Federal Court of Appeal overturns test for subject-matter patentability of computer-implemented inventions

The Federal Court of Appeal (FCA) has waded into one of the hottest topics in patent law: the patentability of computer-implemented inventions. The key question: how to determine whether a particular computer-implemented invention qualifies for patent protection?

Overview

The FCA considered the decision:  Benjamin Moore & Co. v Canada (AG), 2022 FC 923, where the Federal Court (FC) set aside the refusal of two patent applications for computer-implemented inventions relating to colour selection methods using experimentally derived relationships for colour harmony and colour emotion (Canadian Patent Applications No. 2,695,130 and 2,695,146, directed to a “Colour Selection System”). The FC had ordered that the matter be redetermined by the Commissioner of Patents (Commissioner). For more background details, please see our post on the FC decision.

The FCA confirmed that on the redetermination, the Commissioner and the Canadian Intellectual Property Office (CIPO) should apply their current test for determining subject-matter eligibility as set out in the Manual of Patent Office Practice (MOPOP) and CIPO’s Practice Notice PN2020-04, interpreted with the benefit of the FCA’s reasons – at least for now.  

Although the redetermination will be conducted using CIPO’s current test for patentable subject-matter, the FCA did not actually consider whether CIPO’s test is correct in law because this issue was not squarely before the court. The FCA also made it clear that it views the law on this “very complex issue” as being far from settled, pointing to the limited number of cases that have been brought before the Canadian courts and the wide range of fact-specific legal considerations that have been identified as relevant by the courts of other common law jurisdictions. 

These decisions emphasize the importance of engaging experienced Canadian patent counsel to navigate Canada’s unique and still-nascent approach to subject-matter eligibility determinations, mindful that the Canadian approach may not align with what works in other jurisdictions. Applicants are faced with the difficult task of trying to understand what the correct legal test for patent eligibility is, while also ensuring that their claims comply with CIPO’s current practice notice to enable their patent applications to proceed to grant.  

Applicants should prepare for future evolutions of the legal test as more subject-matter eligibility cases are brought before the courts. Applicants seeking clarity may also wish to consider whether rejections in their own cases would benefit from adjudication before the courts. Indeed, at least one appeal considering the new guidance is already underway before the FC. 

Procedural history

The FCA’s findings in Benjamin Moore are closely tied to its procedural context. The case arose on statutory appeal of two Commissioner’s decisions (the Refusal Decisions) refusing two patent applications filed by Benjamin Moore & Co. (BM), both relating to computer-implemented colour selection methods.¹  

The Commissioner held that BM’s claims were non-compliant with section 2 of the Patent Act, as they claimed non-patentable subject matter when construed according to CIPO’s practice at the time.

Shortly thereafter, the FC rejected CIPO’s approach to claims construction when considering the patentability of a computer-implemented invention in Choueifaty v Canada (AG), 2020 FC 837 (Choueifaty). As we reported, Choueifaty confirmed that there is only one approach to claims construction: purposive construction. Following Choueifaty, CIPO responded by issuing Practice Notice PN2020-04 to provide new direction for making subject-matter determinations regarding computer-implemented inventions. This Practice Notice builds on, and in some respects, supersedes, the guidance in MOPOP.

A few days after PN2020-04 was issued, BM filed a statutory appeal of the Refusal Decisions to the FC. There was no dispute among the parties that the Commissioner had erred in applying the pre-Choueifaty approach to construction and that the matter should be remitted for redetermination. 

Instead, the appeal turned on a three-part test for determining subject-matter eligibility that had been proposed by an intervener and supported by BM. In allowing the appeal (2022 FC 923), the FC agreed with the proposed test and ordered the Commissioner to apply it as follows: 

• Purposively construe the claim;
• 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
• 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.

As we reported, this three-part test was viewed as a simplified and more streamlined approach to determining subject-matter eligibility.

On appeal to the FCA, there remained no dispute that the patentability issues should be remitted to the Commissioner for redetermination: the sole issue was the three-part test. The Attorney General of Canada (AGC) argued that the test should be struck from the FC’s order, while new interveners in the FCA raised substantive arguments against both the new test and the FC’s decision in Choueifaty. As the FCA put it, the case “degenerated into what could be considered a reference on subject matter patentability under section 2 of the [Patent] Act, and the statutory interpretation of subsection 27(8) of the [Patent] Act in general.”²  

The FCA allowed the appeal, struck the three-part test from the FC’s order, and replaced it with the following: the “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.”³ 

