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|Neutral Citation Number:  EWHC 568
|Case No: CH 2007 APP
IN THE HIGH COURT OF JUSTICE
|Royal Courts of Justice
London, WC2A 2LL
B e f o r e :
MR PETER PRESCOTT QC (sitting as a Deputy
|In the matter of the Patents Act
|And in the matter of Patent Application
No GB 0311200 in the name of IGT/Acres Gaming Inc
Mr Thomas Moody-Stuart instructed by J A Kemp & Co for the
Mr Colin Birss instructed by the Treasury Solicitor for the UK
Intellectual Property Office
Hearing date : 25 January 2008
submissions in writing
HTML VERSION OF JUDGMENT
Crown Copyright ©
- When a claim defines an invention partly by
reference to excluded subject-matter e.g. a business method, how do you search
the prior art? This appeal illustrates some of the difficulties.
The Invention As Described
- Patent application GB 0311200 was filed by Acres Gaming Inc, of Las Vegas, Nevada. It states the basic problem with
disarming candour "to keep people coming back despite losing money".
- It then describes a known method:-
One technique casinos have been using of late to keep old
players and lure new players is with identification cards. By signing up for
an identification card with the casino, players can earn points toward
bonuses, designed to encourage loyalty to a particular casino. The
identification cards also provide a bonus to the casino: the casino gets
information about the player's playing habits.
- So even casinos are issuing loyalty cards nowadays
a sort of frequent gambler card. The gambler puts his card in a slot where it
is read electronically. The data is sent to a central computer for analysis.
His identity is ascertained as part of that analysis and so he establishes his
entitlement to his bonus points.
- The patent application explains that issuing one of
those loyalty cards is a rather cumbersome process. The new customer's data
(name, address, etc) has to be keyed in manually. It also takes time to make
the card and post it to him. What is more, returning customers sometimes
forget to bring their loyalty card.
- To overcome those difficulties, the applicants came
up with this general idea: Why bother to issue cards in the first place? Why
not use somebody else's cards instead?
- By "somebody else's cards", I mean the sort of
conventional cards not issued by casinos that people are likely to carry
around with them anyway: for example, credit cards, supermarket loyalty cards,
or (in America) driving licences, or social security cards. The information
may be embedded in a magnetic strip or a chip attached to the card or (in the
case of an American driving licence), a barcode.
- As described in the patent application, what happens
at the casino is this. The customer takes one of those cards his credit
card, for example and presents it to a reader. The binary number stored in
the card is read electronically and is sent to a computer, which looks in a
database to see if the customer already has an "account". If he has, he gets
the privileges that pertain to that account: bonus points, or whatever. If he
has no account he is invited to open one.
- The patent application describes a further idea:
that, in order to search the database, the computer does not need to decode
the raw information that is read off the card. As it explains:-
In fact, one level of generalization further is possible.
Specifically, it is not required that the microprocessor in [the] computer
decode the information read from the magnetic stripe or bar code, or even
know the encoding. The bit sequence encoded on the card will typically be
unique or almost unique, even across different coding schemes. Thus, one
player can swipe a driver's license, a second player can swipe a credit
card, a third player can swipe a rewards card (e.g., a rewards card
associated with a supermarket or other store), and so on. [The] computer
then simply uses the raw, encoded information to identify a player's
account, without decoding or even knowing how to decode the information.
- Therefore the system can handle a variety of cards
whose encoding protocols may be mutually incompatible. To search the database
it just uses the raw number read off the card. The raw number may encode
useful information about the returning customer e.g. his name, but this can be
ignored (at that stage, anyway).
The Invention As Claimed
- Claim 1 of the patent application as originally
filed read as follows:
An apparatus for selecting an account for a player, comprising:
a card reader, designed to electronically read information off a preexisting
card issued by an entity other than a casino; a database of accounts;
a network; and a microprocessor programmed to access an account from the
database over the network based on information read from the preexisting
card. [Emphasis supplied.]
