The new test is as follows:

1) properly construe the claim;
2) identify the actual contribution;
3) ask whether it falls solely within the excluded subject-matter; and
4) check whether the actual or alleged contribution is actually technical in nature.

The test will be applied by UK Examiners with immediate effect in new and pending applications.

This test differs from the one used by European Patent Office (EPO) that considers whether the claimed invention provides a technical solution to a technical problem.

From the practice note it appears the UK Patent Office will interpret the test in a way that may lead them to reject some applications which might be accepted by the EPO. Applicants of software related inventions should consider whether the UK Patent Office or EPO is most appropriate place to file.

Background

The Patents Act 1977 lists a number of fields which are not considered to be inventions for the purposes of the Patents Act. Notably the list includes “a scheme, rule or method for .... doing business” and “a program for a computer”. However, the exclusions only apply to the extent that the invention relates to one of the exclusions “as such”. This provision has generated much case law, both in the UK courts, and within the European Patent Office, which has considered when an invention does and does not fall foul of the exclusions.

As reported on this website (Consensus Forms? High Court Approach to the Patentability of Computer Programs and Business Methods; 13 April 2006), one of the last significant decisions in this area was the CFPH decision (2005 EWHC 1589). The court suggested that the separate requirements that a) an invention must not relate to excluded subject-matter and that b) an invention must be novel and inventive, should be considered together. This approach was adopted by the Patent Office immediately (July 2005).

Aerotel and MacrossanThe present judgement is therefore the first time the Court of Appeal have considered the issue of excluded subject-matter in almost ten years. The judgement covers two cases. Aerotel’s case was an application for restoration of their patent which had been revoked by the High Court as the invention was considered to be a business method. Macrossan’s case concerned a UK patent application which had been rejected by the UK Patent Office. Mr Macrossan had appealed to the High Court but the appeal was dismissed.

Aerotel’s patent concerned new method of making telephone calls. A user holds an account with a “special exchange” in which he/she deposits credits. When a user wishes to make a call, they call the “special exchange”, dial a code, and if they have enough credit, they will be allowed to dial through to their destination. This avoids the need for coins when using a public call box.

Macrossan’s application concerned an automated method of acquiring documents necessary for the incorporation of a company.

The court recognised that consistency across Europe, in particular between the European Patent Office and national courts, is important. The Board of Appeal of the European Patent Office have issued many decisions in this area. However, the Court of Appeal believed that some of these decisions were “mutually contradictory” and that it would be premature for the Court of Appeal to simply follow recent decisions issued by the EPO Board of Appeal. In this regard, the Court of Appeal considered case law in both the UK and the EPO in a sizeable appendix to the main decision.

In their decision, the court summarises the various approaches which have been adopted by the UK courts and by the EPO Boards of Appeal.

The Court of Appeal had previously adopted the approach, in at least three cases, namely Merrill Lynch, Gale and Fujitsu, of asking whether the invention made a technical contribution to the known art.  Because the Court of Appeal is bound by its earlier decisions, it was compelled to follow this approach and reject the approach currently used by the EPO. However, the court did consider the best way to implement this approach, and in doing so established the four step test outlined above.

In Aerotel, applying the four-step test, the court allowed the appeal. They considered that the overall system defined in the claims was new, despite the fact that it used components which were know at the time of filing. The contribution was therefore a new system, and not simply a method of doing business.

In Macrossan, the appeal was dismissed as the contribution was considered to a computer program and business method.

The New Four Step Test in Detail

The first step requires proper construction of the claim. As the court pointed out, you must first consider what the monopoly is before questioning whether it is excluded. Although the court considered that this step must be the first step of any test, in practise, it is not always followed. When examining patent applications, Examiner’s must first consider the extent of the monopoly before deciding whether the invention is excluded.

The second step requires determination of the actual contribution the invention makes over the known prior art. This involves a consideration of what problem has been solved, how the invention works, and what its advantages are. The court emphasised substance should prevail over the form of the claims. It was also noted, that in practise, the Examiner may consider this on the basis of the alleged contribution. Given the following steps, this emphasises the need for careful consideration of the “alleged contribution” during drafting to ensure that the application will reach the Examination stage.

For the third step, a determination must be made as to whether the contribution is solely excluded subject-matter (as listed above). If even part of the contribution is not excluded subject-matter, then the claim passes the third step. It is important during drafting to ensure that the contribution is not presented as being solely within an excluded field.

Finally, for the fourth test, is the contribution technical? Even if the contribution is not excluded itself, it must still be shown that it is technical. This step has similarities with the approach in Europe where only technical features can contribute to inventive step.

Questions for the EPO?

In an unusual step the Court made it clear that they were directly addressing the European Patent Office concerning the inconsistency between decisions of the Board of Appeal, and concerning the lack of guidance from the EPO in this area. The court specifically suggested the President of the EPO refer the matter to the so-called “Enlarged Board of Appeal”, the highest judicial authority of the EPO. In doing so, they formulated a series of questions which could be considered by the Enlarged Board, the main one being “What is the correct approach to adopt in determining whether an invention relates to subject matter that is excluded?”

Questions can only be referred to the Enlarged Board by the Boards of Appeal, or the President of the EPO. The President can refer questions to the Enlarged Board if two Boards of Appeal produce divergent decisions. The court alleged that recent decisions in this field are divergent, and that the President should refer the above question, amongst others, to the Enlarged Board. If this were to occur, any decision issued by the Enlarged Board would be binding on the Boards of Appeal and EPO Examiners. Although national courts would not be bound by the decision, they do generally try to follow decisions of the Enlarged Boards, for the sake of consistency across Europe.

It remains to be seen whether the EPO will pay any attention to this request.

The UK Patent Office

As noted above, the UK Patent Office have instructed their examiners to adopt this new approach immediately.. In due course, we will have a better idea of whether or not this new guidance will change the attitude of UK examiners to inventions in this area.

On a positive note, it is encouraging to see the allowance of the Aerotel restoration, which is essentially a new combination of known hardware to implement a new “business method”.

The Future

It is understood that Mr Macrossan’s legal team will be trying to appeal the decision to the House of Lords. The House of Lords is the highest judicial authority in the United Kingdom. Unlike the Court of Appeal, the House of Lord’s is not bound by its earlier decisions If the appeal is allowed, this will give the House of Lords an opportunity to take a fresh look at this area of law, if they are so minded.

It appears that the UK courts have a willingness to follow the EPO so long as they act consistently as well as correctly. If the EPO continue with their current approach then the long term prospects of it being used in the UK seem good. Until then though, applicants should bear in mind the differences.

Andrew Thompson and Russell Barton
December 2006