Software Related Inventions Patentable Subject Matter 13.02.2018 Software Related Inventions Patentable Subject Matter Paul Horbal 2017 Donald M. Cameron

Why worry about patenting software? Quickly changing area of law View how courts and patent offices deal with change Innovation of many businesses can be entirely software-based Funding may rely on patents Pervasive technology…

Statutory definition of invention “Invention” means any new and useful Art; Process; Machine; Manufacture; or, Composition of matter Patent Act, s. 2

Art or process Art means a method of doing something “A computer-implemented method of placing an order for an item” Process means doing something to a material or materials “A method of operating a rubber-molding press for precision molded compounds with the aid of a digital computer”

Machine or manufacture “A mobile computing device” Manufacture means a product that is made by some process “A computer-readable medium having stored thereon computer-executable instructions for performing a method for …”

Statutory exclusions No patents for mere formulas, scientific principles, abstract theorems “No patent shall be granted for any mere scientific principle or abstract theorem” - Patent Act, ss. 27(8) Why are these explicitly excluded?

A problem Computers are glorified calculators Everything a computer does is based on computer code, which is a very detailed mathematical formula Therefore, isn’t all software a “mathematical formula” of sorts? There must be “something more” than just software

More than a mathematical formula What will we consider? Hardware Software Data Structures Signals Business Methods Why are we concerned about these different aspects of computer systems? Gives patent owner different people to sue Customers vs. Competitors Cross-Border Systems

United States Patentability of software and business methods had been thought settled for years Software and business method inventions were patentable when they produced a “real, concrete, and tangible result” Key Decision: State Street Financial v. Signature Financial Group Inc. Not anymore

Europe Inventions require industrial applicability, novelty, an inventive step, and a “technical character” Specific exemptions for computer programs and business methods European Patent Office (“EPO”) does permit certain computer-implemented inventions but has stopped short on business methods

Canada Shell Oil Co. v. Commissioner of Patents (1982) 67 C.P.R. (2d) 1 (S.C.C.) “Art” is a word of very wide connotation and not to be confined … but extended to new and innovative methods of applying skill or knowledge provided that produce effects or results commercially useful to the public This broad definition has been restricted in Harvard Mouse and Monsanto v. Schmeiser

Canada Shell Oil Co. v. Commissioner of Patents (1982) 67 C.P.R. (2d) 1 (S.C.C.) Eligible process: is not a disembodied idea but has a method of practical application; is a new and innovative method of applying skill or knowledge; and has a result or effect that is commercially useful.

SCC since Shell Oil [Citation not found]

? Common Principles Where’s the dividing line? You can’t patent math or science You can patent applied science ? Where’s the dividing line?

Consider Claim 8. A method for calculating value “f”, comprising the step of: calculating f = m · a Claim 9. A computer implemented method for determining the force “f” provided by a moving brick, comprising the steps of: inputting variable “m”, where “m” is the mass of the moving brick measured in kilograms; inputting variable “a”, where a is the acceleration of the moving brick measured in meters per second per second; automatically calculating f = m · a, where “f” is the force provided by the moving brick in newtons; and displaying variable “f”. Are these proper subject matter?

Where’s the dividing line? software Software control system Hardware

Canada Schlumberger Canada Ltd. v. Commissioner of Patents (1981), 56 C.P.R (2d) 204 (FCA) Measurements obtained in the boreholes are recorded on magnetic tapes, transmitted to a computer, modified by mathematical formula set out in the specification and converted to human readable form. Not patentable: “mere scientific principle or abstract theorem”

Canada Schlumberger Canada Ltd. v. Commissioner of Patents (1981), 56 C.P.R (2d) 204 (FCA) “What the appellant claims as an invention here is merely the discovery that by making certain calculations according to certain formulae, useful information could be extracted from certain measurements. This is not, in my view, an invention within the meaning of s.2”

*spoiler alert* Canadian Patent No. 2,937,693, issued January 17, 2017 Claim 1. A computer-implemented method for evaluating a level of noise in a biosignal, the method comprising: receiving a time signal representative of a biological activity, the time signal comprising a biological activity component and a noise component; determining a modulation spectrum for the time signal, the modulation spectrum representing a signal frequency as a function of a modulation frequency; determining, from the modulation spectrum, a first amount of modulation energy corresponding to the biological activity component and a second amount of modulation energy corresponding to the noise component; determining an indication of the level of noise using the first and second amounts of modulation energy; and outputting the indication of the level of noise.

