Aerotel Ltd v Telco Holdings Ltd; Macrossan's Patent Application (No.0314464.9)

JurisdictionEngland & Wales
Judgment Date27 October 2006
Neutral Citation[2006] EWCA Civ 1371
Docket NumberCase No: A3/2006/1007 and A3/2006/1067
CourtCourt of Appeal (Civil Division)
Date27 October 2006

[2006] EWCA Civ 1371





The Hon Mr Justice Lewison

HC 06C00360

The Hon Mr Justice Mann

CH 2005 APP 0248

Royal Courts of Justice

Strand, London, WC2A 2LL


The Rt Hon Lord Justice Chadwick

The Rt Hon Lord Justice Jacob and

The Rt Hon Lord Justice Neuberger

Case No: A3/2006/1007 and A3/2006/1067

Aerotel Ltd(A Company Incorporated Under The Laws of Israel)
(1) Telco Holdings Ltd
(2) Telco Global Distribution Ltd
(3) Telco Global Ltd
And In The Matter of: The Patents Act 1977
And In The Matter of: Patent Application GB 0314464.9
In The Name of Neal William Macrossan

Simon Thorley QC (instructed by Bristows) appeared on behalf of Aerotel

Daniel Alexander QC (instructed by Linklaters) appeared on behalf of Telco

Colin Birss (instructed by the Treasury Solicitor) appeared on behalf of the Comptroller General of Patents

Mr Neal William Macrossan was not present, and was not represented, but made written submissions


Lord Justice Jacob (giving the Judgment of the Court):

1. These two appeals are about some of the categories declared by Art. 52(2) and (3) of the European Patent Convention ("EPC") not to be "inventions" and so unpatentable. The "Aerotel appeal" is in what was a patent action between Aerotel and Telco. Sued for infringement, Telco counterclaimed for revocation of Aerotel's Patent No. 2,171,877. The action started, inappropriately having regard to its complexity and the amount of money at stake, in the Patents County Court as long ago as February 2005. HHJ Fysh QC quite rightly transferred it to the High Court in November that year. Comparatively late in the day, in February 2006, Telco applied for summary judgment on its counterclaim, basing the application on the exclusion to patentability. The application succeeded before Lewison J who ordered revocation of the patent on 3 rd May 2006 [2006] EWHC 997 (Pat). No point is now taken about the lateness of the application.

2. Just before these appeals came on, Aerotel settled with Telco. There is still a pending infringement action on the patent however, for Aerotel have also sued a company called Wavecrest. So Aerotel have a live commercial interest in getting their patent back. It is not normally appropriate for the Court of Appeal by consent or without examining the merits to reverse a first instance decision revoking a patent, Halliburton v Smith International [2006] EWCA Civ 185, [2006] RPC 653.

3. The other appeal (the "Macrossan appeal") arrives here by a different route. Mr Macrossan is the applicant for a UK patent, No GB0314464.9. The Office took the view that the subject-matter was unpatentable. There followed a hearing before Mrs S.E. Chalmers, the hearing officer, at which Mr Macrossan was represented by an experienced patent agent, Mr Michael Butler. Mrs Chalmers, by a decision of 22 nd March 2005, upheld the objection. Mr Macrossan appealed to Mann J who, by a decision of 3 rd April 2006 [2006] EWHC 705 (Ch) dismissed his appeal. With permission granted by me, Mr Macrossan appeals. He lives in Australia and indicated prior to the hearing that he was content to have the appeal heard on paper. He submitted a "Full Argument" shortly before the hearing. He also received the transcript of the hearing, provided some short written observations after the first day and subsequently provided written submissions following the closing of oral argument. His submissions in the main were backed by diligent research and have been very helpful.

4. Mr Simon Thorley QC appeared for Aerotel. Mr Daniel Alexander QC was to have argued Telco's case and had submitted a skeleton argument which we have taken into account. He appeared when the case was called on to confirm his clients no longer had any interest in it and then departed. Mr Birss, in addition to appearing in the Macrossan appeal, then took on the job of acting as an amicus curae in the Aerotel appeal, moving from a neutral position prior to the settlement to take on the burden of defending the judgment below in accordance with the procedure indicated in Halliburton. As would be expected of counsel for the Comptroller, Mr Birss presented matters objectively and in a non-partisan manner. The Comptroller, particularly in an appeal from the Office is essentially seeking the guidance of the court rather than defending the decision of his hearing officer. After all, the Comptroller's job is to reject patents that should not be granted and grant patents that should. He is trying to get it right, not to win for the sake of winning.

