Court of appeal issues eagerly awaited Aerotel/Macrossan decision concerning the patentability of computer program and business method inventions

On 27 October, the Court of Appeal (the second highest court in the UK) issued its eagerly anticipated judgement in the combined cases of Neal Macrossan and Aerotel Ltd vs. Telco Holdings Ltd (and others). This was unusual procedurally since Aerotel's dispute with Telco was nothing to do with Mr Macrossan - Aerotel sought to overturn a High Court decision to revoke their patent, and Mr Macrossan sought an order for the Patent Office to grant his patent application - the two cases were joined because they both concerned the business method and computer program exclusions from patentability set out in Article 52(2) of the European Patent Convention (EPC).

In determining whether the two inventions were excluded from patentability, Lord Justices Chadwick, Jacob and Neuberger decided that a test proposed by the Patent Office was consistent with previous UK court decisions. Consequently, this test now forms part of UK law, and is the test that will be applied by the UK Patent Office and by the UK courts when an invention is alleged to be excluded from patentability by virtue of being a computer program or a business method (or both).

The test is in 4 steps:

1. properly construe the claim

2. identify the actual contribution

3. ask whether it falls solely within the excluded subject matter

4. check whether the actual or alleged contribution is actually technical in nature.

Only if the answer to the third step is 'no' and the answer to the fourth step is 'yes' can the claim be patentable. The court decided that this was merely a re-formulation of the test for patentability laid out in the Merrill Lynch case, which has been the key UK precedent since 1989, and decided that it was the correct approach to take.

The decision also gives some guidance as to how to address the steps. In particular, the second step requires determining 'what has the inventor really added to human knowledge?' The formulation involves looking at substance, not form. The third step is an expression of the "as such" qualification of Article 52(3) EPC. The decision supports the third step involving asking: does 'the contribution thus identified consists of excluded subject matter as such?' The fourth step was conceded maybe not to be necessary in view of the third step, but to be a necessary check in view of the need to follow Merrill Lynch.

This decision clears up much of the uncertainty that existed in UK law. The UK position was not ideal since Merrill Lynch was old and did not sit comfortably with more recent EPO decisions, particularly Hitachi, Pension Benefits, and Microsoft/Data Transfer, all of which are mentioned in the Aerotel v Telco/Macrossan decision. Since Merrill Lynch was a Court of Appeal decision, the Patent Office and the lower Courts were bound by it, although it was clear that on a number of occasions that Merrill Lynch was difficult to apply. It was unclear whether the higher courts would still apply Merrill Lynch or whether they would take a line more like the EPO case law. The position is now clear - the four step test is the correct way to assess an invention.

Although the decision alleges inconsistency in EPO cases and makes an effort to separate itself from them, the new test is not far removed from the principles laid out in EPO case law. However, the approaches to determining whether an invention is excluded from patentability are in some ways different - for instance the EPO approach requires determining what the differences are over the closest prior art, whereas the UK approach starts with identifying 'the contribution' which, although it may not initially appear so, in practice is more holistic. In almost all circumstances, the result of the two different approaches would be the same.

Aerotel v Telco/Macrossan is clear in stating that it does not change the law as set by Merrill Lynch, but it does go some way to help users of the patent system assess the patentability of computer implemented inventions. For that reason it is a welcome decision, although a further reduction in the gap between UK and EPO case law would have been preferred by many practitioners.

Since a patent examiner's or court's view as to what is 'the contribution' of an invention will depend to a significant degree on the way in which the patent specification frames the invention, it is important to consider, prior to filing a patent application, whether presenting the invention differently might give rise to a greater chance of success.

As to the outcomes of the cases, Aerotel's patent claims were held to define a patentable invention and thus their patent was restored, and Mr Macrossan's invention was held not to be patentable, in line with most observers' expectations.

Paul Derry 01 Jan 2007

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