Creditex Group, Inc (Re): patentable subject matter and physicality in computer-implemented inventions

A Commissioner of Patents’ recommendation issued in April 2024 considered the patentability of an invention relating to a computer-implemented system and method for affirming over-the-counter derivative trades. This decision provides practical takeaways for patenting computer-implemented inventions in the financial sector. This is another case considered after the Federal Court of Appeal’s decision in Canada (Attorney General) v Benjamin Moore & Co, considering the current Canadian practice in view of PN2020-04.

Introduction

The patent application in issue, Canadian application number 2,678,924, is directed to a post-trade affirmation and messaging service for affirming trades with counterparties prior to processing.  During examination, there were five rounds of examiner’s reports (with the fifth examiner’s report being final).  A number of different iterations of claim amendments were made during the responses to the examiner’s reports.

After the final action, the applicant submitted another proposed claim set (proposed claim set 1). The examiner still disagreed with the applicant, and issued a summary of reasons for the rejection of the application for non-patentable subject matter. 

The Patent Appeal Board then issued a preliminary review letter noting the application lacked patentable subject matter, but with the FCA decision in Canada (Attorney General) v Benjamin Moore & Co, a supplementary preliminary review letter was prepared that still maintained the application lacked patentable subject matter.  

The applicant then submitted proposed claim set 2, and the parties had a hearing focused on whether the invention provided an efficiency gain to the functioning of the computer system used for implementing the trading platform.  After the hearing, the applicant then submitted proposed claim set 3 and arguments.  The Patent Appeal Board conferred with the applicant and then proposed claim set 4 was submitted.

PN2020-04

PN2020-04 sets out how to determine what constitutes patentable subject matter where a patent application concerns a computer-implemented invention. The Federal Court of Appeal’s decision in Benjamin Moore overturned the Federal Court’s decision that had previously declared a new test for patentable subject matter in computer-implemented inventions that superseded the guidance set out in PN2020-04. 

Patent Appeal Board decision and amendments

Proposed claim set 4 recited the following independent claim (bold emphasis from PAB decision, italics / underlined emphasis is mine):

A computer-implemented post-transactional affirmation method for confirming details related to credit derivative trades comprising:

receiving, via an electronic processing platform, directly from a first party trade capture system associated with a first party, trade details comprising a credit derivative trade agreed upon between the first party and a second party outside of the electronic processing platform, said electronic processing platform comprising a connectivity and electronic messaging system that is independent of and upstream relative to a downstream trade processing system, said connectivity comprising system-to-system links between said electronic processing platform and each of the first party trade capture system and a second party trade capture system;

automatically routing and transmitting in real-time, via the system-to-system links, the trade details to the second party trade capture system associated with the second party;

receiving, by the electronic processing platform, directly from the second party trade capture system via the system-to-system links, an affirmation or a rejection of the trade details, wherein the affirmation indicates the transmitted trade details represent the agreed upon trade and the rejection indicates the transmitted trade details contain an error;

automatically notifying, via the electronic processing platform via an electronic message, the first party trade capture system of the affirmation or the rejection;

creating, via the electronic processing platform, at least one trade ticket for each of the first party and the second party comprising the trade details only when the electronic processing platform receives the affirmation from the second party trade capture system; and

submitting, by the electronic processing platform, the at least one trade ticket of the first party and the at least one trade ticket of the second party to a separate trade confirmation process in accordance with the credit derivative trade, said trade confirmation process being embodied in and executed by the downstream trade processing system.

The Patent Appeal Board noted the key changes for claim 1 on file (the claims before the proposed claim set), shown above in bold, recite that a copy of the trade ticket is submitted by each party to the trade confirmation system.  Additional emphasis in addition to those from the Patent Appeal Board is added to note other relevant portions of the claim.

In its decision, the Patent Appeal Board noted the claimed system would provide an efficiency improvement to a downstream trade processing system by pre-reconciling data so that only reconciled trade information reaches the downstream system. 

The system as claimed would provide a physical improvement to computer efficiency of the downstream system. Therefore, the computer system would be part of the actual invention and would be patentable subject matter according to section 2 and subsection 27(8) of the Patent Act (italics and underlined emphasis are mine).

Practical Notes

This decision provides a practical amendment path for computer messaging-related applications where interoperation by two systems can be claimed as part of the innovation, especially if arguments can be made for improving efficiency, more specifically the computer efficiency of a downstream system. The incremental and collaborative approach noted in the decision also reflects our positive experiences engaging with CIPO on computer-implemented inventions and patentable subject matter.