The rules for patents for computer software examined in Aerotel v Telco (2006)

December 2006


By Tom Frederikse, Solicitor, Clintons

The Court of Appeal has provided a welcome clarification on the extent to which a computer programme (software) is protectable by UK Patent Law: none (*except where the computer program has a “technical effect”). In two appeals heard together, Aerotel Ltd v Telco Holdings Ltd and Re: Macrossan [2006] EWCA Civ 1371, Telco was sued for patent infringement and counter-claimed for revocation of Aerotel’s patent, whilst Mr Macrossan had appealed against his patent application having been refused for “unpatentable” subject-matter. The appeal from Mr Macrossan was dismissed, the appeal from Aerotel was allowed and the Court took this opportunity to examine the patentability of software and business methods.

Under UK and EU law, “computer programs” and methods for “doing business” or “performing mental acts” cannot not protected by a patent, but the question of what a computer program or a business method actually is has long been uncertain. The main problem in this area is so many inventions and gadgets use software as a element that the line is vague between what is and is not a “computer program”. The Court likened it to an elephant: “you know it when you see it but you can’t describe it in words”. The Court set out a staged test for patentability of a computer program which begins with an effectively-drafted application followed by an identification of the software’s substantial “contribution” to the state of the art (i.e. are there any “new” inventive elements) and finally – crucially – showing that the contribution is “technical”. This test is largely based on the existing EU test of whether the software has a “technical effect” and is, to some extent, based on whether the invention uses hardware or a new physical combination of hardware. This suggests that an entirely virtual invention would have a very difficult path to a patent registration.

A “method for doing business”, such as Amazon’s “1-click” patent for a method of online purchasing, Priceline’s patent regarding a “reverse auction” method for online air tickets, or Aerotel’s application in this case for a new method of telephone exchange connection, would also be subject to the patentability test. This complexity in Patent Law is made worse for the IT industry by the fact that the US routinely grants patents for these and nearly all types of inventions. As the Court put it: “Since [inventors] can get them there, they must as a commercial necessity apply for them everywhere [and] an arms race in which the weapons are patents has set in”.

The Court stressed that, most importantly, computer programs have protection under Copyright Law that is, after all, a more convenient shield under which software developers can take cover for up to life plus 70 years.

The full text of the judgment may be accessed via:

This Update contains general information about English (or other) law. It does not contain legal advice. For further information on any specific legal matter, please consult a solicitor at Clintons ( © 2006 Tom Frederikse / Clintons

The IPKat adds:

On Friday the UK Patent Office issued a Practice Note as to when and whether such inventions are patentable. According to the prelude to the Practice Note:

“Following the Court of Appeal’s judgment in Aerotel v Telco and Macrossan’s Application, issued last Friday, The UK Patent Office has issued a Practice Notice on how it will in future decide if an invention is not patentable because it is a computer program or business method as such.

The Notice notes that the judgment considers all the previous caselaw from the UK courts and the European Patent Office and provides a clear approach as to how the computer program and business method questions should be tackled. The judgment is binding on the High Court and the Patent Office, and from now on the Patent Office will follow this as set out in the Practice Notice.

The approach is in the form proposed to the Court by the UK Patent Office and the Notice concludes that it is unlikely that it will substantially change what innovations are and are not patentable. The Notice refers to a number of worked examples applying the new approach to cases recently decided by the Office under the previous approach and in each case the same decision as to patentability is reached”.

The IPKat says, the really important bit of the Practice Note is paragraph 4:

“4. In reaching its judgment, the Court also fully considered all the precedent UK case law in this area. … [T]he Office takes the view that Aerotel/Macrossan must be treated as a definitive statement of how the law on patentable subject matter is now to be applied in the United Kingdom ( UK). It should therefore rarely be necessary to refer back to previous UK or EPO case law”.

In other words, says the IPKat, if citation of pre-Aerotel/Macrossan case law is cut out or kept to a minimum, the Patent Office can concentrate on patentability on a more highly-focused basis and both examiners and the courts will have far fewer real or hypothetically contradictory precedents to worry about. The comment also adds that previous attempts to draw a line under old case law in other areas of IP law, notably breach of confidence law, have generally failed.

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