5. In that connection we should record also that we accept Mr Birss' submission that any pure question of law involved should be decided during prosecution. It is not enough to get a patent past the application stage to show that as a matter of law it merely arguably covers patentable subject-matter. The position is different from that under the old law. Then the rule was that patents should be refused only where on no reasonable view could the subject-matter be patentable, see Swift's Appn. [1962] RPC 37 at p.46. Despite that being the rule, in the years that followed Swift, in practice a decision of the Office or on appeal to the Appeal Tribunal was taken to decide the matter once-and-for all. That itself shows there is no point doing other than deciding the question. Moreover that is what the European Patent Office ("EPO") does and there is no warrant in the EPC for the "arguable" approach. Of course if a debatable question of pure fact is or may be involved at the application stage, things are different – one cannot then say that the decision at that point must be the last word on the subject. Then the applicant must be given the benefit of any reasonable doubt.


The Approach to the Legislation

6. As we have said these appeals turn on the application of Art.52(2) and 52(3) of the EPC. The provision was implemented in UK law by s.1(2) of the Patents Act 1977. Although s.1(2) pointlessly uses somewhat different wording from that of the EPC no-one suggests that it has any different meaning. So we, like the parties before us, work directly from the source. That has several advantages:

i) The difference in wording has at least the potential to lead to an erroneous construction of a provision which is intended to have the same meaning as that of the EPC (which is the effect of s.130(7) of the Act) . Working using the EPC text obviates that risk;

ii) Decisions of the EPO Boards of Appeal on the exclusions are based on the provisions of the EPC. It makes sense to consider similar problems here by exactly the same language and Article number rather than a differently numbered variant which is supposed to have the same meaning;

iii) This is particularly important having regard to the fact that decisions of the Boards of Appeal on provisions of the UK Act intended to implement corresponding provisions of the EPC have "great persuasive authority" per Lord Hoffmann in Merrell Dow v Norton [1996] RPC 76 at p.82. Similar views have been expressed in other cases too, for instance by Nicholls LJ (with whom the other members of the court agreed) in Gale's Appn. [1991] RPC 305 at p.323, and by Lord Oliver in Asahi's Appn. [1991] RPC 485 at p.540.

iv) Moreover by using the text of the Convention the decisions of this court (and other UK courts) are more readily intelligible to those in other European countries who will be unfamiliar with the idiosyncratic ways of the UK Parliamentary draftsman. That is important: European patent judges ought, so far as they can, try to be consistent with one another, particularly in relation to the interpretation of national laws implementing provisions of the EPC. Decisions of important national courts on such provisions are also of persuasive authority within the EPO Boards of Appeal itself – see, for an example, Eisai G 5/83 [1985] OJ 064 where the Enlarged Board had regard to a decision of the Bundesgerichtshof (the "BGH"), the Supreme Court of Germany.


Article 52: General considerations

7. Article 52 reads:

"(1) European patents shall be granted for any inventions which are susceptible of industrial application, which are new and which involve an inventive step.

(2) The following in particular shall not be regarded as inventions within the meaning of paragraph 1:

(a) discoveries, scientific theories and mathematical methods;

(b) aesthetic creations;

(c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers;

(d) presentations of information.

(3) The provisions of paragraph 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."

8. The provisions about what are not to be "regarded as inventions" are not easy. Over the years there has been and continues to be much debate about them and about decisions on them given by national courts and the Boards of Appeal of the EPO. They form the basis of a distinct industry of conferences and are the foundation of a plethora of academic theses and publications. There has also been much political debate too: some urging removal or reduction of the categories, others their retention or enlargement. With the political debate we have no concern – it is our job to interpret them as they stand.

9. As the decisions show this is not an easy task. There are several reasons for this:

i) In the first place there is...

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