A ground-breaking selection was delivered by the Court of Appeal in the circumstances of Aerotel Ltd v Telco Holdings Ltd (and other folks)  and Macrossan’s Application  on 27 October 2006. This essential selection signifies that there is now a new approach by which patent examiners will assess irrespective of whether or not an invention is patentable. The selection is in particular relevant to these wishing to patent ‘business methods’ or ‘computer programs’.
A patent is efficiently a legal monopoly for a approach or item. When granted a patent, the patent holder will be exclusively permitted to exploit a patented item or approach for the life of the patent. When a patent is applied for, the patent examiners should make sure that the item or approach which is the topic matter of the patent application meets the test for patentability. Up till this ground-breaking ruling, the test was incredibly difficult to apply in practice due to the massive quantity of case law dealing with the interpretation of the acceptable legislation. Now the test has been concisely summarised by this selection.
The Legislations: There are two key pieces of legislation which had to be interpreted by the courts to supply the basis for the test of patentability. These are s1(two) of the Patents Act 1977 and its equivalent European legislation, namely Report 52(two) of the European Patent Convention (“EPC”). Each pieces of legislation outline what is excluded from patentability.
The wording utilized in the Patents Act 1977 is diverse to the wording utilized in the EPC. So far as relevant, s.1 reads:
(two) It is hereby declared that the following (amongst other factors) are not inventions for the purposes of this Act, that is to say, something which consists of:
(a) a discovery, scientific theory or mathematical approach
(b) a literary, dramatic, musical or artistic operate or any other aesthetic creation whatsoever
(c) a scheme, rule or approach for performing a mental act, playing a game or undertaking small business, or a system for a pc
(d) the presentation of facts
but the foregoing provision shall stop something from getting treated as an invention for the purposes of this Act only to the extent that a patent or application for a patent relates to that issue as such. Whereas the Report 52 EPC, so far as relevant, reads:
(1) European patents shall be granted for any inventions which are susceptible of industrial application, which are new and which involve an inventive step.
(two) The following in certain shall not be regarded as inventions inside the which means of paragraph 1:
(a) discoveries, scientific theories and mathematical strategies
(b) aesthetic creations
(c) schemes, guidelines and strategies for performing mental acts, playing games or undertaking small business, and applications for computer systems
(d) presentations of facts.
Though no-a single has however expressly recommended that the distinction in wording would outcome in a distinction in practice, to make sure absolute consistency with other EPC contracting states, the court mainly focussed on examining how the European legislation has been interpreted. The cause for undertaking this was cited as follows:
“The distinction in wording has at least the possible to lead to an erroneous building of a provision which is intended to have the identical which means as that of the EPC… Functioning applying the EPC text obviates that threat”
Background: The problem arising in Aerotel Ltd v Telco Holdings Ltd  relates to the patent of a small business approach. Aerotel held a UK patent for a phone technique which permits the user to make a contact from any out there telephone and have the expense of this contact billed from the credit relating to this account. After this credit runs out, the contact would be disconnected. Aerotel believed that Telco had infringed their patent, and sued them. Telco counterclaimed to have Aerotel’s patent revoked. Aerotel had their patent revoked by summary judgment on three Could 2006. They are now attractive to have it reinstated.
In Macrossan’s Application , they applied for a UK patent for a pc system. The software program permits customers to get all the essential legal documentation for the incorporation of a enterprise. The customers answer concerns asked by a remote server and from their answers the acceptable types are compiled and filled in automatically. The customers are then sent the documents. In the initial application, the UK Patent Workplace took the view that the topic matter of the patent was unpatentable.
The new four Stage Test: The selection introduced a new four stage test in establishing irrespective of whether an invention is patentable. The UK Patent Workplace is of the opinion that this selection must be treated as the definitive way in which the law on patentable topic matter of an invention is to be applied in the UK. This substantially reduces the want to refer back to preceding case law. The new four stage test to be utilized by patent examiners is constant with preceding UK judgments and is as follows:
Step 1: Correctly construe the claim. This new very first step is made to make the examiners establish what monopoly would be produced had been the patent to be granted. After the monopoly has been identified, the examiners will then go on to ask irrespective of whether the monopoly is in an excluded class of monopolies:-
- If the monopoly is in an excluded class, then the very first step would fail.