Three wrongs don’t make a right

The FCA held that the FC erred in a number of respects by adopting and ordering the Commissioner to apply the three-part test for subject-matter eligibility. These errors fall generally into three categories:

• It was an error to impose any sequence for the patentability test following claims construction. This ran afoul of the FCA’s ruling in Amazon.com, Inc. v Canada (AG), 2011 FCA 328, which held that the Commissioner is not required to consider these patentability elements in any particular order.
• There was also no legal basis for the particular sequence of steps adopted by the FC. 
  • The FC’s test required consideration of the statutory exceptions to patent-eligibility in subsection 27(8) of the Patent Act (“mere scientific principle or abstract theorem”) prior to considering whether the subject-matter of the claim under the definition of an invention in section 2. The FCA held that while this may be practical in some cases, the assessment normally begins with identifying the category of invention under section 2 – and as noted above, no particular order is required.
  • The FCA also held that there was no reason to relegate the consideration of judicial exclusions to the last step of the analysis, separate from the statutory exceptions in subsection 27(8) of the Patent Act. In reaching this conclusion, the FCA seemed to suggest that it may be appropriate to consider exceptions to patentability that have been found to be relevant to computer-implemented inventions in other common law jurisdictions, such as the US and Australia, but which have yet to be considered by Canadian courts.
  • The FC wrongly suggested that the concepts of novelty and obviousness/ingenuity should be limited to the formal analysis of these issues under sections 28.2 and 28.3 of the Patent Act. The FCA held that it was premature to determine that these concepts could play no part in the patentable subject-matter analysis, given that this issue – which has attracted much controversy in other common law jurisdictions – has yet to be properly addressed by the courts in Canada. The FCA left open the possibility that it may be appropriate to consider the “actual contribution to human wisdom or knowledge.”⁴ 
• There were also a number of procedural issues with making the three-part test part of the relief in the FC’s order. The FCA noted that BM had not asked for this relief in its notice of appeal from the Commissioner’s decision and it was not open to the intervener to seek relief that was not pleaded by a party. The FCA also noted that the FC had failed to consider the test for granting declaratory relief. Finally, the FCA determined that the reference to claims construction in the three-part test was unnecessary: there was no dispute between the parties that this needed to happen and it was clear that it was to be done before determining whether the subject-matter was patentable.

More problems, more solutions?

It is apparent that, even following Choueifaty, the proper approach to purposive construction remains a live issue. 

Although purposive construction was not squarely before the FCA, the court commented that “purposive construction is a difficult exercise even for judges,”⁵ and that the Commissioner was not refusing to follow the law in this regard – rather, “CIPO and the Commissioner simply did not properly understand all of the subtleties of this difficult exercise.”⁶ 

Among these subtleties, the FCA commented that it may be useful to identify “the purpose of the invention and the problem that the invention sought to address”⁷ – as long as the “problem and solution” approach does not become the “sole or overarching element of the determination of essential elements.”⁸ This was the error in Choueifaty. The FCA also noted that the problem-and-solution approach could be useful to identify the skilled person to whom the patent is addressed.

A cautionary call to action 

Although the FCA firmly rejected the three-part test for determining patentable subject-matter that had been adopted in the FC, it also made clear that the legal issues concerning patentability of computer-implemented inventions are far from settled in Canadian law. 

In particular, the FCA remarked that no Canadian authority has expressly dealt with whether novelty and/or obviousness/ingenuity may be relevant to the statutory definition of “invention” in section 2 of the Patent Act. 

To that end, the FCA wrote:⁹ 

At the end of the hearing, the panel urged the Commissioner to cooperate with IPIC so as to properly bring the issues that remain to be determined by Canadian courts, by issuing the decision that applies the appropriate purposive claim construction approach, and provides reasons that fully engage with these remaining issues.

The FCA also noted that another statutory appeal involving the patentability of computer-implemented inventions – this one rendered with the benefit of Choueifaty and CIPO’s PN 2020-04 – is already before the FC. That case is Worldgaming Network LP v Canada (AG), Court File No. T-657-22, which was held in abeyance pending the outcome of the Benjamin Moore appeal. 

Given the courts’ incremental approach to clarifying the principles of Canadian patent law, cases such as Choueifaty, Benjamin Moore, and Worldgaming Network play a critical role in bringing important issues such as subject-matter eligibility before the courts for determination.

We will continue to monitor the Worldgaming case and others for developments in this important space.

The authors wish to thank Isabelle Khalifa, articling student, and Fiona Sarazin, law student, for their help in preparing this IP Monitor.

For more information, please contact your IP professional at Norton Rose Fulbright Canada LLP.
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