Thought policing

The Court of Appeal’s decisions in Aerotel and Macrossan go some way to clarifying patent law and signal the UK’s intention to concur with a European standard. By Alan Johnson, David Brown and James Boon

The Court of Appeal was recently given the opportunity to clarify matters relating to the patentability of methods of doing business and computer programs following a flurry of cases in the Patents Court. As a result of the increased activity in the Patents Court, the Patent Office had announced a change in its examination practice.

The judgment of the Court of Appeal was therefore eagerly anticipated, particularly in light of the rejection of the directive on computer-implemented inventions in July of last year by the European Parliament. The Court of Appeal recognised in its judgment that billions (euros, pounds or dollars) turn on the approach to patentability.

Two appeals were heard together: Aerotel Ltd v Telco Holdings Ltd & Ors, relating to a method and system of making a telephone call; and Macrossan v Comptroller-General of Patents Designs and Trademarks, relating to a method for producing documents for use in the formation of a corporate entity using a data processing system.

Bristows acted on behalf of Aerotel, who sought to appeal a summary judgment revocation of its patent as a method of doing business. Neal William Macrossan sought to appeal the Patents Court judgment that had refused his patent application on the basis that it was both a method of performing a mental act and a computer program. The Patents Court had held that Macrossan’s application did not amount to a method of doing business.

Patentability is dealt with in the Patents Act by setting out what should not be regarded as an invention in Section 1(2). This non-exhaustive list includes methods of doing business and computer programs. The basis for these provisions is found in Article 52 of the European Patent Convention and the Court of Appeal worked directly from this source.

Noting that European patent judges ought to try to be consistent with one another, the court considered the case law of the European Patent Office (EPO) Technical Boards of Appeal and national courts in other European countries as well as in the UK. Ultimately, the Court of Appeal felt it would be premature to place great weight on the decisions of the Boards of Appeal as these were “mutually contradictory”.

A comprehensive review of the case law revealed “at least four differing points of view”, including the “contribution approach”, the “technical effect approach” previously adopted by the Court of Appeal in Merrill Lynch’s application (1989), and versions of the “any hardware approach”, more recently applied in the EPO.

While the court expressed a preference for returning to the ‘contribution approach’, which simply asks whether the inventive step resides only in the contribution of excluded matter, it was bound by its own precedent in Merrill Lynch and other cases where it had applied the ‘technical effect approach’.

The court did take the opportunity of clarifying this approach by adopting the four-step test proposed by the Patent Office:

  • construe the claim properly;
  • identify the actual contribution;
  • ask whether it falls solely within the excluded subject matter; and
  • check whether the actual or alleged contribution is actually technical in nature.

    In applying this test to the Aerotel patent the Appeal Court identified the contribution as a new system. As the system involved a new physical combination of hardware, the court concluded that there was clearly more than just a method of doing business. The appeal in Aerotel was therefore allowed.

    In relation to Macrossan’s application, the court first applied the four-step test to consider whether the application amounted to a method of doing business and as such identifed Macrossan’s contribution as an interactive system capable of doing the job that otherwise would have been done by a solicitor or company formation agent.

    The Court of Appeal disagreed with the Patents Court and held that this fell solely within the excluded subject matter. For the purpose of determining whether the application amounted to a computer program the contribution was identified as the provision of a computer program to carry out the method. Again, this was held to fall solely within the excluded subject matter.

    In contrasting the application of the Court of Appeal’s approach in Aerotel and Macrossan, the key step appears to be the identification of the contribution.

    Having recognised the desirability of consistency throughout Europe, the court nevertheless followed its own case law rather than that of the EPO. In light of this tension, the court took the unprecedented step of suggesting questions that the president of the EPO might wish to put to the Enlarged Board of Appeal.

    Another decision of the EPO Technical Board of Appeal, which was not considered by the Court of Appeal, has now been reported (Konami (2006)). This decision followed the Hitachi (2004) version of the ‘any hardware approach’.

    The use of display means in Konami’s patent application for a device and method concerned with providing guide marks in a team video game was enough to overcome any question of eligibility for patent protection. There was still a question of whether features lacking any technical effect should be taken into account in the assessment of inventive step. This continuing divergence of approach emphasises the need for clarification from the Enlarged Board of Appeal.

    In the meantime, the Patent Office has issued a new practice note announcing an immediate change in the way patent examiners will assess whether inventions are for patentable subject matter. The four-step test endorsed by the Court of Appeal will be employed without the need to regularly refer back to previous UK and EPO case law. Pending applications will now be reassessed on this basis.

    The Patent Office expresses the view that the change in approach does not fundamentally change the boundary between what is patentable in the UK. The practice note goes on to state that the end result in nearly every case would be the same as that achieved using the Hitachi ‘any hardware approach’ (coupled with the subsequent assessment of inventive step). In Konami, the application was ultimately held to be patentable and inventive, so one may therefore ponder how this application would fare in the context of the Court of Appeal’s four-step test.

    An interesting issue noted in the judgment arises if the Enlarged Board of Appeal does rule on the question of patentability, opting for a different approach to the one endorsed by the Court of Appeal. The court suggested that, in such circumstances, a UK appeal should be leapfrogged to the House of Lords. Indeed, Macrossan has announced his intention to apply for leave to appeal.

    The timing of this potential further appeal relative to the possible consideration of the issue by the Enlarged Board of Appeal would appear to be critical. If the House of Lords considers the issue of patentability in the absence of guidance from the Enlarged Board it would not be bound by the Merrill Lynch ‘technical effect approach’. However, in such circumstances the House of Lords would be in no better a position than the Court of Appeal with regard to the ‘mutually contradictory’ decisions of the boards of appeal.

    Alan Johnson is a partner, David Brown is a former partner and James Boon is an associate at Bristows