Federal Court of Appeal Rejects Test for Software-Based Inventions in Canada

Under the prevailing Canadian jurisprudence, patent claims are to be construed in view of the specification as a whole, or “purposively” construed, to give meaning to the words in the claims and determine those claim elements that are essential (non-essential elements being those elements that, on a purposive construction, are clearly not intended to be essential, or could be substituted or omitted without affecting the working of the invention). (Free World Trust v. Électro Santé Inc., 2000 SCC 66) [“Free World Trust”]

One purpose of this analysis is to identify those claim elements that must be present to establish infringement; i.e., there is no infringement if an essential element is different or omitted in an allegedly infringing device. The case law has also established as a fundamental rule of claims construction that claims receive one and the same interpretation for all purposes, including infringement and validity. (Whirlpool Corp. v. Camco Inc., 2000 SCC 67)

An aspect of validity is whether claimed subject-matter comprises a prohibited category of invention or is “non-statutory.” One such non-statutory category is a mere scientific principle or abstract theorem (Subsection 27(8) of the Patent Act) which tends to capture claims that cover sets of rules. This is sometimes a problem for software-based or computer-implemented inventions, which often comprise steps of an algorithm (a set of rules). What is needed in order for such subject-matter to be statutory is for it to comprise a practical application; i.e., the essential elements must comprise a physical existence, or manifest a discernible effect or change. (Canada (Attorney General) v. Amazon.com Inc., 2011 FCA 328 at para. [66]) [“Amazon”]

Benjamin Moore Decision

In our June 2022 article, we addressed the Federal Court’s (“FC”) decision in Benjamin Moore & Co. v. Attorney General of Canada, 2022 FC 923 [“Benjamin Moore”]. Prior to Benjamin Moore, the Canadian Intellectual Property Office (“CIPO”) had routinely relied upon a “problem/solution” analysis in rejecting claims comprising computer-implemented subject-matter – often a combination of physical computer elements (e.g., memory and processors) and steps of an algorithm. CIPO would read out of such claims those elements considered by CIPO not to contribute to solving a problem described within the description (sometimes even where CIPO considered such elements to be essential) and, as such, not to comprise part of the “actual invention.” In some instances, this analysis would conflate the novelty of the claimed subject-matter with the process of claims construction, with CIPO determining certain elements to be non-essential because they were known in the art (under Free World Trust, novelty is not a consideration in claims construction and the identification of essential vs. non-essential claim elements). In this manner, CIPO would often distill claims comprising computer-implemented subject-matter to their algorithmic steps and, accordingly, deny the claims as mere scientific principles or abstract theorems.

In Benjamin Moore, the FC held that the Commissioner of Patents (the “Commissioner”) failed to apply the proper test to determine the essential elements of the claims and that CIPO’s “problem/solution” approach was not in line with the principles of purposive construction. The FC also adopted a test proposed by an intervener, the Intellectual Property Institute of Canada, and remitted the matter to the Commissioner for reconsideration, with instruction to use this test:

1. Purposively construe the claim;

2. Ask whether the construed claim as a whole consists of only a mere scientific principle or abstract theorem, or whether it comprises a practical application that employs a scientific principle or abstract theorem; and

3. If the construed claim comprises a practical application, assess the construed claim for the remaining patentability criteria: statutory categories and judicial exclusions, as well as novelty, obviousness and utility (the “Test”).

Appeal by Attorney General of Canada

Canada (Attorney General) v. Benjamin Moore & Co., 2023 FCA 168 [“Benjamin Moore FCA”] is an appeal by the Attorney General of Canada (“AG”) of Benjamin Moore, focusing on the Test. CIPO was concerned about being held in contempt of court under a test that it considered to be ambiguous. Further, the AG argued that the FC’s decision amounted to a declaratory judgment that was not sought by Benjamin Moore or the AG, but rather a third-party intervener and, as such, was inappropriate. The Federal Court of Appeal (“FCA”) allowed the appeal, although only to delete the Test from the FC’s judgment and replace it with the following: “This redetermination of the patentability of these two applications should be carried out on an expedited basis, in light of the most current version of the MOPOP with the benefit of these reasons.” (Benjamin Moore FCA at para. [98])

A summary of the FCA’s reasons follows.

Judicial Minimalism

Judicial minimalism is “the practice of courts dealing only with issues raised before them, which are necessary to determine the outcome of an appeal, and normally not to address other issues in obiter, even when properly before them.” (Benjamin Moore FCA at para. [32])

On this basis, the FCA stated “that interveners cannot seek a remedy that was not sought by the parties themselves,” (Benjamin Moore FCA at para. [32]) and, further, “that, subject to limited exceptions, unless a request to include a particular framework for all computer-implemented inventions in the judgment is a remedy specifically sought in the notice of appeal, it should normally not be considered.” (The FCA found it doubtful that the limited exceptions to this general principle could apply.) Furthermore, the FCA noted that “the discretion to grant [declaratory] relief can only be exercised after considering the four-part test set out by the Supreme Court in Ewert v. Canada, 2018 SCC 30 at paragraph 81. In this case, there is no indication that the Federal Court turned its mind to this test.” (Benjamin Moore FCA at para. [35])

The Test – Step One

The FCA relied on a FC ruling, Wenzel Downhole Tools Ltd. v. National-Oilwell Canada Ltd., 2011 FC 1323 (aff’d 2012 FCA 333), in stating that “the error of the Commissioner … in this case was not that she considered the problem and solution as part of her general assessment of the scope of the claims based on her reading of the applications as a whole, but rather that she identified the essential elements of the claims solely on that basis.” (Benjamin Moore FCA at para. [39])