- What is defined in that claim differs from loyalty
schemes already in use in casinos, and admittedly so, in one material respect
only: that the card is a pre-existing card issued by an entity other than a
casino. But that is just an institutional fact, denoting a legal relationship.
It may or may not have been a clever business idea to piggy-back on
pre-existing conventional cards, but what is there defined is not a patentable
invention according to the law of this country. The innovation lies in the
world of business administration, not technology: see below.
- Furthermore, the concept was not new even in terms
of casino business methods. It had already been proposed see US Patent
5811772A (Lucero) that in order to obtain playing credit without having to
queue up at a window to get more coins, a player could feed a general purpose
charge card (e.g. Visa, MasterCard, American Express) to a reader at a gaming
machine. But Lucero also disclosed, see Figure 8, that the information read
off that general purpose charge card could be used to ascertain if the player
already had an account with the casino. Of course, the general purpose charge
card would be a card "issued by an entity other than a casino".
- Therefore, Claim 1 as originally filed could not
be allowed and the applicants accepted it. So they proposed an amended
- Claim 1 of the UK patent application as presently
on file reads as follows:-
An apparatus for selecting an account for a player, comprising:
a card reader, designed to electronically read encrypted
information off a preexisting card issued by an entity other than a
a database of accounts, each identified by respective
a network; and
a microprocessor programmed to use encrypted information
read off a preexisting card and without decrypting the information in
order to identify and access an account from the database, over the network,
identified by the non-decrypted information. [Emphasis supplied.]
- That was said to be based on the passage I have
quoted in paragraph 9 above. From certain subsidiary claims in the
application it appears that decryption of the information at a later stage
for a different purpose (i.e. after the account has been identified and
accessed) is not ruled out.
- There are other claims on file, but having
considered these I believe I can decide this appeal essentially on the basis
of existing Claim 1.
- Article 52 of the European Patent Convention 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
(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
The expression "excluded matter" is a bit of jargon that is used to denote
what is covered by Article 52(2).
- Article 52 has proved to be difficult to apply but
the approach that is current in this country was laid down by the Court of
Appeal in Aerotel Ltd v. Telco Holdings Ltd  EWCA Civ 1371. There are four consecutive steps:-
(1) properly construe the claim
(2) identify the actual contribution;
(3) ask whether it falls solely within the excluded subject
(4) check whether the actual or alleged contribution is actually
technical in nature.
- The fourth or last step is just a cross-check,
because "technical" is too vague a test to be used on its own.
- In discussing the second step the Court of Appeal
43. The second step identify the contribution is said to be
more problematical. How do you assess the contribution? Mr Birss submits the
test is workable it is an exercise in judgment probably involving the
problem said to be solved, how the invention works, what its advantages are.
What has the inventor really added to human knowledge perhaps best sums
up the exercise. The formulation involves looking at substance not form
which is surely what the legislator intended.
44. Mr Birss added the words "or alleged contribution" in his
formulation of the second step. That will do at the application stage
where the Office must generally perforce accept what the inventor says is
his contribution. It cannot actually be conclusive, however. If an inventor
claims a computer when programmed with his new program, it will not assist
him if he alleges wrongly that he has invented the computer itself, even if
he specifies all the detailed elements of a computer in his claim. In the
end the test must be what contribution has actually been made, not what the
inventor says he has made.
- The Court of Appeal accepted those submissions and
I have stressed the most important point: what has the applicant really added
to human knowledge?
- After hearing argument in this case I wondered
what is meant by the second paragraph I have quoted, namely paragraph 44. Does
it mean that the Patent Office is bound to accept the applicant's assertion
(save in blatant cases)? Or can the Patent Office do a prior art search to
find out what has the inventor really added to human knowledge? I therefore
invited further submissions in writing.
