| A ground-breaking decision was delivered by the | | | | of this step is to allow the patent examiners to identify |
| Court of Appeal in the cases of Aerotel Ltd v Telco | | | | categorically what an inventor has contributed to the |
| Holdings Ltd (and others) [2006] and Macrossan's | | | | stock of human knowledge through the creation of his |
| Application [2006] on 27 October 2006. This important | | | | or her invention. It is the substance of the invention |
| decision means that there is now a new method by | | | | which requires the consideration. The invention is |
| which patent examiners will assess whether or not an | | | | looked at as a whole. As long as the overall substance |
| invention is patentable. The decision is especially | | | | of the invention, when it is considered in its entirety, |
| relevant to those wishing to patent 'business methods' | | | | contributes suitably to the stock of human knowledge, |
| or 'computer programs'. | | | | the second step will be passed. In the end the test |
| A patent is effectively a legal monopoly for a process | | | | must be what contribution has actually been made, not |
| or product. When granted a patent, the patent holder | | | | what the inventor says he has made. |
| will be exclusively allowed to exploit a patented | | | | Step Three: Ask whether it falls solely within the |
| product or process for the life of the patent. When a | | | | excluded subject matter. This third step is intended to |
| patent is applied for, the patent examiners must ensure | | | | establish whether the invention is comprised of solely |
| that the product or process which is the subject | | | | unpatentable subject matter. There is a list of matters |
| matter of the patent application meets the test for | | | | which will not be afforded patent protection under |
| patentability. Up until this ground-breaking ruling, the test | | | | Article 52(2) of the EPC. These are outlined above. If |
| was extremely complicated to apply in practice due to | | | | the invention in question falls:-o wholly within excluded |
| the large amount of case law dealing with the | | | | subject matte, it would fail the third stepo only partly |
| interpretation of the appropriate legislation. Now the | | | | within excluded subject matter, it would passo outside |
| test has been concisely summarised by this decision. | | | | all the categories of excluded subject matter, then it |
| The Legislations: There are two main pieces of | | | | would also pass. |
| legislation which had to be interpreted by the courts to | | | | Step Four: Check whether the actual or alleged |
| provide the basis for the test of patentability. These | | | | contribution is actually technical in nature. The final step |
| are s1(2) of the Patents Act 1977 and its equivalent | | | | is relatively simple in comparison to the previous three. |
| European legislation, namely Article 52(2) of the | | | | The examiners will merely consider whether the |
| European Patent Convention ("EPC"). Both pieces of | | | | contribution to the stock of human knowledge is |
| legislation outline what is excluded from patentability. | | | | technical in nature:-o If it is held by the patent |
| The wording used in the Patents Act 1977 is different | | | | examiners that it is not technical in nature, then the |
| to the wording used in the EPC. So far as relevant, s.1 | | | | fourth step would fail.o If it is held by the patent |
| reads: | | | | examiners that it is technical in nature, the fourth step |
| (2) It is hereby declared that the following (among | | | | would be passed. |
| other things) are not inventions for the purposes of this | | | | The Application Of The New Test In The Cases: The |
| Act, that is to say, anything which consists of: | | | | Aerotel Appeal: The patent application consisted of |
| (a) a discovery, scientific theory or mathematical | | | | two halves. The first half was for the method of |
| method; | | | | carrying out the telephone calls. The second half was |
| (b) a literary, dramatic, musical or artistic work or any | | | | for the actual system which needed to be used in |
| other aesthetic creation whatsoever; | | | | carrying out the telephone calls. It was held by the |
| (c) a scheme, rule or method for performing a mental | | | | court that the system as a whole was new, despite it |
| act, playing a game or doing business, or a program | | | | partly being made up of existing components, and |
| for a computer; | | | | therefore the patent application was for something |
| (d) the presentation of information;but the foregoing | | | | more than merely a method of doing business. The |
| provision shall prevent anything from being treated as | | | | method of carrying out the telephone call would be |
| an invention for the purposes of this Act only to the | | | | impossible without using the new system. |
| extent that a patent or application for a patent relates | | | | The monopoly to be created was the method of |
| to that thing as such. Whereas the Article 52 EPC, so | | | | carrying out the telephone calls by using the new |
| far as relevant, reads: | | | | system. Thus the claim was held to be properly |
| (1) European patents shall be granted for any | | | | construed. The actual contribution to the stock of |
| inventions which are susceptible of industrial application, | | | | human knowledge was the new system, which |
| which are new and which involve an inventive step. | | | | included a piece of new hardware. The claim partly fell |
| (2) The following in particular shall not be regarded as | | | | within one of the excluded categories (namely the |
| inventions within the meaning of paragraph 1: | | | | 'business method' category) due to the fact that the |
| (a) discoveries, scientific theories and mathematical | | | | application was for both the new system and the |
| methods; | | | | method of carrying out telephone calls. And finally it |
| (b) aesthetic creations; | | | | was clear that the contribution was technical in nature. |
| (c) schemes, rules and methods for performing mental | | | | For these reasons the appeal was granted. |
| acts, playing games or doing business, and programs | | | | The Macrossan Appeal: The court held that the patent |
