In Aerotel Ltd v Wavecrest Group Enterprises Ltd  EWCA Civ 408, the Court of Appeal of England and Wales dismissed an appeal from a decision at the High Court in relation to Aerotel’s UK patent GB 2171877 (the patent). The patent was also the subject of the Aerotel/Macrossan judgment of the Court of Appeal in 2006, the leading case on the patentability of computer-related inventions.
Aerotel sued Wavecrest for infringement of the patent, which claimed a method of making pre-paid telephone calls from any telephone, plus the related hardware. Wavecrest counterclaimed for revocation of the patent on various grounds, including lack of patentable subject matter, a lack of novelty and obviousness over numerous prior art citations, and also on insufficiency.
At first instance, HHJ Fysh considered that he was not bound by the previous Court of Appeal decision upholding the validity of the patent, owing to the absence of the prior art cited by Wavecrest.
The judge held that the patent was rendered obvious by such systems and that claimed commercial success was of very little importance and could not save the patent. Aerotel appealed against the finding of obviousness.
COURT OF APPEAL
In the Court of Appeal, Aerotel argued that a strong indication of its inventiveness was that the patent had been so commercially successful. However, in this case Jacob LJ found against Aerotel on this point, for two principal reasons.
The first of these was that, whilst Aerotel could point to a number of licences to the patent, these had been obtained as a result of litigation and the threat of litigation in the United States. The judge was of the view that this was unimpressive, as at least from the mid 1990s the U.S. patent litigation scene had become immensely pro-plaintiff and there was no reason to suppose that third parties took licences from Aerotel other than to avoid the considerable risk in not doing so.
The second reason was that, although there was an increasing market in pre-payment telephone cards in the years following the grant of the patent, Aerotel had failed to prove that this was due to the invention claimed in the patent. There were a number of other factors that may have been at work such as the invention could not be used without a tone dialling telephone and such phones were not in widespread use in the United Kingdom at the time. Further, the actual cost of telephone calls had fallen so that the amount of prepayment required to make a worthwhile call had also fallen.
Whilst there may not have been any pre-pay systems on the market at the priority date of the patent (and accordingly the patent was not anticipated by the prior art), the skilled addressee would in all likelihood consider the use of prepayment because any transaction can only run on credit or prepayment.
The Court of Appeal therefore found that the first instance judge made no errors of principle and dismissed the appeal accordingly.
It is rare, in the United Kingdom at least, for an argument of commercial success to save what would otherwise seem to be an obvious patent. A patentee must show that the commercial success was itself due to the technical merits of that invention. This will always be a difficult hurdle to overcome, but particularly so in cases such as this where the patent’s claimed success is to due to its aggressive enforcement before the courts.