- Although there was some disagreement, both parties
accepted that the Patent Office is entitled to do a prior art search and that
if it turns out that the alleged contribution was already known, or was
obvious, there can hardly be a contribution to human knowledge. In my judgment
that is correct. And there will be no patentable contribution to human
knowledge if what is new and not obvious relates solely to a business method
The Patent Office Decision
- The Examiner (Mr Paul Marshall) objected that
Claim 1 as amended still did not define a patentable invention because it was
for a business method or computer program as such. He also objected that what
was claimed did not involve any inventive step. There was a hearing at which
Mr Thomas Moody-Stuart represented the applicants, as he does now.
- In his decision the hearing officer (Mr R C
Kennell) first considered whether the claims of the application defined a
patentable invention. He proceeded as follows. He cited the four-stage test
laid down by the Court of Appeal in Aerotel. He assessed the inventor's
'contribution' (i.e. what he had added to human knowledge) as follows: "The
use of encrypted information on a pre-existing card, without decrypting it,
for the purpose of either identifying an existing account or confirming
whether or not an account already exists". However he then went on to consider
whether the 'contribution' related solely to excluded matter. He held that it
did because it was "as a whole, sufficiently part of the administration of the
business to be excluded as a method for doing business" irrespective of
whether the invention was claimed as a method or as apparatus. He therefore
held that the application should be refused.
- Although the hearing officer thought it was not
strictly necessary for his decision, he then went on to consider whether the
claimed invention was obvious; but he was not satisfied that it was. The
inventive step could be the recognition that there was information in a
pre-existing card which could be used as an identifier without decryption,
"which would not have occurred to the skilled man without inventive effort".
(I should explain that the Examiner had argued this point without relying on
any specific piece of prior art. His argument was that it was well known to
use a string of identifying information in order to access a computer record,
and that lack of 'decryption' was a red herring.)
The Hearing On This Appeal
- In opening this appeal Mr Moody-Stuart pointed out
that, if indeed it was not obvious to use the identifier on a pre-existing
card without decryption as the hearing officer was prepared to hold then
the invention of amended Claim 1 ought to have been held to be patentable. For
in that case the contribution that the inventor had made to human knowledge
did not consist solely of excluded matter.
- So far as that goes, I would have been prepared to
hold that Mr Moody-Stuart was right. If and I stress the word "if" it was
indeed new and not obvious to those skilled in the art at the priority date of
the patent application to devise an apparatus where a card bearing encrypted
information is presented to a reader and the information is used to access a
record in a database without decrypting the information first, it would be so
irrespective of the business (if any) in which the concept was to be employed.
It would be a new and inventive technical procedure. It could therefore hardly
be said to be subject-matter falling solely within the excluded province.
- Furthermore, even if Claim 1 failed, other claims
might not, and the applicants would at least be entitled to those. Claim 11 as
now on file is for an apparatus according to Claim 1 where the pre-existing
card "is drawn from the set including a driver's licence, a credit card, and a
bonus card". Such cards have mutually incompatible encoding protocols. So at
that level of generalisation the invention could be described as follows: In
an environment where cards bearing information encrypted according to mutually
incompatible protocols may be presented to a card reader, the use of the raw
encrypted number to access a record in a database without decrypting the
number first. I have stated the concept without reference to any business
method as such, and if that concept is indeed new and not obvious, the
applicants would be entitled to patent it.
- Although there are some claims of the application which are directed to a computer program
which, in use, would cause the above-described procedures to be performed, it
would seem that those would not be considered to be computer programs 'as
such', in the assumed premises and having regard to the recent decision of
Kitchin J in Astron Clinica Ltd v. Comptroller-General of Patents  EWHC 85 (Pat).
- Therefore, if that had been all, I would have been
prepared to allow the appeal and to direct that the patent application should
- However, for reasons that emerged during the
hearing and which I shall now describe, I am not satisfied that what I have
said so far is a completely accurate description of the case.
- Claim 1 as now on file uses the expressions
"encrypted", "non-decrypted", and "without decrypting the information": see
paragraph 15 above. In my judgment they lack sufficient clarity and may have
misled the Examiner when he searched the prior art, so that it is possible
that there existed prior art in the light of which the concepts I have
described were not new, or were obvious
- The data in these cards may be stored in a
magnetic strip, a microchip, or the like. If you could somehow read one of
those with your own eyes, you would see a string of bits a sequence of 1s
and 0s. They constitute a binary number that encodes certain
information pertinent to the holder of the card. In some instances there is
nothing secret about the method of encoding. For example, American driving
licences encode the licence number, the issuing State, the driver's name,
address, and so forth, according to an agreed and published encoding protocol.
