Factual and Procedural Background
These two appeals concern categories under Article 52(2) and (3) of the European Patent Convention ("EPC") that are excluded from patentability as "not inventions." The first appeal ("Aerotel appeal") arose from a patent infringement action brought by Company A against Company B, who counterclaimed for revocation of Company A's Patent No. 2,171,877. The case began in the Patents County Court in February 2005 but was transferred to the High Court later that year. Company B applied for summary judgment on the basis of patentability exclusions, which was granted, leading to revocation of the patent. Company A later settled with Company B but continued infringement proceedings against Company C, maintaining a commercial interest in the patent's validity.
The second appeal ("Macrossan appeal") involves an application by Appellant for a UK patent (No GB0314464.9) which was refused by the Patent Office on grounds of unpatentability. The appellant appealed unsuccessfully at first instance and now appeals with permission. The appellant resides abroad and the appeal was conducted primarily on paper submissions. Counsel appeared for the parties and the Comptroller acted as amicus curiae in the Aerotel appeal.
Legal Issues Presented
- What is the correct approach to determine whether subject matter falls within the exclusions under Article 52(2) and (3) EPC?
- How should elements of a claim relating to excluded subject matter be treated when assessing novelty and inventive step under Articles 54 and 56 EPC?
- Specifically, whether an operative computer program loaded onto a medium is excluded by Article 52(2), and if not, what constitutes a "technical effect"?
- What are the key characteristics of the "method of doing business" exclusion?
Arguments of the Parties
Appellant's Arguments (Aerotel)
- The patent claims a new telephone call system involving a special exchange and verification code, which constitutes a new physical combination of hardware and is more than a method of doing business.
- The method claims are tied to the use of this new apparatus and thus are technical and patentable.
Appellant's Arguments (Macrossan)
- The application claims an automated method for producing corporate formation documents via interactive communication with a data processing system.
- The method is a tool to assist in business and does not involve any new hardware.
- Argued that the exclusion to patentability should not apply to electronic means performing mental acts.
Comptroller's Arguments
- Supported a structured four-step approach to assess patentability exclusions consistent with prior case law.
- Submitted that pure questions of law on exclusions should be decided at the application stage.
- Did not support the mental act exclusion as broadly as applied by first instance in the Macrossan case.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Merrill Lynch v Falconer J [1988] RPC 1; [1989] RPC 561 |
Rejected the "contribution approach" that only the contribution of excluded matter should be considered; established the "technical contribution" test. |
Confirmed the "technical contribution" approach with the rider that inventive excluded matter does not count as a technical contribution. |
| Gale's Application [1991] RPC 305 |
Clarified that a computer program embodied on a physical medium is excluded unless there is a technical effect beyond mere running of the program. |
Held that merely putting a new program on a known medium does not escape exclusion under Art.52(2). |
| Fujitsu [1997] RPC 608 |
Discussed difficulties in defining "technical contribution" and mental act exclusions. |
Applied the "technical contribution" test and provisionally held that mental act methods require technical contribution to be patentable. |
| Vicom (T 208/84) [1987] OJ EPO 14 |
Established that inventions should not be excluded simply because implemented by computer programs; focus on technical contribution. |
Preferred approach over "contribution approach"; technical contribution is decisive. |
| Pension Benefits (T 931/95) [2000] |
Distinguished between method claims (excluded if business methods) and apparatus claims (patentable if concrete physical entity). |
Held method claims to business methods unpatentable, but apparatus claims to programmed computers patentable subject matter. |
| Hitachi (T 258/03) [2004] |
Rejected the contribution approach; held that both method and apparatus claims involving technical features are patentable. |
Held that a programmed computer and methods involving technical means are inventions; no need for further technical contribution. |
| Microsoft/Data Transfer (T 424/03) [2006] |
Held that a computer-readable medium with a program is not a computer program "as such" and thus not excluded. |
Confirmed patentability of computer-readable media containing programs producing technical effects beyond normal physical effects. |
