Aerotel V Telco And Macrossan's Application
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''Aerotel v Telco and Macrossan's Application'' is a judgment by the
Court of Appeal of England and Wales The Court of Appeal (formally "His Majesty's Court of Appeal in England", commonly cited as "CA", "EWCA" or "CoA") is the highest court within the Senior Courts of England and Wales, and second in the legal system of England and Wales only to ...
. The judgment was passed down on 27 October 2006 and relates to two different appeals from decisions of the High Court. The first case involved granted to Aerotel Ltd and their infringement 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 Intellectual Property Office of the United Kingdom (often referred to as the UK IPO) is, since 2 April 2007, the operating name of The Patent Office. It is the official government body responsible for intellectual property rights in the UK ...
). The reasoning in the judgment forms the basis for the current practice of the UK Intellectual Property Office, when assessing whether
patent application A patent application is a request pending at a patent office for the grant of a patent for an invention described in the patent specification and a set of one or more claim (patent), claims stated in a formal document, including necessary officia ...
s are for
patentable subject matter Patentable, statutory or patent-eligible subject matter is subject matter of an invention that is considered appropriate for patent protection in a given jurisdiction. The laws and practices of many countries stipulate that certain types of inven ...
. The approach applied in the judgment has been criticized by a Board of Appeal of the European Patent Office (EPO) as being "irreconcilable with the
European Patent Convention The European Patent Convention (EPC), also known as the Convention on the Grant of European Patents of 5 October 1973, is a multilateral treaty instituting the European Patent Organisation and providing an autonomous legal system according to w ...
".Decision T 154/04
of November 15, 2006, Reasons 13.


History


Aerotel's patent


Application procedure

Zvi Kamil, an
Israel Israel, officially the State of Israel, is a country in West Asia. It Borders of Israel, shares borders with Lebanon to the north, Syria to the north-east, Jordan to the east, Egypt to the south-west, and the Mediterranean Sea to the west. Isr ...
i
inventor An invention is a unique or novel device, method, composition, idea, or process. An invention may be an improvement upon a machine, product, or process for increasing efficiency or lowering cost. It may also be an entirely new concept. If an ...
, filed his UK patent application number 8600691 for a "telephone system" on 13 January 1986, claiming priority from two previous Israeli patent applications filed on 13 January 1985 and 10 November 1985. The application related to a "special"
telephone exchange A telephone exchange, telephone switch, or central office is a central component of a telecommunications system in the public switched telephone network (PSTN) or in large enterprises. It facilitates the establishment of communication circuits ...
. A caller has an account with the owner of that exchange and deposits a
credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...
with him. The caller has a
code In communications and information processing, code is a system of rules to convert information—such as a letter, word, sound, image, or gesture—into another form, sometimes shortened or secret, for communication through a communicati ...
. To make a call he calls the
number A number is a mathematical object used to count, measure, and label. The most basic examples are the natural numbers 1, 2, 3, 4, and so forth. Numbers can be represented in language with number words. More universally, individual numbers can ...
of the special exchange and inputs his code and then the
callee The called party (in some contexts called the "B-Number") is a person who (or device that) answers a telephone call. The person who (or device that) initiates a telephone call is the calling party. In some situations, the called party may numbe ...
'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.


Macrossan's application


Application procedure

Macrossan's has a December 2000 priority date. It was for a new automated method of acquiring the
document A document is a writing, written, drawing, drawn, presented, or memorialized representation of thought, often the manifestation of nonfiction, non-fictional, as well as fictional, content. The word originates from the Latin ', which denotes ...
s necessary to
incorporate Incorporation may refer to: * Incorporation (business), the creation of a business or corporation * Incorporation of a place, the creation of municipal corporation such as a city or county * Incorporation (academic), awarding a degree based on the ...
a
company A company, abbreviated as co., is a Legal personality, legal entity representing an association of legal people, whether Natural person, natural, Juridical person, juridical or a mixture of both, with a specific objective. Company members ...
. It involved a user sitting at a computer and communicating with a remote
server Server may refer to: Computing *Server (computing), a computer program or a device that provides requested information for other programs or devices, called clients. Role * Waiting staff, those who work at a restaurant or a bar attending custome ...
, 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 In computing, a database is an organized collection of data or a type of data store based on the use of a database management system (DBMS), the software that interacts with end users, applications, and the database itself to capture and a ...
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 may refer to: *Electronics, the science of how to control electric energy in semiconductors * ''Electronics'' (magazine), a defunct American trade journal *Electronic storage, the storage of data using an electronic device *Electronic c ...
for the user to print out and submit, mailed to the user, or submitted to the appropriate
registration authority Registration authorities (RAs) exist for many standards organizations, such as ISO, the Object Management Group, W3C, and others. In general, registration authorities all perform a similar function, in promoting the use of a particular standard ...
on behalf of the user. The UK patent office did find that Macrossan's process was both novel and involved an
inventive step The inventive step and non-obviousness reflect a 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. In other words, " henon ...
, but nonetheless rejected the application for a patent since the claimed subject matter was not
patentable subject matter Patentable, statutory or patent-eligible subject matter is subject matter of an invention that is considered appropriate for patent protection in a given jurisdiction. The laws and practices of many countries stipulate that certain types of inven ...
under UK patent law. The UK patent examiner found that the claims related to a method for doing business and a
computer program A computer program is a sequence or set of instructions in a programming language for a computer to Execution (computing), execute. It is one component of software, which also includes software documentation, documentation and other intangibl ...
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 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. By extension, patentability also refers to the substantive conditions that must be met for ...
invention An invention is a unique or novelty (patent), novel machine, device, Method_(patent), method, composition, idea, or process. An invention may be an improvement upon a machine, product, or process for increasing efficiency or lowering cost. It m ...
in principle because the system as a whole was
new New or NEW may refer to: Music * New, singer of K-pop group The Boyz * ''New'' (album), by Paul McCartney, 2013 ** "New" (Paul McCartney song), 2013 * ''New'' (EP), by Regurgitator, 1995 * "New" (Daya song), 2017 * "New" (No Doubt song), 1 ...
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'' 997EWCA Civ 1174 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 Mr Justice Laddie in the Hi ...
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 The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an international legal agreement between all the member nations of the World Trade Organization (WTO). It establishes minimum standards for the regulation by nat ...
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 Jacob, later known as Israel, is a Hebrew patriarch of the Abrahamic religions. He first appears in the Torah, where he is described in the Book of Genesis as a son of Isaac and Rebecca. Accordingly, alongside his older fraternal twin brother E ...
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 The House of Lords is the upper house of the Parliament of the United Kingdom. Like the lower house, the House of Commons of the United Kingdom, House of Commons, it meets in the Palace of Westminster in London, England. One of the oldest ext ...
.Marks and Clerk
.
Patent Appeal
The Register 2006-11-10.
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 Novelty (derived from Latin word ''novus'' for "new") is the quality of being new, or following from that, of being striking, original or unusual. Novelty may be the shared experience of a new cultural phenomenon or the subjective perception of an ...
, inventive step,
claim construction In a patent or patent application, the claims define in technical terms the extent, i.e. the scope, of the protection conferred by a patent, or the protection sought in a patent application. The claims particularly point out the subject matter whi ...
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".Macrossan Refused Leave to Appeal
IPKat IPKat is a law blog founded in June 2003, and dedicated to intellectual property law (IP) with a focus on European law.Alex Newson, Deryck Houghton, Justin Patten, ''Blogging and other social media: exploiting the technology and protecting the ent ...
.
Macrossan at the Highest Court
The Register 2007-02-08.
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 The Foundation for a Free Information Infrastructure (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. The FFII played a k ...
have expressed the view that the decision of the House of Lords confirms the correctness of the Court of Appeal.