The FCA further stated that “although identifying the problem and solution is relevant when construing the claims, it cannot be the sole or overarching element of the determination of their essential elements.” (Benjamin Moore FCA at para. [41])

Generally, the FCA was of the view that “CIPO and the Commissioner simply did not properly understand all of the subtleties of [the] difficult exercise [of purposive construction]” and concluded, with respect to the first step of the Test, that “the test does not provide any clarification as to the purposive construction exercise, instead simply stating that it must be completed. This was never in dispute.” (Benjamin Moore FCA at paras. [44] and [45])

The Test – Steps Two and Three

The FCA held that the FC erred by dictating the order to be followed by CIPO by first assessing subject-matter eligibility at step two of the Test, and only then considering novelty, obviousness and utility. In Amazon, the FCA had stated that “these patentability elements need not be considered by the Commissioner in any particular order.” (Benjamin Moore FCA at para. [48])

Further, the FCA considered the order imposed by step two of the Test to be problematic, as “it is difficult to understand why the Commissioner should look at the exclusions set out in subsection 27(8) before even examining whether the subject matter falls under the definition of an ‘invention’ at section 2 of the Act.” (Benjamin Moore FCA at para. [51]) The FCA further remarked that the “addition of the word ‘only’ and of ‘or whether’ imply an interpretation of subsection 27(8) and creates a dichotomy that is not based on any authority having definitely interpreted subsection 27(8).” (Benjamin Moore FCA at para. [54])

Regarding step three of the Test, the FCA failed “to see any real reason why the Commissioner should deal with recognized judicial exclusions only at that stage,” noting that “[m]any of these exclusions may be relevant to computer-implemented inventions.” (Benjamin Moore FCA at para. [55])

The FCA remarked that while Amazon “does not settle the issue of whether, once the claims have been purposively construed, the Commissioner may consider the concepts of novelty or ingenuity in assessing patentable subject matter under section 2, on my reading of the reasons as a whole, it certainly does not preclude such an exercise.” (Benjamin Moore FCA at para. [70])

The FCA further stated that “there are no authorities that have concluded that, once the claims have been purposively construed, [the] concepts [of novelty and obviousness] cannot be considered to determine whether the subject matter falls within the definition of ‘invention’ at section 2 and is not otherwise excluded.” (Benjamin Moore FCA at para. [72])

The FCA accordingly concluded that “there is no basis in Canadian case law as it currently stands for limiting the Commissioner’s consideration of the concepts of novelty and ingenuity to the analyses in application of sections 28.2 and 28.3 of the [Patent] Act, as [step three] of the Test implies.” (Benjamin Moore FCA at para. [78])

The FCA therefore found the Test not to be supported by Canadian case law, save for step one, and to be contrary to Amazon.

Obiter dicta

In obiter, the FCA stated that “[a]ll participants should keep in mind the particular difficulties arising from the realization of potentially unpatentable subject matter by programming it into a computer by means of a formula or algorithm (abstract ideas) (Amazon at para. 61). In the same vein, the Commissioner should keep an open mind and not hastily conclude that the subject matter claimed is not patentable simply because it involves the use of conventional computer technology.” (Benjamin Moore FCA at para. [85])

The FCA also remarked that “the difficulty often lies in determining where the discovery lies, i.e., what new knowledge has been added to human wisdom, in order to assess whether what is claimed is indeed a practical application as this expression is used at paragraph 66 of Amazon.” (Benjamin Moore FCA at para. [89])

The FCA further expressed the view that “if the only new knowledge lies in the method itself, it is the method that must be patentable subject matter. If, however, the new knowledge is simply the use of a well-known instrument (… a computer) to implement this method, then it will likely not fall under the definition [of “invention”] without something more to meet the requirement described at paragraph 66 of Amazon.” (Benjamin Moore FCA at para. [94])

Takeaways

The FCA’s comment that “the Commissioner should keep an open mind and not hastily conclude that the subject matter claimed is not patentable simply because it involves the use of conventional computer technology” is helpful for applicants of computer-implemented inventions. However, the FCA’s comment in obiter that “if the only new knowledge lies in the method itself, it is the method that must be patentable subject matter” and its further remark that Amazon does not preclude the Commissioner from considering the concepts of novelty or ingenuity in assessing patentable subject-matter may give CIPO reason to, once again, conflate the issue of novelty with the determination of essential claim elements (despite that this is not in alignment with the approach to essential element determination dictated by the Supreme Court of Canada in Free World Trust). Furthermore, CIPO may continue to use a problem/solution analysis, given the FCA’s acknowledgment that “identifying the problem and solution is relevant when construing the claims,” but in so doing, CIPO should also recognize the FCA’s further statement that “it cannot be the sole or overarching element of the determination of their essential elements.”

What this all means for applicants of patent applications covering computer-implemented inventions remains to be seen; it is unclear how CIPO will apply the FCA’s decision in Benjamin Moore FCA. In the meantime, to help avoid an application being rejected as non-statutory, applicants may consider including in their patent applications claim elements that, along with algorithm or method steps, impart physicality to the claimed subject-matter (beyond conventional computer elements) or manifest a discernible effect or change, such as a physical measurement device or input tied to an algorithm, or the physical use of an algorithm output.