CIPO’s 1994 guidelines Unapplied mathematical formulae are not patentable Computer programs neither add to nor subtract from patentability Computer program integrated with traditional subject matter is patentable

CIPO’s 2005 guidelines Hardware Software Data Are important elements: processors, memories, interfaces, displays and peripheral devices described? Is the interaction with the network described? Software Does the patent describe: Steps to be performed Sequence to steps Processes and algorithms Interface Data Does the patent describe the source and form of input data? What is the flow of data? How does software manipulate or modify data?

CIPO’s 2013 guidelines Construe the claims Identify a problem addressed by the claims, and the elements involved in the solution Ask whether the essential elements belong to a statutory category

Where’s the dividing line? Business methods software Software control system Hardware

Business methods in US State Street Bank v. Signature Financial (Fed. Cir. 1998) data processing system for administering mutual funds hub and spoke method calculated final share price “useful, concrete & tangible result” patentable there is no “business methods” exclusion to patentability

Other decisions in US Methods patentable even if: Some steps could be carried out with a human mind - AT&T Corp. v. Excel (Fed. Cir. 1999) Even where a person performing the method had to think - In re Musgrave (1970)

Revisiting business methods In Re Comiskey (Fed. Cir. 2007) A method for mandatory arbitration, including the steps of: Enabling a person to enrol; Providing arbitration language; Conducting arbitration resolution; Determining an award or a decision that is final and binding

Revisiting business methods In Re Comiskey (Fed. Cir. 2007) Not patentable Although 35 USC 101 says processes are patentable, the term “process” should not be read literally Idea or algorithm cannot be patented, even if it has practical application Routine addition of modern electronics to an otherwise unpatentable invention typically creates a prima face case of obvious

Turning tide Bilski v. Kappos, 561 U.S. 593 (2010) Method of hedging risk in the field of commodities trading Bilski admitted claims not limited to operation on a computer Federal Circuit created “machine-or-transformation” test and held claims not patentable subject matter Supreme Court affirmed but moderated test

The definitive test? Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014) Method of using aa third party to mitigate settlement risk (aka “hedging”) Apply the test from Mayo v. Prometheus, 132 S. Ct. 1289 (2012): Is the claim directed to a patent ineligible concept: a law of nature, a natural phenomenon, or an abstract idea? If yes, then examine the claim “as an ordered combination” to determine whether the additional elements offer “significantly more” than the ineligible concept, that can “transform the nature of the claim” into a patent-eligible application. Conclusion: not statutory subject matter – an abstract idea.

The definitive test? Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014) “Laws of nature, natural phenomena, and abstract ideas are ‘the basic tools of scientific and technological work.’ … ‘Monopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it,’ thereby thwarting the primary object of the patent laws. We have ‘repeatedly emphasized this … concern that patent law not inhibit further discovery by improperly tying up the future use of’ these building blocks of human ingenuity.” “In any event, we need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case.”

Really? All inventions can be distilled down to an abstract idea How do we know when to stop distilling? Is pre-emption a good test?