| Halliburton v Smith [2005] EWHC 1623 (Pat) |
Discussed exclusions and the "contribution approach"; emphasized the need to identify the inventor’s contribution beyond excluded matter. |
Supported the structured approach to assess technical contribution and exclusion. |
| CFPH's Applications [2006] RPC 359 |
Reviewed EPO and UK case law; emphasized vagueness of "technical contribution" and importance of identifying contribution to the art. |
Supported approach that excludes pure business methods and computer programs as such; contribution must be technical. |
| Informa v Catalina Marketing (France, 2002) |
Held that presence of hardware removes exclusion for business methods. |
Found that apparatus claims involving hardware are not excluded from patentability. |
| Sprachanalyseinrichtung (German BGH, 2002) |
Held a programmed computer has technical character regardless of whether it produces further technical effect. |
Confirmed patentability of programmed apparatus as a physical entity. |
| Jesco Schwarzer (German BGH, 2004) |
Refused to extend patentability to claims essentially directed to mathematical methods even if computer-implemented. |
Declined to follow Hitachi approach; upheld exclusion for mathematical methods as such. |
Court's Reasoning and Analysis
The court began by emphasizing the importance of interpreting Article 52(2) and (3) EPC directly, noting that UK law implements these provisions with no substantive difference in meaning. The exclusions listed are heterogeneous, lacking a common underlying purpose or principle, and must be interpreted without bias either for or against exclusion.
The court reviewed the varied and sometimes conflicting approaches to patentability exclusions, including the "contribution approach," the "technical effect approach," and the "any hardware" approach. It rejected the "any hardware" approach as intellectually dishonest and inconsistent with the statutory language and case law.
Binding precedent requires applying the "technical contribution" approach, which involves:
- Properly construing the claim;
- Identifying the actual contribution;
- Determining whether the contribution falls solely within excluded subject matter;
- Checking whether the contribution is technical in nature.
This structured approach, supported by the Comptroller and consistent with prior case law, was applied to both appeals.
In the Aerotel appeal, the court found that the system claim was to a new physical combination of hardware components forming a new telephone system, not merely a business method. The method claims were tied to the use of this apparatus and thus also technical. The first instance judge had misunderstood the evidence, conflating the use of known components with the novelty of the system as a whole. The appeal was allowed.
In the Macrossan appeal, the invention was an automated method for producing corporate formation documents via interactive data processing, effectively replacing a solicitor's role. The court found this to be a method of doing business as such and a computer program as such, with no technical contribution beyond running a program on standard hardware. The appeal was dismissed.
The court also reviewed relevant case law, including UK and EPO decisions, highlighting the evolution and divergence in approaches, particularly the shift from the "technical contribution" approach to the "technical character" approach adopted by more recent EPO Boards of Appeal. The court noted inconsistencies and the need for clarification by an Enlarged Board of Appeal.
Finally, the court proposed questions for referral to the Enlarged Board of Appeal to clarify:
- The correct approach to determining exclusions under Article 52;
- How excluded elements in claims should be treated when assessing novelty and inventive step;
- Whether a computer program on a medium is excluded unless producing a technical effect, and what constitutes such an effect;
- The key characteristics of the business method exclusion.
Holding and Implications
The court allowed the Aerotel appeal, holding that the patent claims to a new physical telephone system and its use are not excluded from patentability under Article 52(2) EPC.
Conversely, the court dismissed the Macrossan appeal, holding that the claimed automated method for producing corporate documents is a method of doing business and a computer program as such, excluded from patentability.
The decision clarifies the application of the "technical contribution" test in UK patent law and confirms the continuing exclusion of business methods and computer programs as such. No new precedent was set beyond reaffirming existing principles and applying them to the facts. The court encouraged referral to the Enlarged Board of Appeal for authoritative clarification of the unsettled points in EPC interpretation.