK patent office did find that Macrossan's process was both novel and involved an inventive step
Inventive step and non-obviousness
The inventive step and non-obviousness reflect a same general patentability requirement present in most patent laws, according to which an invention should be sufficiently inventive — i.e., non-obvious — in order to be patented....

, but nonetheless rejected the application for a patent since the claimed subject matter was not patentable subject matter
Patentable subject matter
Patentable, statutory or patent-eligible subject matter is subject matter which is susceptible of patent protection. The laws or patent practices of many countries suggest that certain subject matter is or is not something for which a patent should be granted.Together with novelty, inventive step...

 under UK patent law
Software patents under United Kingdom patent law
There are four over-riding requirements for a patent to be granted under United Kingdom patent law. Firstly, there must have been an invention. That invention must be novel, inventive and susceptible of industrial application...

.
The UK patent examiner found that the claims related to a method for doing business
Business method patent
Business method patents are a class of patents which disclose and claim new methods of doing business. This includes new types of e-commerce, insurance, banking, tax compliance etc. Business method patents are a relatively new species of patent and there have been several reviews investigating the...

 and a computer program
Computer program
A computer program is a sequence of instructions written to perform a specified task with a computer. A computer requires programs to function, typically executing the program's instructions in a central processor. The program has an executable form that the computer can use directly to execute...

 as such.

Macrossan sought a review of the patent examiner's finding, by way of a hearing before a UKPO hearing officer - she held that the application related to a computer program as such, a method for doing business as such, and a method for performing a mental act as such, and thus was excluded from patentability on each of those three grounds.

High Court

Macrossan then appealed to the High Court. The High Court concurred in finding that the application related to a computer program as such, and to a method for performing a mental act as such and was unpatentable for each of those two reasons. However the High Court specifically overruled the UKPO hearing officer on one of the three grounds of exclusion, by holding that the application did not relate to a method of doing business as such.

Judgment

The judgment approved 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 problematic since it may be difficult to determine what the contribution actually is.

Aerotel v Telco

Aerotel's patent was found to relate to a patentable
Patentability
Within the context of a national or multilateral body of law, an invention is patentable if it meets the relevant legal conditions to be granted a patent...

 invention
Invention
An invention is a novel composition, device, or process. An invention may be derived from a pre-existing model or idea, or it could be independently conceived, in which case it may be a radical breakthrough. In addition, there is cultural invention, which is an innovative set of useful social...

 in principle because the system as a whole was new
Novelty (patent)
Novelty is a patentability requirement. An invention is not patentable if the claimed subject matter was disclosed before the date of filing, or before the date of priority if a priority is claimed, of the patent application....

 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

In relation to Macrossan's patent application, it was held that the subject matter was unpatentable on the grounds of the computer program and business method exclusions. However in relation to the mental act exclusion, the Court of Appeal made no specific finding.

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
Fujitsu's Application
Fujitsu's Application is a 6 March 1997 judgment by the Court of Appeal of England and Wales. The judges' decision was to confirm the refusal of a patent by the United Kingdom Patent Office and by J Laddie on Appeal before the High Court...

 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 briefly mentions the TRIPS agreement
Agreement on Trade-Related Aspects of Intellectual Property Rights
The Agreement on Trade Related Aspects of Intellectual Property Rights is an international agreement administered by the World Trade Organization that sets down minimum standards for many forms of intellectual property regulation as applied to nationals of other WTO Members...

 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, Jacob
Robin Jacob (judge)
Robert Raphael Hayim "Robin" Jacob , now styled The Rt Hon. Professor Sir Robin Jacob, was as Lord Justice Jacob a judge in the Court of Appeal of England and Wales.His primary area of expertise is intellectual property rights...

 had previously ruled that TRIPS does not have direct effect on UK law and thus did not affect the case in question. Instead, cases relating to the exclusions from patentability must be decided by simply trying to make sense of the language of the EPC without bias for or against exclusion.

Appeal to House of Lords

Citing as reasons a 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
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....

. Within the patent profession
Patent attorney
A patent attorney is an attorney who has the specialized qualifications necessary for representing clients in obtaining patents and acting in all matters and procedures relating to patent law and practice, such as filing an opposition...

 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
Novelty (patent)
Novelty is a patentability requirement. An invention is not patentable if the claimed subject matter was disclosed before the date of filing, or before the date of priority if a priority is claimed, of the patent application....

, inventive step, claim construction
Claim (patent)
Patent claims are the part of a patent or patent application that defines the scope of protection granted by the patent. The claims define, in technical terms, the extent of the protection conferred by a patent, or the protection sought in a patent application...

 and sufficiency
Sufficiency of disclosure
Most patent law systems require that a patent application disclose a claimed invention in sufficient detail for the notional person skilled in the art to carry out that claimed invention. This requirement is often known as sufficiency of disclosure or enablement, depending on the...

 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
Foundation for a Free Information Infrastructure
The Foundation for a Free Information Infrastructure or FFII is a non-profit organisation based in Munich, Germany, dedicated to establishing a free market in information technology, by the removal of barriers to competition...

 have expressed the view that the decision of the House of Lords confirms that the correctness of the Court of Appeal.

