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Inventions Not Patentable

Written by Jane Coyle on 13 April 2007

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In the first application of the 4-step test to determine patentability following Aerotel/Macrossan, the High Court upheld the decisions of the Patent Office by rejecting two applications. The High Court reached its decision on the basis that the contribution in one of the applications was deemed to be no more than an advance in a computer program and had no technical effect, while the other application was deemed in essence to be a business method with no technical effect. This decision is useful for its practical application of the Aerotel/Macrossan test, particularly because it addresses the requirement in the 4th step that the contribution must be technical.

Article 52(1) of the European Patent Convention ("EPC") and section 1(2) of the Patents Act 1977 provide, among others, that European patents will be granted for inventions which are new and which involve an inventive step. However, Article 52(2)(c) specifies that "schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers" are not to be regarded as "inventions" within the meaning of Article 52(1).Article 52(3) of the EPC provides that the provisions of Article 52(2) "shall exclude patentability of the subject matter or activities referred to in that provision only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such". 

The Court of Appeal in Aerotel Limited v Telco Holdings Limited & Ors; Neil William Macrossan ("Aerotel/Macrossan") set out a 4-step test to be applied when dealing with the exceptions in section 1(2) of the Act:

1. properly construe the claim (i.e. decide what the monopoly is);

2. identify the actual contribution (in substance, not form);

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 first application involves Mr Cappellini ("Cappellini"). He applied to the UK Patent Office for a patent for a new method of determining the delivery route for a package by a network of carriers. The Hearing Officer rejected the application on the grounds that the application consisted of "methods for performing mental acts, doing business or programs for computers as such" and therefore fell within one of the exclusions from patentability under section 1(2) of the Act. The second case is an application made by Bloomberg LP ("Bloomberg") to the UK Patent Office for a method of treating data to match the requirements of a particular end-user was also rejected on the basis that it fell wholly within the meaning of computer program in section 1(2)(c) of the Act and therefore was not patentable.

In each case, the party appealed the rejection of their application in the High Court. Pumfrey J considered that as both appeals raised similar legal issues, he would deliver a single judgment in respect of those issues. Pumfrey J applied the 4-step test in Aerotel/Macrossan to determine the patentability of both patent applications. In doing so, he noted that the Aerotel/Macrossan decision provided an important gloss to the equally binding Court of Appeal decision in Fujitsu. While the decisions in Aerotel/Macrossan and Fujitsu apply the same tests, they do so in a different order. In contrast to Aerotel/Macrossan, Fujitsu asks first, whether there is a technical contribution and then goes on to stipulate that a contribution consisting solely of exclusive matter will not count as a technical contribution. Adding his own comments on the 4th step of the Aerotel/Macrossan test, and confirming his decision in Shopalotto.com’s Application, Pumfrey J stated that in the case of computer programs, a technical effect over and above that to be expected from the mere loading of a program into a computer was required.

In considering the "mental act" exclusion under the Act, Pumfrey J noted the narrower interpretation of the Court of Appeal in Aerotel/Macrossan than in Fujitsu. Confirming his decision in Halliburton v Smith, Pumfrey J considered that where the method was capable of being performed mentally by a human being, and complete when the method terminates, this would be a scheme for performing a mental act under section 1(2)(c) of the Act. He also highlighted the importance of ensuring that an invention produces a physical or real world effect and construing the claimed invention accordingly. By "tethering" the claimed invention in this way, an otherwise non-patentable invention could be saved. This would be particularly relevant for methods for performing a mental act, business methods and computer programs.

For the "business methods" exclusion under the Act, Pumfrey J followed the Court of Appeal decision in Aerotel/Macrossan in concluding that to determine whether a business method was excluded from patentability under the Act, it was necessary to consider what the claimed invention was as a matter of substance. It followed that a claim for a programmed computer which performed a
business method would fall within the excluded subject matter under the Act.

Applying the 4-step test, Pumfrey J upheld the Hearing Officer’s decision that Bloomberg’s application was for a computer program as such and dismissed Bloomberg’s appeal. He identified the contribution of the application as being the concept of matching data to an end-user’s requirements prior to transmission to that end-user. Further, he rejected the suggestion that the
invention improved interoperability between items of hardware. Bloomberg’s application did not contain any relevant hardware limitation and the invention did not match the format of the data to a feature of an item of hardware but rather it simply formatted data to enable it to work with particular software. Pumfrey J also found that it was not possible to identify a technical effect
for the purposes of the 4th step. Unlike the RIM case, where the application concerning the server-side treatment of data to be transmitted was limited to certain systems and computers, there were no limitations in Bloomberg’s application and no relevant technical effect.

Pumfrey J also dismissed Cappellini’s appeal. Cappellini’s invention was a new method for planning delivery routes for a package using a network of carriers. In considering the 4-steps in the Aerotel/Macrossan decision, Pumfrey J identified the relevant contribution in this case as being that the method worked out meeting places in the network where exchange of packages between carriers could take place. However, in assessing Cappellinni’s contribution, Pumfrey J could find no evidence of a physical effect which did constitute a business method. Finally, there was nothing technical in Cappellini’s contribution; it was merely a routing method for moving vehicles and their cargos. It followed that the method fell within the excluded subject matter under the Act, so was not patentable.

The decision of the High Court should be welcomed as being the first to apply the 4-step test in Aerotel/Macrossan. Importantly, Pumfrey J addressed the 4th step in this test, namely, the requirement that the contribution is technical. However, as the decisions in Aerotel/Macrossan and Fujitsu are of equal precedence, it is by no means certain that Aerotel/Macrossan will be followed in preference to Fujitsu in the future. This case certainly provides more clarity as to the precise scope of the exclusions to patentability Article 52 of the EPC (and hence section 1(2) of the Act) in relation to business and software patents. Nevertheless, it is unfortunate then that the EPO has declined to address the questions posed to it by Jacob LJ in Aerotel/Macrossan in relation to such exclusions. Many believe guidance from the EPO would be particularly useful, not just to ensure consistency between the UK courts and the rest of the European community, but also because the majority of all software and business method patents are granted by the EPO.

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