Parallel procedure before the European Patent Office

A European patent application, namely , in the
patent family A patent family is a set of patents or patent applications in various countries in relation to a single invention, for example when a first patent application, application in a country – the priority priority application – is extende ...
of patent application GB 2388937 filed by Macrossan, was pending at the
European Patent Office The European Patent Office (EPO) is one of the two organs of the European Patent Organisation (EPOrg), the other being the Administrative Council. The EPO acts as executive body for the organisation
(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 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.See for instance The do ...
for the European patent application issued a declaration under (now ) that a search could not be established.European Patent Register entry for EP1346304
/ref> 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. Before a substantive examination report was issued, the application was deemed to be withdrawn in October 2009 after Macrossan failed to pay a maintenance fee.


Effect on UK practice

Following this judgment, the UK Patent Office (now the
UK Intellectual Property Office The Intellectual Property Office of the United Kingdom (often referred to as the UK IPO) is, since 2 April 2007, the operating name of The Patent Office. It is the official government body responsible for intellectual property rights in the UK ...
) 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 The European Patent Convention (EPC), the multilateral treaty instituting the legal system according to which European patents are granted, contains provisions allowing a party to appeal a decision issued by a first instance department of the Eu ...
in an effort to resolve perceived conflicts between the different decisions of the Boards of Appeal. In response to this,
Alain Pompidou Alain Pompidou (; 5 April 1942 – 11 December 2024) was a French scientist and politician. A professor of histology, embryology, and cytogenetics, he was the fourth president of the European Patent Office (EPO) from 1 July 2004, to 30 June 2 ...
, then president of the
European Patent Office The European Patent Office (EPO) is one of the two organs of the European Patent Organisation (EPOrg), the other being the Administrative Council. The EPO acts as executive body for the organisation
(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 Jane Brimelow CBE (born 1949European Patent Office web site''Alison Brimelow's CV'' Consulted on 2 July 2007. ) is a British civil servant and former chief executive and Comptroller General of the UK Patent Office, now known as the Inte ...
did refer a number of questions to the Enlarged Board. In its opinion G 3/08, 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 (also known as state of the art or background art) is a concept in patent law used to determine the patentability of an invention, in particular whether an invention meets the novelty and the inventive step or non-obviousness criteria f ...
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 patents are a class of patents which disclose and claim new methods of doing business. This includes new types of e-commerce, insurance, banking and tax compliance etc. Business method patents are a relatively new species of pate ...
*
List of UK judgments relating to excluded subject matter Under United Kingdom patent law, a patent may only be granted for "an invention". While the meaning of invention is not defined, certain things are not regarded as inventions. Such things are excluded from patentability. This article lists judgme ...
*
Software patent A software patent is a patent on a piece of software, such as a computer program, library, user interface, or algorithm. The validity of these patents can be difficult to evaluate, as software is often at once a product of engineering, something ...


References


External links


Collection of materials
relating to the Macrossan case collated by Neal Macrossan
TheLawyer.com
commentary
Withers and Rogers
commentary
FFII
analysis
Wragge and Co
analysis/speech of December 2007 {{DEFAULTSORT:Aerotel V Telco And Macrossan's Application Software patent case law Court of Appeal (England and Wales) cases United Kingdom patent case law 2006 in United Kingdom case law