Anybody skilled in the art could recover that information using standard
- In other instances, however, the information (or
some of it) is intended to be kept secret. For example, if your credit or
debit card is stolen it is important to stop thieves recovering your PIN. The
correct name for that kind of encoding is enciphering. Enciphering is a
species of encoding.
- Unfortunately, the claims of the patent
application, as now on file, use a third expression: encrypted. I
cannot find that that word was used in the application as originally filed,
and in my judgment it is unduly obscure as it stands. It could suggest that
some of the information in the card is meant to be kept secret, which is
indeed the primary meaning of the word. It is true that if you read the
document as a whole, carefully, you may be led to think that that is not the
case, because of the references to driving licences and social security cards.
I believe that in America such documents do not encode secret information but,
as against that, this is a patent application for the United Kingdom.
Therefore, how can the skilled reader be sure that the applicants did not
decide to disclaim the use of cards bearing nothing but open-access
- In response to questions I put to him at the
hearing, Mr Moody-Stuart told me that Claim 1 was intended to cover both cases
in the alternative i.e. (1) where at least some of the encoded information is
secret or (2) where none of it is.
- When I first perused the document I thought that
"encrypted", and so forth, referred to enciphering. Furthermore, Mr Colin
Birss, who represents the Patent Office, told me that the use of
encrypted, and so forth, had misled the Office during the official
examination, perhaps causing them to miss relevant prior art. They asked me
for a further opportunity to examine this application.
- I was not told why the original expressions
"decode", "encoding", "encoded", "without decoding", and so forth, were
changed. If e.g. "without decrypting" means exactly the same as "without
decoding", why change it? If it does not mean exactly the same, is there added
subject-matter? Maybe an intermediate generalisation was intended. I do not
attempt to answer those questions now. It is enough that the expressions
currently in Claim 1 are not sufficiently clear.
- A patent claim should desirably be as clear "as
the subject admits of". It may be possible to arrive at the most probable meaning of
a claim by paying careful attention to the text of the document as a whole,
but at the examination stage this many not be enough. A higher standard can be
required. It should be remembered that, in real life, industry may have to
consider a large number of patents and in practice there may not be enough
time to do more than look at the broadest claim and the drawings. If the claim
seems to bear a meaning that is, in fact, inconsistent with its real meaning
when read in the context of the whole document, the reader may be misled. The
claim is therefore obscure, and if the obscurity is avoidable objection arises
under section 14(5)(b) of the Patents Act 1977.
- In my judgment the Patent Office is entitled to
take the point even at this stage and I have power, in the exercise of my
discretion, to allow them to do so: see section 99 of the Act. Although I bear
in mind that the point has been taken very late in the day, I exercise my
discretion having regard to the public interest i.e. that it is most desirable
that patent claims should be clear. Not just that, but the law so requires:
see section 14(5)(b). I therefore hold that this patent application needs
amendment for the reason I have stated. Although the time has expired for the
case to be in order for acceptance, the case is before me under appeal, and
the combined effect of the Act and Rules is to give the applicants an
opportunity to amend. By the same token the Patent Office is entitled to
examine the document as sought to be amended, and to search for further prior
art if so desired.
- I shall therefore put Mr Moody-Stuart's clients to
their election. They can either accept the consequences I have stated in the
preceding paragraph. Or they can choose to stick to the language they have
chosen, apply to the Court of Appeal for permission to appeal, and seek to
justify it before that tribunal I do not encourage this myself. (They will
also run the risk that their patent, if granted, could be held invalid for
- That is enough to dispose of this appeal, but I
should like to add some brief remarks about searching the prior art in these
cases in case it may assist the Patent Office in future. (I need hardly stress
that no criticism whatever of the search examiner is intended.)