Parallel procedure before the European Patent Office

A European patent application, namely , in the patent family
Patent family
A patent family is "a set of patents taken in various countries to protect a single invention ." In other words, a patent family is "the same invention disclosed by a common inventor and patented in more than one country."- See also :* Continuing patent application* Triadic patent* INPADOC...

 of patent application GB 2388937 filed by Macrossan, is currently pending at the European Patent Office
European Patent Organisation
The European Patent Organisation is a public international organisation created in 1977 by its contracting states to grant patents in Europe under the European Patent Convention of 1973...

 (EPO).

On Monday 30 October 2006 (the first business day following the handing down of the Court of Appeal's judgment on Friday 27 October 2006), the Search Division of the EPO in charge of establishing a search report
Search report
In patent law, a search report is a report established by a patent office, which mentions documents which may be taken into consideration in deciding whether the invention to which a patent application relates is patentable...

 for the European patent application issued a declaration under (now ) 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
Software patents under the European Patent Convention
The patentability of software, computer programs and computer-implemented inventions under the European Patent Convention is the extent to which subject matter in these fields is patentable under the Convention on the Grant of European Patents of October 5, 1973...

 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 UKIPO 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 , but will probably use reasoning relating to the question of whether the invention involves an inventive step
Inventive step under the European Patent Convention
Under the European Patent Convention , European patents shall be granted for inventions which inter alia involve an inventive step. The central legal provision explaining what this means, i.e. the central legal provision relating to the inventive step under the EPC, is...

 .

Effect on UK practice

Following this judgment, the UK Patent Office (now the UK Intellectual Property 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. The Patent Office also prepared four case studies as examples of how they saw the test being applied in practice.

One change in practice that occurred was that claims to a computer program were rejected on the basis of the form of the claim, even if the process that was performed by the computer program was itself considered to be patentable. This new practice was challenged by Astron Clinica Ltd and others and the UK Patents Court judged that the practice was incorrect.

Comparison of EPO and UK practice

The judgment proposes several questions to be put to the Enlarged Board of Appeal
Appeal procedure before the European Patent Office
Decisions of the first instances of the European Patent Office can be appealed, i.e. challenged, before the Boards of Appeal of the EPO, in a judicial procedure , as opposed to an administrative procedure. These boards act as the final instances in the granting and opposition procedures before the...

 in an effort to resolve perceived conflicts between the different decisions of the Boards of Appeal. In response to this, Alain Pompidou
Alain Pompidou
Alain Pompidou is a French scientist and politician. A former professor of histology, embryology and cytogenetics, he was the fourth president of the European Patent Office from July 1, 2004 to June 30, 2007...

, then president of the European Patent Office
European Patent Office
The European Patent Office is one of the two organs of the European Patent Organisation , the other being the Administrative Council. The EPO acts as executive body for the Organisation while the Administrative Council acts as its supervisory body as well as, to a limited extent, its legislative...

 (EPO), wrote to Lord Justice Jacob to say that while clarification of certain issues relating to excluded subject matter would be welcomed, there were currently insufficient differences between relevant Board of Appeal decisions that would justify a referral. Instead, a referral would be appropriate if the approach taken by one Board of Appeal would lead to the grant of a patent whereas the approach taken by another Board would not. On 22 October 2008, Pompidou's successor Alison Brimelow
Alison Brimelow
Alison Jane Brimelow CBE is a British civil servant and former Chief Executive and Comptroller General of the UK Patent Office, now known as the Intellectual Property Office...

 did refer a number of questions to the Enlarged Board. In its opinion G 3/08
G 3/08
Under case number G 3/08, the Enlarged Board of Appeal of the EPO issued on May 12, 2010 an opinion in response to questions referred to it by the President of the European Patent Office , Alison Brimelow, on October 22, 2008...

, the Enlarged Board rejected the referral as inadmissible.

The practice of the EPO to deem non-technical subject matter, such as new music or a story, as part of the prior art
Prior art
Prior art , in most systems of patent law, constitutes all information that has been made available to the public in any form before a given date that might be relevant to a patent's claims of originality...

 was criticised in the judgment as not being intellectually honest. A similar criticism was also raised during appeal T 1284/04, in response to which the EPO Board of Appeal stated that:
The EPO Boards of Appeal, in T 154/04 further states that the examination of whether there is an invention within the meaning of has to be strictly separated from and not mixed up with the other three patentability requirements referred to in .
In relation to the "ordinary popular sense" according to which novelty and inventive step are understood to be attributes of all inventions and in relation to the corresponding meaning of the term invention, the Board considered that:
The "contribution" or "technical effect" approach followed in the Aerotel/Macrossan judgement was abandoned by the Boards of Appeal of the EPO ten years ago and the board in T 154/04 confirmed that there were "convincing reasons" for abandoning this approach.

The Board further considered that

See also

  • Business method patent
    Business method patent
    Business method patents are a class of patents which disclose and claim new methods of doing business. This includes new types of e-commerce, insurance, banking, tax compliance etc. Business method patents are a relatively new species of patent and there have been several reviews investigating the...

  • List of UK judgments relating to excluded subject matter
  • Software patent
    Software patent
    Software patent does not have a universally accepted definition. One definition suggested by the Foundation for a Free Information Infrastructure is that a software patent is a "patent on any performance of a computer realised by means of a computer program".In 2005, the European Patent Office...


External links

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