| for computers; | | | | application was for both a business method and a |
| (d) presentations of information. | | | | computer program. The monopoly to be created was |
| Although no-one has yet expressly suggested that the | | | | for the system comprising of the method of selling |
| difference in wording would result in a difference in | | | | documents to users by using the computer program. |
| practice, to ensure absolute consistency with other | | | | Although no new hardware has been created, the |
| EPC contracting states, the court primarily focussed on | | | | court held that the overall contribution was the system |
| examining how the European legislation has been | | | | itself. It is the third step where the Macrossan Appeal |
| interpreted. The reason for doing this was cited as | | | | falls down. The contribution concerns solely excluded |
| follows: | | | | subject matter. It is for both a business method and a |
| "The difference in wording has at least the potential to | | | | computer program. Nothing more. It was therefore not |
| lead to an erroneous construction of a provision which | | | | necessary for the court to consider the fourth step, |
| is intended to have the same meaning as that of the | | | | even though; the contribution was clearly technical in |
| EPC... Working using the EPC text obviates that risk" | | | | nature. |
| Background: The issue arising in Aerotel Ltd v Telco | | | | The Position Outside Europe: Both business methods |
| Holdings Ltd [2006] relates to the patent of a business | | | | and computer programs are patentable in the USA. |
| method. Aerotel held a UK patent for a telephone | | | | These decisions were made in the cases of State |
| system which allows the user to make a call from any | | | | Street Bank v Signature Financial Group (1998) and Re |
| available phone and have the cost of this call billed | | | | Alappat (1994) respectively. The primary reason is that |
| from the credit relating to this account. Once this credit | | | | there is no equivalent of Article 52(2) under US law. |
| runs out, the call would be disconnected. Aerotel | | | | This means that the excluded categories in Europe |
| believed that Telco had infringed their patent, and sued | | | | and the UK are not represented across the Atlantic. |
| them. Telco counterclaimed to have Aerotel's patent | | | | The fact that patents can be granted in the USA for |
| revoked. Aerotel had their patent revoked by | | | | what are excluded categories in the UK has resulted in |
| summary judgment on 3 May 2006. They are now | | | | an increase in such US patent applications. It is a |
| appealing to have it reinstated. | | | | commercial necessity that if patents are applied for, |
| In Macrossan's Application [2006], they applied for a | | | | and granted, in the USA, then they should be applied |
| UK patent for a computer program. The software | | | | for everywhere. However, it is interesting to note that |
| allows users to obtain all the necessary legal | | | | there is no significant data which suggests that there |
| documentation for the incorporation of a company. | | | | has been an increase in innovation or investment in the |
| The users answer questions asked by a remote | | | | excluded categories, especially business methods and |
| server and from their answers the appropriate forms | | | | computer programs, in the USA since the decisions in |
| are compiled and filled in automatically. The users are | | | | 1998 and 1994. |
| then sent the documents. In the initial application, the UK | | | | Conclusion: If all four parts of the test are passed, the |
| Patent Office took the view that the subject matter of | | | | invention in question is likely to be afforded patent |
| the patent was unpatentable. Mr Macrossan has now | | | | protection. The Patent Office insists that this new test |
| appealed to have the application reviewed. | | | | does not change the boundaries between what is and |
| The new 4 Stage Test: The decision introduced a | | | | what is not patentable. The purpose is to improve the |
| new 4 stage test in establishing whether an invention is | | | | way the decision process takes place and to provide |
| patentable. The UK Patent Office is of the opinion that | | | | evidence of better reasoning behind a decision where |
| this decision should be treated as the definitive way in | | | | a patent application is turned down. It does however |
| which the law on patentable subject matter of an | | | | recognise that there is likely to be the odd cases on |
| invention is to be applied in the UK. This substantially | | | | the boundary which would be decided differently under |
| reduces the need to refer back to previous case law. | | | | this new method. As this early stage, we would have |
| The new 4 stage test to be used by patent | | | | to wait and see whether this decision leads to an |
| examiners is consistent with previous UK judgments | | | | increase in the number of patent applications for |
| and is as follows: | | | | business methods, games or computer programs and |
| Step One: Properly construe the claim. This new first | | | | the number of granted patents for such subject |
| step is designed to make the examiners establish | | | | matters. |
| what monopoly would be created were the patent to | | | | If you require assistance with patenting your business |
| be granted. Once the monopoly has been identified, the | | | | method or computer programs, contact us at |
| examiners will then go on to ask whether the | | | | © RT COOPERS, 2006. This Briefing Note does |
| monopoly is in an excluded class of monopolies:-o If | | | | not provide a comprehensive or complete statement |
| the monopoly is in an excluded class, then the first | | | | of the law relating to the issues discussed nor does it |
| step would fail.o If the monopoly is not in one of the | | | | constitute legal advice. It is intended only to highlight |
| excluded classes, then the first step would be passed. | | | | general issues. Specialist legal advice should always be |
| Step Two: Identify the actual contribution. The purpose | | | | sought in relation to particular circumstances. |