Aerotel Ltd v Telco Holdings Ltd

For the purpose of the exclusion for business methods, a patent may pass the initial threshold for being an invention where it uses technical means. The exclusion is then considered at the stages of novelty and obviousness by examining the features that contribute technical character. A new use of known equipment remains excluded where the contribution is no more than a method of conducting business. Summary judgment is appropriate where the materials show that the patent has no realistic prospect of avoiding that conclusion at trial.

Aerotel sued Telco Holdings Ltd and related companies for infringement of a patent concerning prepaid telephone calls made from any available telephone. Telco denied infringement and sought summary judgment under Part 24 of the Civil Procedure Rules, contending that the patent was invalid because the claimed invention was a scheme, rule or method for doing business as such under Article 52 of the European Patent Convention.

The central issue was whether the patent made a technical contribution beyond the business method of arranging and paying for telephone calls, such that a trial was necessary.

1. The application for summary judgment was granted. Telco established one ground of invalidity, and the patent was revoked. The court considered that Aerotel had no realistic prospect of succeeding on the business-method objection.

2. The court adopted the summary judgment principles stated in Celador Productions v Melville [2004] EWHC 2362 (Ch): the applicant must show that the respondent has no real prospect of success; a real prospect is more than fanciful or merely arguable; and the court must not conduct a documentary trial without disclosure or cross-examination.

3. Under Article 52 of the European Patent Convention, the initial threshold for an invention is low. The approach in Hitachi Limited (Case T258/03) treated the presence of technical means as sufficient at that stage. The excluded subject matter is considered subsequently when novelty and obviousness are assessed, by reference to features contributing technical character.

4. The court accepted the distinction, reflected in CFPH LLC's Application [2006] RPC 5 and Shopalotto.com Ltd's Application [2006] RPC 7, between the scope of a contribution and the area in which the contribution is made. A clever or innovative business arrangement does not become patentable merely because it is implemented using a computer or other known technical equipment.

5. The patent described the use of an established electronic telephone exchange to verify a prepaid code, connect a call, monitor remaining credit and terminate the call when the credit was exhausted. Its problem and solution concerned payment for telephone calls. The equipment was not new, and the claimed method made no technical contribution beyond the business method itself. Further construction or expert evidence could narrow, but could not realistically widen, the scope of the claim.

Not stated in the judgment.