Aerotel v Telco and Macrossan's Application^[1] is a judgment by the Court of Appeal of England and Wales. 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 GB 2171877^[2] granted to Aerotel Ltd and their infringement action against Telco Holdings Ltd and others. The second case concerned GB application 2388937 filed by Neal Macrossan but refused by the UK Patent Office (now operating as the UK Intellectual Property Office).

Quick Facts Aerotel v Telco and Macrossan's Application, Court ...

Aerotel v Telco and Macrossan's Application
Court	Court of Appeal of England and Wales
Full case name	Aerotel Ltd(a company incorporated under the laws of Israel) v. Telco Holdings Ltd, Telco Global Distribution Ltd, Telco Global Ltd; And In the Matter of: The Patents Act 1977; And in the Matter of Patent Application GB 0314464.9 in the name of Neal William Macrossan
Decided	October 27, 2006 (2006-10-27)
Citation(s)	[2006] EWCA Civ 1371
Transcript(s)	[2006] EWHC 997 (Pat) [2006] EWCA Civ 1371
Court membership
Judge(s) sitting	Chadwick LJ, Jacob LJ, Neuberger LJ
Case opinions
Decision by	Jacob LJ
Keywords
software patent

Close

The reasoning in the judgment forms the basis for the current practice of the UK Intellectual Property Office, when assessing whether patent applications are for patentable subject matter.

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".^[3]

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.

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.^[18][19] 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,^[20] inventive step,^[21] claim construction and sufficiency^[22] 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".^[23][24][25]

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 the correctness of the Court of Appeal.^[26][27]

A European patent application, namely EP application 1346304, in the patent family of patent application GB 2388937 filed by Macrossan, was pending at the European Patent Office (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 for the European patent application issued a declaration under Rule 45 EPC 1973 (now Rule 63 EPC) that a search could not be established.^[28] 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.^[28]

Following this judgment, the UK Patent Office (now the UK Intellectual Property Office) issued a Practice Note^[29] 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.^[30]

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^[31] judged that the practice was incorrect.

The judgment proposes several questions to be put to the Enlarged Board of Appeal in an effort to resolve perceived conflicts between the different decisions of the Boards of Appeal. In response to this, Alain Pompidou, then president of the European Patent Office (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.^[32] On 22 October 2008, Pompidou's successor Alison Brimelow 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 was criticised in the judgment as not being intellectually honest.^[33] A similar criticism was also raised during appeal T 1284/04, in response to which the EPO Board of Appeal stated that:

the COMVIK approach does not consider the non-technical constraints as belonging to the prior art, but rather as belonging to the conception or motivation phase normally preceding an invention since they may lead to a technical problem without contributing to its solution. Such aspects have never been taken into account for assessing inventive step, irrespective of whether or not they were known from the prior art.^[34]

The EPO Boards of Appeal, in T 154/04 further states that the examination of whether there is an invention within the meaning of Article 52(1) to (3) EPC has to be strictly separated from and not mixed up with the other three patentability requirements referred to in Article 52(1) EPC.

This distinction abstracts the concept of "invention" as a general and absolute requirement of patentability from the relative criteria novelty and inventive step, which in an ordinary popular sense are understood to be the attributes of any invention (...).^[35]

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 "technical effect approach" endorsed by Lord Justice Jacob in the Aerotel/Macrossan judgement (...) seems to be rooted in this second ordinary meaning of the term invention, a practice which might be understandable "given the shape of the old law" (Lord Justice Mustill, loc.cit.^[36]), but which is not consistent with a good-faith interpretation of the European Patent Convention in accordance with Article 31 of the Vienna Convention on the Law of Treaties of 1969.^[37]

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.^[37]

The Board further considered that

The "technical effect approach (with the rider)" applied in the Aerotel/Macrossan judgement is irreconcilable with the European Patent Convention also for the further reason that it presupposes that "novel and inventive purely excluded matter does not count as a 'technical contribution'" (Aerotel/Macrossan, e.g. paragraph No. 26(2)). This has no basis in the Convention and contravenes conventional patentability criteria (...)"^[3]

• Business method patent
• List of UK judgments relating to excluded subject matter
• Software patent