Further Analysis on Patenting Computer-Implemented Inventions in Canada
June 22, 2021
The question of whether a claimed invention includes patentable subject matter often entails a complex and multi-pronged analysis of the language of the patent specification. In late 2020, the Canadian Intellectual Property Office provided guidance in its Practice Notice, “Patentable Subject-Matter under the Patent Act”, following on the heels of the Federal Court’s decision in Yves Choueifaty v. Attorney General of Canada, 2020 FC 837. In the Practice Notice, CIPO signaled a move away from the former “problem and solution” approach to identifying essential elements during purposive claim construction. CIPO also advised that the subject matter inquiry involves identifying an “actual invention” of the claim and determining whether such “actual invention” has physicality (i.e., either has physical existence or manifests a discernible physical effect or change).
In addition to CIPO’s own examples applying the new guidelines, we have been getting a steady stream of decisions from the Patent Appeal Board (“PAB”) commenting on subject matter eligibility in light of the Choueifaty decision.
CFPH, LLC (Re), 2021 CACP 16 (“CFPH”)
In CFPH, the application related to a betting system for race events wherein a bettor may place bets as to the position of a race participant at an intermediate point of the race event. Measurement devices placed at intermediate points of the race relay intermediate race results to a computer betting system to determine payouts.
Claim 1 of the application included a step of receiving data regarding intermediate race results “from devices at a race location”. The final step of the claim recites “determining payout results, at a processor of the computer betting system, for the bets based at least in part on whether the designated race performance characteristics of race participants at the designated intermediate points match the received intermediate race performance characteristics measured for the participants.”
The PAB analyzed the claims in view of the Practice Notice. Specifically, the PAB decision took into consideration this excerpt from the Practice Notice: “…it is necessary to consider whether the computer cooperates together with other elements of the claimed invention and thus is part of a single actual invention and, if so, whether that actual invention has physical existence or manifests a discernible physical effect or change and relates to the manual or productive arts.”
In their analysis, the PAB held that the measurement devices recording intermediate race results cooperate with the computer betting system to produce the overall method wherein bets can be made and resolved based on intermediate race results. The PAB noted that there is nothing in the common general knowledge that suggests that the computer betting system cooperating together with a race event measurement device constitute a generic computer that “processes the algorithm in a well-known manner.”
The claimed subject matter was held eligible under the Patent Act. In the decision, the PAB stated the method steps of the betting and payout determination process and the computer system that implements them form a single actual invention in combination with the use of the measurement device at the race event. That single actual invention, by virtue of the use of the measurement device to record intermediate race results, is “something with physical existence, or something that manifests a discernible effect or change” (Canada (Attorney General) v Amazon.com Inc, 2011 FCA 328 at paragraph 66).
Chicago Mercantile Exchange, Inc. (Re), 2021 CACP 14 (“Chicago Mercantile Exchange”)
In Chicago Mercantile Exchange, the application related to trading of financial instruments. Specifically, the application related to a method of improving market liquidity by matching trading orders using trade templates.
Claim 1 of the application included, in part, an algorithm that uses trade templates to pre-match parts of existing spread orders, determines a collection of needed orders to complete the trade templates, matches incoming orders with needed orders, and executes matched trades.
After finding that all the claimed elements are essential, the PAB held that the claimed method (including the order matching algorithm) improves the order matching functionality of a computerized trading system. The computerized trading system and the order matching algorithm were found to “form a single actual invention” that addresses technical limitations of existing trading platforms due to inefficient order matching algorithms. The claimed subject matter was thus held to be eligible under the Patent Act.
In their decision, the PAB distinguished the actual invention of the impugned claims from those at issue in the Schlumberger Canada Ltd. V. Commissioner of Patents  1 FC 845 (CA), emphasizing that the computerized steps of the impugned patent “are not merely for yielding information, but for permitting the computer inside the electronic trading system to carry out the order matching procedures with higher efficiency and faster speed, which improves the functioning of the computerized trading system for achieving better market liquidity”.
Landmark Graphics Corporation (Re), 2021 CACP 15 (“Landmark Graphics Corporation”)
In Landmark Graphics Corporation, the application related to history matching of oil and gas reservoir models and simulation of production using well logging data.
Claim 1 of the application included, in part, the steps of acquiring measurements from wells in a reservoir, generating history-matched models using the measurements, generating dynamic simulation realization sets using history-matched models, deriving a ranking of a subset of the history-matched models based on the dynamic simulation realization sets, and presenting a production forecast based on the ranking.
The PAB noted that other than “acquiring measurements” (which was broadly construed as mere accessing of stored information), all steps of the claimed method correspond to a generic computer processing data and presenting an output. Specifically, the PAB held that the actual invention is an abstract algorithm, lacking any physicality, for processing well-logging data and presenting output information, and that the computer described in the claim does not form part of the single actual invention.
Interestingly enough, the Applicant provided proposed amendments to claim 1 that include a step of “acquiring, using a production logging tool...”. The PAB determined that the proposed amendment uses more specific language than the claims on file and includes the production logging tool as an element of the claim. The PAB stated that since the production logging tool cooperates with the computer and algorithm to provide the solution of the invention, the production logging tool is therefore part of the actual invention and provides the necessary physicality. As such, the PAB has indicated that the proposed amendments appear to meet all requirements of the Patent Act and Patent Rules.
BGC Partners, Inc. (Re), 2021 CACP 24 (“BGC Partners”)
In BGC Partners, the application related to a computer-implemented method and system for protecting users from erroneous price entries in electronic trading. As a market price changes quickly, manual entry of bids on a trading computer can have excessive delay compared to the fast-moving market, resulting in erroneous bid entries. The application seeks to overcome this defect by allowing a user an opportunity to submit, modify or cancel their bid entry when it is determined that the price has changed by a predetermined amount, or when the price change has occurred within a predetermined period of time.
Claim 1 of the application recited a method for protecting against the occurrence of erroneous price entries and included steps of displaying by a computing device on a user interface a plurality of bid and ask prices, receiving by the computing device a trade command from a user to hit or lift at least one price from the plurality of bid and ask prices, determining by the computing device whether the at least one price has changed by at least a predetermined number of increments from a first price to a second price, and if the at least one price has changed by at least the predetermined number of increments, presenting the user by the computing device with the opportunity to submit at least a portion of the trade command at the second price or cancel the trade command.
In their analysis, the PAB noted that all the elements of the claims on file are determined to be essential, including the computer implementation steps and the computer-related components. In view of the specification, the PAB stated that the claims method is addressing shortcomings in the user interface of the trading computer. Specifically, the PAB stated that, as disclosed, a user’s action to enter trade commands requires a manual or physical execution. As a result, by the time the trade command is actually registered by the system, a given price will have changed to something other than what the user expected.
In view of the Practice Notice, the PAB has stated that although the steps of the claimed subject matter appear to merely define a trading rule or algorithm, the effect of said algorithm running on the trading computer is to enhance or improve the data entry functionality of the trading computer. As such, the PAB decided that the claimed invention is addressing a technical limitation in the electronic trading system, one of latency between the display of information and the ability of a user to enter a response before said information has changed. The PAB also stated that the computer and the algorithm together form a single actual invention that defines something with physical existence, or something that manifests a discernible effect or change. The application was thus found to meet the requirements of the Patent Act and Patent Rules.
These recent PAB decisions are promising for those seeking patent protection on computer implemented inventions in Canada. That being said, it is important to ensure the application provides significant details as to how the computer elements cooperate together with other elements of the claimed invention to form a single actual invention. It is also important to include details as to how the actual invention has physical existence or manifests a discernible physical effect or change.