Aerotel ruling by UK Court of Appeal on 27 October 2006
Aerotel v. Telco is a UK ruling made in 2006 by Lord Justice Jacob.
A conjoined appeal against refusal from Aerotel, who made an alternative telephone carrier system implemented in programmed computer systems, and Mr Neil Macrossan, this case established the four-step test for whether a core technical feature of a patent is to be excluded as not patentable under the UK Patents Act. The previous methods were summarised and criticised and a new four-step test outlined to be used where it was not clear if a particular patent claim should be excluded from patentability. The four steps are:
- i) properly construe the claim;
- ii) identify the actual contribution;
- iii) ask whether it falls solely within the excluded subject matter;
- iv) check whether the contribution is actually technical in nature.
In particular, the judgement states their interpretation that the European Patent Convention intended to exclude real, functioning compute programs from patentability (paragraph 31): "We think the framers of the EPC really meant to exclude computer programs in a practical and operable form. They meant to exclude real computer programs, not just an abstract series of instructions."
The only people who gain are patent lawyers (point 20 page 10):
The patent system is there to provide a research and investment incentive but it has a price. That price (what economists call “transaction costs”) is paid in a host of ways: the costs of patenting, the impediment to competition, the compliance cost of ensuring non-infringement, the cost of uncertainty, litigation costs and so on. There is, so far as we know, no really hard empirical data showing that the liberalisation of what is patentable in the USA has resulted in a greater rate of innovation or investment in the excluded categories. Innovation in computer programs, for instance, proceeded at an immense speed for years before anyone thought of granting patents for them as such. There is evidence, in the shape of the mass of US litigation about the excluded categories, that they have produced much uncertainty. If the encouragement of patenting and of patent litigation as industries in themselves were a purpose of the patent system, then the case for construing the categories narrowly (and indeed for removing them) is made out. But not otherwise.
For what it's worth, in the USA, the ITC ruled that patent litigation is not a "domestic industry" that warrants protection. (However, licensing can be a domestic industry, and litigation as part of licensing activities could suffice.)
Companies are spending money on acquiring patents because they feel they have to (point 18):
This pressure in part stems from the fact that, following State Street (business methods) and Alappat (computer programs) people have been getting patents for these subject-matters in the USA. Since they can get them there, they must as a commercial necessity apply for them everywhere. If your competitors are getting or trying to get the weapons of business method or computer program patents you must too. An arms race in which the weapons are patents has set in. The race has naturally spread worldwide...
The Macrossan patent was held invalid (section 73).
 Subsequent EPO rulings and statements
Shortly after, a ruling by one of the European Patent Office's Boards of Appeal called the Aerotel decision "not consistent with a good-faith interpretation of the [EPC]". (Duns Licensing Associates T 0154/04, 15th November 2006)
In October 2008, the Symbian v. Comptroller General (2008, UK) mentioned that there had then been four decisions by the EPO's Boards of Appeal on this topic:
- Duns Licensing Associates T 0154/04, 15th November 2006
- Gameaccount Ltd T 1543/06, 29 June 2007
- Sharp T1188/04
- File search method/Fujitsu T1351/04
 EPO referral
In the ruling, Lord Justice Jacob says:
The decisions of the EPO Boards of Appeal are mutually contradictory [...] We have no power to refer any question and must reach our decision now independently of what any Enlarged Board might decide if and when there is a reference. Nonetheless we have ventured to formulate questions which might be asked of an Enlarged Board in the hope of encouraging a reference.
To this prompting, the then-President of the EPO, replied that he, on the contrary, saw "insufficient differences between current Board of Appeal decisions dealing with Article 52 EPC exclusions on important points of law that would justify a referral at this stage"
In 2008, under the new President Allison Brimelow, these questions were referred to the EPO's Enlarged Board of Appeal. (see EPO EBA referral G3-08) The decision of the Enlarged Board, published in May 2010, was that the referral was inadmissible and could not be replied to by the Enlarged Board.
- The 2006 UK ruling in Aerotel vs Telco (or as pdf)
- Aerotel v Telco and Macrossan's Application, Wikipedia
- "At the ITC, Patent Litigation is Not a Domestic Industry". http://legaltimes.typepad.com/blt/2010/04/at-the-itc-patent-litigation-is-not-a-domestic-industry.html. "allowing patent infringement litigation alone to constitute a domestic industry would place the bar for establishing a domestic industry so low as to effectively render it meaningless."
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