Offshore server infringes UK patent, says appeals court

The case was brought by Menashe Business Mercantile Ltd, the owners of a European Patent covering an "interactive, computerised gaming system with remote control", against bookmaker William Hill.

William Hill's British punters connected to the offshore server using software supplied by the bookmaker. Menashe argued that, once a punter within the UK connected to the offshore server via the internet then the system fell within – and infringed – its patent.

William Hill claimed that it could not infringe the patent as the host computer was outside the UK and, accordingly, beyond the scope of a UK patent.

Although accepting that its supply of software was within the UK and that it was an essential element of the invention, the company denied that it was a supply for putting into effect the invention within the UK as that would require the combination of the server and end-users' computers to be wholly within the UK.

The Patents Court rejected the bookmaker's arguments, reasoning that it was no defence that the host computer and part of the communication system were not located in the UK. William Hill appealed the decision.

The Appeals Court sided with the Patent Court's decision. It ruled that the Patents Act 1977 should not be confined to infringing acts committed within the UK, and that the law looked to "effect within the UK" rather than "use within the UK." The court reasoned that:

"It is the input to and output of the host computer that is important to the punter and in a real sense the punter uses the host computer in the United Kingdom even though it is situated in Antigua and operates in Antigua. In those circumstances it is not straining the word 'use' to conclude that the UK punter will use the claimed gaming system in the UK, even if the host computer is situated in, say, Antigua. Thus the supply of the CD in the UK to the UK punter will be intended to put the invention into effect in the UK."

Therefore, the court found, the host computer located in Antigua should be considered as within the jurisdiction of the UK, and the appeal was dismissed.

The Court of Appeals' decision can be found at:
www.bailii.org/ew/cases/EWCA/Civ/2002/1702.html