- If the monopoly is not in a single of the excluded classes, then the very first step would be passed.
Step Two: Determine the actual contribution. The goal of this step is to enable the patent examiners to recognize categorically what an inventor has contributed to the stock of human understanding via the creation of his or her invention. It is the substance of the invention which demands the consideration. The invention is looked at as a entire. As lengthy as the all round substance of the invention, when it is regarded in its entirety, contributes suitably to the stock of human understanding, the second step will be passed. In the finish the test should be what contribution has really been created, not what the inventor says he has created.
Step 3: Ask irrespective of whether it falls solely inside the excluded topic matter. This third step is intended to establish irrespective of whether the invention is comprised of solely unpatentable topic matter. There is a list of matters which will not be afforded patent protection below Report 52(two) of the EPC. These are outlined above. If the invention in query falls:-
- wholly inside excluded topic matte, it would fail the third step
- only partly inside excluded topic matter, it would pass
- outdoors all the categories of excluded topic matter, then it would also pass.
Step 4: Verify irrespective of whether the actual or alleged contribution is really technical in nature. The final step is reasonably uncomplicated in comparison to the preceding 3. The examiners will merely contemplate irrespective of whether the contribution to the stock of human understanding is technical in nature:-
- If it is held by the patent examiners that it is not technical in nature, then the fourth step would fail.
- If it is held by the patent examiners that it is technical in nature, the fourth step would be passed.
The Application Of The New Test In The Instances: The Aerotel Appeal: The patent application consisted of two halves. The very first half was for the approach of carrying out the phone calls. The second half was for the actual technique which necessary to be utilized in carrying out the phone calls. It was held by the court that the technique as a entire was new, in spite of it partly getting created up of current elements, and hence the patent application was for one thing a lot more than merely a approach of undertaking small business. The approach of carrying out the phone contact would be not possible without the need of applying the new technique.
The monopoly to be produced was the approach of carrying out the phone calls by applying the new technique. Hence the claim was held to be correctly construed. The actual contribution to the stock of human understanding was the new technique, which incorporated a piece of new hardware. The claim partly fell inside a single of the excluded categories (namely the ‘business method’ category) due to the reality that the application was for each the new technique and the approach of carrying out phone calls. And lastly it was clear that the contribution was technical in nature. For these causes the appeal was granted.
The Macrossan Appeal: The court held that the patent application was for each a small business approach and a pc system. The monopoly to be produced was for the technique comprising of the approach of promoting documents to customers by applying the pc system. Though no new hardware has been produced, the court held that the all round contribution was the technique itself. It is the third step exactly where the Macrossan Appeal falls down. The contribution issues solely excluded topic matter. It is for each a small business approach and a pc system. Nothing at all a lot more. It was hence not essential for the court to contemplate the fourth step, even even though the contribution was clearly technical in nature.
The Position Outdoors Europe: Each small business strategies and pc applications are patentable in the USA. These choices had been created in the circumstances of State Street Bank v Signature Economic Group (1998) and Re Alappat (1994) respectively. The principal cause is that there is no equivalent of Report 52(two) below US law. This signifies that the excluded categories in Europe and the UK are not represented across the Atlantic.
The reality that patents can be granted in the USA for what are excluded categories in the UK has resulted in an raise in such US patent applications. It is a industrial necessity that if patents are applied for, and granted, in the USA, then they must be applied for everywhere. Nonetheless, it is fascinating to note that there is no considerable information which suggests that there has been an raise in innovation or investment in the excluded categories, in particular small business strategies and pc applications, in the USA given that the choices in 1998 and 1994.
Conclusion: If all 4 components of the test are passed, the invention in query is probably to be afforded patent protection. The Patent Workplace insists that this new test does not adjust the boundaries among what is and what is not patentable. The goal is to enhance the way the selection approach requires location and to supply proof of greater reasoning behind a selection exactly where a patent application is turned down. It does nonetheless recognise that there is probably to be the odd circumstances on the boundary which would be decided differently below this new approach. As this early stage, we would have to wait and see irrespective of whether this selection leads to an raise in the quantity of patent applications for small business strategies, games or pc applications and the quantity of granted patents for such topic matters.