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

2. 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…

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

4. 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”

5. 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 …”

6. 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?

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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.

13. SCC since Shell Oil
[Citation not found]

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

15. 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?

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

17. 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”

18. 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”

19. *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.

20. 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

21. 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?

22. 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

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

24. 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

25. 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)

26. 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

27. 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

28. 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

29. The definitive test?
Alice Corp. v. CLS Bank International, 134 S. Ct (2014)
Method of using aa third party to mitigate settlement risk (aka “hedging”)
Apply the test from Mayo v. Prometheus, 132 S. Ct (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.

30. The definitive test?
Alice Corp. v. CLS Bank International, 134 S. Ct (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.”

31. 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?

32. 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

33. 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”

34. 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

35. 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.”

36. 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

37. 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?

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

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

40. 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

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

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

43. 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

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

45. 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

46. 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

47. 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”

48. 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

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

50. 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?