Federal Court’s patentable subject matter framework struck out by Court of Appeal

The Federal Court of Appeal issued a decision on the patentability of computer implemented inventions in Canada. This decision is the first time in over ten-years that the Federal Court of Appeal has addressed patentability of computer implemented inventions directly. The court rejected a three-party framework that had been proposed by IPIC and endorsed by the lower court and instead suggested more flexibility was required. In this appeal, Canada (Attorney General) v. Benjamin Moore & Co., 2023 FCA 168, the FCA determined that the Federal Court erred in imposing a three-part framework on the Commissioner of Patents to determine the patentability of Benjamin Moore’s patent applications. In a unanimous decision, the FCA declined to amend the framework and instead struck it down in its entirety, concluding that the second and third steps were not supported by Canadian case law and, in particular, was contrary to its earlier decisions. The FCA instructed the Commissioner to re-examine Benjamin Moore’s patent applications in light of the decision and the most current version of the Commissioner’s Manual of Patent Office Practice.

Background

The two Benjamin Moore patent applications in question pertain to inventions involving computer-driven systems and processes for color selection. Both applications were refused by the Commissioner on the grounds that the claims were directed to non-patentable subject matter, specifically, the essential elements of the claims constituted a mere abstract theorem. On appeal of the Commissioner’s refusal, the FC imposed a framework on the Commissioner, requiring it to evaluate statutory subject matter during examination of computer-implemented inventions by applying the following three-part framework:

• 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.

The framework, proposed by IPIC which had intervened at the FC, would have clarified that novelty and obviousness were not factors to be considered when determining if a claim contained a practical application. These grounds of invalidity would only be evaluated after establishing the claims were directed to a practical application. For example, under the proposed framework, computer equipment essential to a claim would not need to be novel to qualify as a practical application.

Federal Court of Appeal’s analysis

A significant portion of the FCA's decision focused on the appropriateness of the framework endorsed by the FC and whether or not the court was justified in imposing it on the Commissioner. The FCA proceeded on the assumption that the FC possessed the discretionary authority to issue specific directives to the Commissioner concerning the examination of patent applications related to computer-implemented inventions however the FCA held that the framework was not appropriate.

From the outset, the FCA held that it could not discern any explanation as to the usefulness of the framework in light of the current practice of CIPO (the revised version of the MOPOP and its latest practice notices). While considering the first part of the framework, the FCA concluded that it was never in dispute that a purposive construction exercise must be completed by the Commissioner when reviewing an application.

In reviewing the FC's Judgment and reasons the FCA identified the following issues with the proposed framework:

• Sequence of patentability criteria - The FCA held that the sequence the Commissioner must examine criteria for patentability contradicted the FCA's statement in previous cases. According to the FCA, patentability elements need not be considered in any particular sequence. FCA determined that imposing a specific sequence in the framework was a error by the lower court.
• Definition of “invention” and exclusions - The FCA pointed out that computer implemented inventions may fall under different categories of inventions depending on ‎their nature. For example, a manufacturing process may involve a computer or an improved refrigerator ‎may include a computerized component to improve its working as a machine. ‎The FCA was concerned that the proposed framework would treat these types of inventions as a distinct category under the Patent Act. The FCA expressed its difficulty understanding why the Commissioner, as prescribed by the framework, must look at the exclusions set out in subsection 27(8) of the Patent Act before examining whether the subject matter falls under the definition of an “invention”. The FCA held that although doing so may be practical in certain circumstances, there was no basis for requiring this order of analysis.
• Distinction between inventiveness and novelty from patentable subject matter - The third error identified by the FCA relates to the third part of the framework, where it suggested that novelty and ingenuity can only be considered when carrying out the analyses in application of sections 28.2 (novelty) and 28.3 (obviousness) of the Patent Act. The FCA stated that although the role of novelty and obviousness in determining patentable subject matter has been the subject of much controversy in the United States and Australia, it has never been addressed head on in Canadian case law.

The FCA looked to its previous decisions and the Supreme Court’s guidance, which had looked at novelty and ingenuity as relevant considerations in determining whether the addition to human knowledge fell within the statutory definition of “invention” at section 2 of the Patent Act, which refers to a “new and useful art”. The FCA further agreed with its own One-Click decision that the “definition of “invention” found at section 2 of the Act reflects certain concepts which are also the subject of specific statutory provisions”, namely sections 28.2 and 28.3 and that according to the Supreme Court, these concepts do not automatically become irrelevant when assessing whether the subject matter meets the statutory definition of an “invention”. To conclude on the matter, the FCA held that while this matter was not settled, Canadian law does not preclude considering novelty and ingenuity in determining patentable subject matter.

It is worth noting that, while arriving at the above conclusion, the FCA reviewed a recent decision of the High Court of Australia in Aristocrat Technologies Australia Pty Ltd v. Commissioner of Patents [2022] HCA 29. The FCA summarized the Australian court’s Aristocrat decision as splitting three to three but unanimously agreeing that “novelty and ingenuity were relevant to the determination of whether the claimed monopoly was directed to an invention as defined in their Patent Act.” Without adopting the above finding, the FCA added that since the Supreme Court often considers patent law approaches developed by English courts, it did not see why the Australian case law would not be treated similarly. 

What’s next

Overall, the FCA's analysis highlighted a need for a more nuanced understanding of patent examination and underscored the court’s concern with considering all relevant aspects of a question before setting a compulsory framework on a complex issue.

The FCA declined to modify the proposed framework, or create its own test, as explained in the preceding analysis, and instead chose to direct the patent office to re-examine the patentability of the patent applications at issue in light of the most current version of the patent office’s guidance with the benefit of the court’s reasons.

Patent applicants and practitioners are waiting to see if there is any updated guidance from the Patent Office in response to this decision as well as monitoring other pending appeals before the court on the patentability of computer implemented inventions.