FFII UK

Analysis of the Court of Appeal’s Decision in Macrossan and Aerotel

November 20th, 2006

There are many positives from the Court of Appeal judgement which the FFII feels send a clear message to those who are seeking to harm innovation and free competition by extending patentability to computer programs and business methods In particular, the FFII is reassured by the following points of the judgement of Lord Justice Jacob, who gave the judgement of the Court):

1) The Court made a point of stating that patent granting authorities should not be bowing down to pressure from patent applicants to extend the boundaries of what should and should not be patentable:

“19. it by no means follows that because of pressure from applicants, the grant of patents for excluded categories should be allowed or that the excluded categories (particularly business methods and computer programs) should be construed narrowly. Just as with arms, merely because people want them is not sufficient reason for giving them.”

2) The Court noted the problems of the liberal patent policy in the USA, recognising in paragraph 20 of the judgement that:

(i) ‘despite the fact that [patents for excluded subject matter] have been granted for some time in the US, it is far from certain that they have been what Sellars and Yeatman would have called a “Good Thing.”‘;

(ii) having a patent system does have ‘a price’ and therefore it does not always follow that more intellectual property rights is necessarily beneficial;

(iii) “there is, so far as [the court is aware], 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”;

(iv) as Peter Prescott QC did in 2005 in the CFPH High Court decision[^1], that ‘[i]nnovation in computer programs … proceeded at an immense speed for years before anyone thought of granting patents for them as such’;

(v) that the extension of patentability in the USA has led to ‘a mass of litigation’ that has created ‘uncertainty’; and

(vi) with a slight sense of English sarcasm, that this might be acceptable if the purpose of the patent system was the ‘encouragement of patents and patent litigation as industries in themselves’ — when we all know that this not meant to be the purpose of the patent system.

3) The Court confirmed that there is a ‘positive intention and policy’[^2] to exclude the items listed in Article 52(2) of the EPC.

4) The Court commented that ‘decisions of the EPO Boards of Appeal are mutually contradictory‘[^3] (emphasis added). It is very rare for an English court to be as open as the Court of Appeal has been in highlighting the need for the EPO to consider clarifying its position by encouraging an internal referral to what is known as the ‘Enlarged Board of Appeal’. The Court also notes how the EPO’s internal examination guidelines have changed over time on the patentability of computer programs and how the current guidelines are inconsistent[^4]. It is worth noting that the wording of the EPC has not changed yet the interpretation of the EPO has over time. The FFII believes that the shifting sands of the internal examination guidelines, as highlighted by the Court, is a natural outcome of having bodies such as the EPO and its own Boards of Appeal making decisions which are not divorced from the administration of the granting of patents; objectivity becomes blurred and it is all too easy for ‘customers’ interests’ to take priority over the interests of European citizens.

5) The Court, discussing the EPO Boards of Appeal approach to construing the computer program exclusion in Article 52(2) as narrow as possible and in a way which divorced the set of programming instructions from the reality that a computer program, to function, must be on some form of media and/or executed on a computer, concluded that such approach was the ‘wrong’ approach because it effectively defeated the purpose behind the exclusion:.

The FFII believes that this reasoning is consistent with the need to ensure that an international convention is interpreted to give effect to its purpose. The framers clearly intended to include computer programs in a set of non-patentable subject matter. The Court of Appeal has sent out a clear message that the word game played by the EPO and the Boards of Appeal is an attempt to defeat such purpose.

6) The Court, to aid consistent decision making and, as a re-statement of existing English law, stated that there should be a 4 stage test:

“(1) properly construe the claim

(2) identify the actual contribution;

(3) ask whether it falls solely within the excluded subject matter;

(4) check whether the actual or alleged contribution is actually technical in nature”[^6].

However, the Court stressed that, “[t]he fourth step — check whether the contribution is “technical” — may not be necessary because the third step should have covered that.”[^7]. This statement is very important because it clearly implies that the Court believes that, if something is solely within excluded subject matter (e.g. a computer program, including standard apparatus used to make the computer program function — as earlier said by the Court), it should not pass the third test, and therefore, there is no need to consider the fourth test. This is important because it is effectively saying that excluded subject matter ‘as such’ does not have a ‘technical’ effect for the purposes of patent law. This statement sends out a clear message against the EPO’s very broad brush approach of classing just about anything as having a ‘technical effect’ which then, using its logic, makes the subject matter patentable rather than excluded. This is restated in paragraph 47 of the judgement when the Court comments:

“a contribution which consists solely of excluded matter will not count as a technical contribution.” (emphasis added)

However, we do feel the Court’s judgement would have been better if:

1) It had focussed more clearly on the uncertainty surrounding hybrid inventions involving patentable subject matter and excluded subject matter under Article 52(2); and

2) It had considered the CFPH statements regarding the supremacy of the English Courts in respect of the interpretation of the EPC and acknowledged the constitutional issues with the judicial function of the EPO and the EPO Boards of Appeal (including the Enlarged Board of Appeal[^8].

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[^1]: IN THE MATTER OF Patent Applications GB 0226884.3 and 0419317.3 by CFPH L.L.C. [2005] EWHC 1589 (Pat)

[^2]: Per Paragraph 21

[^3]: Per Parargaph 25

[^4]: Per Paragraph 115

[^5]: Per paragraph 31, emphasis added. See also the comments at paragraph 113.

[^6]: Per paragraph 40

[^7]: Per paragraph 46, emphasis added

[^8]: See paragraph 56 of the CFPH judgement.

Entry Filed under: Software Patents