Prior Art Searching
- In CFPH's Application  EWHC 1589 (Pat) I pointed out that "patents that are wrongly granted can be
very expensive to challenge, and perhaps beyond the means or inclination of
small and medium enterprises. An accumulation of patents of that sort
(sometimes known as a "patent thicket") may be a serious barrier to entry. The
only safeguard against that wrong and it is a wrong is the vigilance of
the Patent Office." That is consistent with what the Court of Appeal said in
Aerotel at paragraphs 17-21.
- It is therefore in the public interest that patent
applications should be searched against the prior art with appropriate
thoroughness, and that is what the Patent Office normally tries to do.
- Patent applications are usually searched against
an existing patent database, but because business methods as such are not
supposed to be patented and should not be in the database in the first place,
relevant prior art could be missed if the search were to be confined to
subject-matter partly defined by mere "business" features. The most relevant
prior art might be a document propounded in a wholly different business
context, or in no business context at all. It is therefore legitimate, when
performing a search, to strip out the "business" features and to search for
the remaining combination of "technical" features.
- For instance (and to take the present case as an
illustration), the search need not be limited with reference to casinos and
"accounts". Such features can be stripped out for the purpose of the search.
For example, the subject of existing Claim 1, when suitably clarified, might
be searched against the following concept: "Reading the information encoded in
a card or other token and using the raw number thus read to search a database
without decoding the number first". It would still remain for the substantive examiner to decide
whether the claim is for patentable subject-matter having regard to the prior
art thrown up by the search, and according to the principles laid down in
- Furthermore, when it is suspected that the sole
contribution to human knowledge may be a business method as such i.e. the
"technical" features of the claim were known or obvious it does not follow
that a patent database is the only or best place to search. The most relevant
prior art document may not be in any patent database, because it was not
decided to apply for patent protection. This could be so where the document is
a published international standard. Such documents may be available online.
- Purely by way of example, passports have a
machine-readable string at the end. Likewise an American driving licence is
machine-readable, and identity cards have been proposed which would be
machine-readable. Also there could be traveller's cheques with a unique
identifying code in a magnetic strip (see e.g. WO9724694). If such a document
is reported as stolen (or if the authorities have some other reason to
interview the bearer) the fact may be flagged up in a database. Is it known to
search the database without decoding the string first? I do not know; but the
Patent Office is entitled to find out if a concept of that sort has been
published. That is a matter for them.
- The point I am venturing to make, therefore, is
that when the Patent Office wants to do a search it is entitled to strip out
the merely "business" features of a claim. This may be known to examiners
already, but I do not believe it is stressed in the Manual of Office Practice.
- Furthermore, if the stripping-out exercise is
performed it may become self-evident that the combination of "technical"
features was common general knowledge, or even acknowledged in the application
itself (see e.g. paragraph 12 above). It may then emerge that a search under
section 17 would serve no useful purpose, see section 17(5), and may be
deferred pending amendment, thus saving valuable human resources.
- But on matters of searching I do not want to say
one word that would fetter the discretion of the Patent Office in this and
- Because of the outcome of this appeal there should
be no order as to costs.
Note 1 Published as GB 2390917
Note 2 Subsequently it was assigned to the
present owners, IGT. [Back]
Note 3 Claim 10, for example, which says
that the microprocessor is further programmed to decode the information read
from the card reader e.g. to identify the users name and
Note 4 For example, A computer program to
select an account for a player, comprising program code means which, when
executed on a computer system, instructs the computer system to effect the
method [of the previous claims]. [Back]
Note 5 Cleveland Graphite v. Glacier
Metal (1952) 67 RPC 149 at 154, H.L. [Back]
Note 6 Likewise, the subject of Claim 11
could be searched as follows: In an environment where a number of cards
encoding information according to mutually incompatible protocols may be
presented to a reader, the use of the raw number read off a card to search a
database without decoding the number first. In passing, I wonder if existing
charge cards are all encoded according to identical
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