Aerotel yet again

The IPKat was in the middle of writing about a (to him, at least) rather interesting turn on the Symbian/Aerotel view of excluded matter under the UK Patents Act 1977 (more below, for those sufficiently interested), when the very familiar name of Aerotel appeared yet again in his inbox. This time, Aerotel have again appeared in the Court of Appeal, with an argument about the same (already expired) patent that was the central theme of the judgment in Aerotel/Macrossan back in October 2006, and again before Lord Justice Jacob. The judgment is available from BAILII here.

The patent, GB2171877, was upheld in the original Court of Appeal judgment (here), but was then revoked the second time round by HHJ Fysh QC in the Patents Court in May 2008 (here). As this Kat thought at the time, it seems that the patent should really have been revoked the first time round, if only a proper attack had been made on it.  The first alleged infringer, Telco, didn't have a proper go, and gave up before the Court of Appeal decided the matter.  The second alleged infringer, Wavecrest, did have a proper go and relied more on the safer ground of novelty and inventive step, which resulted in the patent being found wanting for the latter.

Rather than taking another pot shot at the alleged inconsistencies of EPO case law, Jacob LJ, in dismissing Aerotel's appeal, chose to have a go at them this time for being a patent troll. Aerotel's barrister, Henry Carr QC, had attempted to argue that one reason the minor difference between what was known at the priority date and the claimed invention in the patent (essentially pre-payment rather than post-payment of phone calls) should be seen as being inventive was because the patent had been so commercially successful. Jacob LJ was, however, having none of this and put his arguments as follows:

"Mr Carr submitted that commercial success was a powerful factor in Aerotel's favour here. I do not see that. For here there is a counterquestion to "why not done before?" It is "why was it not done after?" A grateful market did not immediately fall upon this invention, saying "this is the answer to our problems." When the invention was made known absolutely nothing happened. The world beat a path to the door of Ralph Waldo Emerson's inventor of a better mousetrap, but the path to Aerotel's door remained untrodden.

I must explain. Aerotel does not itself make or sell anything. It is a company formed to exploit the present patent and its corresponding patents in other countries, particularly the US. The priority date is January 1985 and the application was published in Europe in 1986. Yet no one is said to have used the invention until 1994. From then on there was increasing use, but none of it was by virtue of anything done by or with Aerotel. A variety of telephone prepayment businesses just started up: there is no suggestion that any of them even got the idea from the Aerotel patent. There is no suggestion that any one of them came seeking a licence. Mr Carr's skeleton argument asserts that the invention "helped change the industry" and "created a new market which did not exist before". Nothing like that was proved and it is totally improbable.

So how then did Aerotel make money from the patent? By litigation and the threat of litigation against users. And principally in the US. That is unimpressive, for it is notorious that at least from the middle-90s the US patent litigation scene had become immensely pro-plaintiff. A defendant faced with the possibility of litigation had to take into account all of the following matters: (1) the right of the patentee to insist upon jury trial (juries are apt to be pro-plaintiff); (2) the general level of damages awarded in the US – by juries; (3) the real possibility of triple damages for wilful infringement; (4) the fact that even if a defendant won he would have to pay his own, very considerable, legal costs; and (5) the fact that until the decision of the Supreme Court in eBay v MerckExchange U.S. No. 05–131 (2006) there was a strong view that even a non-exploiting patentee who won would get an injunction as of right.

We know that Aerotel entered into licensing arrangements. But we know little more than that. There is no evidence as to why people took licences. I see no reason to suppose they did so for any reason other than the considerable downside risk they would avoid" (paragraphs 30-33).

This now seems to be the end of the line for Aerotel, in the UK at least.  The IPKat supposes that we (IP professionals and academics, that is) should thank them for being the catalyst for spurring a renewed debate on what the exclusions on patentablity mean in Europe.  After all, would we have had the recent referral from the President if Aerotel/Macrossan had not happened? Merpel, however, thinks that it would have happened anyway, it just needed the right McGuffin to kick it all off.

What the IPKat was reviewing at the time he was interrupted was a recent decision from the UK-IPO that may help those who are confused about how things now stand in the UK in relation to the exclusions under section 1(2).  This decision (available here) related to an application made in the name of Toshiba for a computerised system for determining the length of cable runs in a 3D model.  The invention itself, however, was not the interesting thing.  What was interesting to the IPKat was the following wording, which seems to be now standard for UK-IPO decisions relating to excluded subject matter:

"The interpretation of section 1(2) has recently been given further consideration by the Court of Appeal in Symbian Ltd’s Application [2008] EWHC Civ 1066. Symbian arose under the computer program exclusion, but as with Aerotel, the Court gave guidance of a more general nature on section 1(2). Although the Court approached the question of excluded matter primarily on the basis of whether there was a technical contribution, it was quite clear (see paragraphs 8-15 of the decision) that the structured four-step approach to the question in Aerotel was never intended to be a new departure in domestic law; that it remained bound by its previous decisions which rested on whether the contribution was technical; and that any differences in the two approaches should affect neither the applicable principles nor the outcome in any particular case. Indeed the Court at paragraph 59 considered its conclusion in the light of the Aerotel approach. It therefore remains appropriate for me to apply the Aerotel test, but with due regard to the clarification that Symbian provides as to when a computer program makes a technical contribution."

If anyone thought that Symbian really changed anything at the UK-IPO, the IPKat thinks that they are probably either overly optimistic or mistaken. The test, such as it is, is now still the familiar 4-step Aerotel test, but bearing in mind that computer programs can make a technical contribution, contrary to what the 4-step test might suggest. To the IPKat's eye, this seems to be a fudge. Either the whole EPO approach, problem-solution and all, should be used, or none of it. To rely on such a mish-mash of different approaches (which are now apparently incompatible at the EPO) doesn't really make anything clearer, and doesn't seem to help examiners in making the right decisions. Or is that the point?