Business methods in Europe Per se, not patentable Point of invention requires technical character If the invention relates to a new or improved manner of conducting business, not technical so not patentable If the invention can be characterized as having technical character and makes a technical contribution – improved processing technique, for example – then may be patentable

Business methods in Canada Progressive Games, Inc. v. Canada (Comm. Patents) (2000) 9 C.P.R. (4th) 479 (F.C.A.) affirming (1999) 3 C.P.R. (4th) 517 (F.C.T.D.) Method of playing poker Is shuffling cards an “art”? Not patentable because “known use for playing cards”

Business methods in Canada Re: Application 564,175 to Atkins, Sep. 1999, (Comm. Patents) Applicant substitutes a computer programmed in a specific manner to make decisions which were formerly made by a financial advisor – professional skill An operation which is not patentable when carried out by an individual cannot be made patentable merely by having it carried out by a computer

Amazon.com 1-Click Amazon.com, Inc. v. Canada (Attorney General), 2010 FC 1011 (Phelan J.) “There is no basis for the Commissioner’s assumption that there is a ‘tradition’ of excluding business methods from patentability in Canada” A technological character test “would be highly subjective and provide little predictability” Conduct purposive construction of claims Look to Shell Oil: “The Patent Act is not static; it must be applied in ways that recognize changes in technology such as the move from the industrial age to the electronic one of today.”

Amazon.com 1-Click Canada (Attorney General) v. Amazon.com, Inc., 2011 FCA 328 Affirmed Phelan J. in part Looking for “scientific or technological in nature” is unclear and confusing A patent claim may be expressed in language that is deliberately or inadvertently deceptive Just because a business method has a practical embodiment or a “practical application” does not mean that it is patentable subject matter

CIPO’s current approach New guidelines introduce tweaked “problem-and-solution” approach: Conduct purposive construction Look for “computer problem” problem with the operation of a computer controlling a chip, system component or technical architecture element addresses challenges or deficiencies in prior computers Ask whether computer is essential to solving the problem Is this based on existing case law?

Where’s the dividing line? signals Software control system software Hardware Business method

Signal claims A signal is data or information briefly transmitted It is not stored in memory. e.g., data communicated over the Internet

Signal claims In Re Nuijten (500 F.3d 1346, Fed. Cir. 2007) A signal, standing alone, is not patentable A new method of watermarking (adding data listener cannot hear to an audio file, but which can be detected by computer) Court held: A manufacture must be tangible “Transient” or “fleeting” inventions not patentable Claimed signal is devoid of any semblance of permanence during transmission

Contrast signal claims Chemical claims Fleeting “intermediate” produced in a chemical reaction is patentable

Fixing signal claims Patentable claims: Method to watermark signal (add the inaudible data) Device to watermark signal Storage medium containing watermarked signal

Signal claims in Canada CIPO formerly regarded signal claims (e.g., carrier wave representing computer instructions) as patentable More recently, considered a transitory “form of energy” and not patentable But methods, processes, machines or manufactures involved in the generation, transmission, reception, or processing of signals may be patentable

Where’s the dividing line? data structure Software control system Software Hardware Signals Business method

Data structures Represent a physical implementation of a data model for organizing and representing information which is used by a computer program Physical organization is responsive to the attributes of the data rather than specific content e.g. MP3, customer database, or DVD data structure: organized and linked compressed video data portions having an indexing system or interface such as chapters, pointers, etc. to access particular portions of the video

US - 1994 In re Lowry (1994) data structure of database was patentable dictated how application programs managed information allowed the computer to operate more efficiently

US - 2014 Digitech Image v. Electronics for Imaging (Fed. Cir. 2014) “Data in its ethereal, non-physical form is simply information that does not fall under any of the categories of eligible subject matter” The claim “recites an ineligible abstract process of gathering and combining data that does not require input from a physical device”

Canada No case law Once upon a time CIPO Guidelines supported patentability Claimed as a product Latest guidelines consider a data structure to be an abstract idea

Where’s the dividing line? Software control system Software Hardware Data structures Signals Business method

Closing thoughts What is the law in Canada, when there is so little law in Canada? Guidelines do not have the force of law But CIPO treats them as if they do How much of this is a de facto obviousness analysis?