The Court of Appeal is to hear a case that could rewrite the book on how software patenting is handled in Britain.

The case involves a patent application by Neal Macrossan, an Australian resident, whose application to patent a computer-based system was turned down by the Patent Office on the grounds that it fell under the category of two exclusions in the European Patent Convention and the UK Patents Act. Both exclude any patent covering "a mental act" and "a program for a computer".

This language has effectively kept software programs and business processes from being patented in the UK, although the European Patent Office's interpretation is quite different - it has granted several thousand such patents, including a European version of's 'One-Click' shopping process.

The controversial software patents directive thrown out by the European Parliament last year was intended to eliminate such differences in interpretation, and, according to critics, would have allowed software patents to be enforced across the E.U.

Last week, Lord Justice Jacob gave the go-ahead for Macrossan's appeal to proceed to the Court of Appeal. If the appeal is successful, it could force the U.K. Patent Office to be more liberal in granting computer-related patents.

In court documents, Lord Justice Jacob stated that the exclusions are "of public interest, sufficiently uncertain and thus worthy of consideration by the Court of Appeal".

He said Macrossan's arguments "have a real prospect of success".

Macrossan's invention is a web-based system for automatically generating the documents necessary for incorporating a company in the U.K. The Patent Office denied him a patent based partly the findings of a 1997 Fujitsu case, found that a computer program for modelling crystal structures couldn't be patented.

Macrossan took the Patent Office to the High Court, but Justice Mann decided against him in April of this year.

"It is hard to see what technical contribution is provided by the invention," said Justice Mann in the April decision. "It is, or it involves, a technical process, but that process is itself a computer program... The heart of its effect is an automation process, but what it automates is a mental act."

In the US, computer-related patents are issued far more liberally, a practice that has led to a patent arms race amongst the largest IT companies. Smaller companies have been in the position of having to license technology from their larger competitors or face legal action.