The Canadian Patent Appeal Board, in two recent decisions, has reversed the examiner’s rejections of applications regarding certain financial service–related innovations. The decisions are particularly noteworthy for the Board’s strong statements about improper subject matter objections raised by examiners during prosecution.
Patent Application for a Computerized Stock Exchange Trading System
In this decision, the Board considered claims that relate to improvements to a computerized stock trading system, with means for displaying and communicating orders to an order entry system of a stock exchange computer.1
The examiner rejected the claims for several reasons, including insufficiency of disclosure (on the basis that the application did not sufficiently describe the specific software required for the system), obviousness (in light of certain prior art references) and improper subject matter (on the basis that the claims related to the automation of commonplace features, which is not patentable according to Schlumberger2).
The Board reversed each of the examiner’s rejections in no uncertain terms. In respect of the insufficiency of disclosure rejection, the Board found that the application provided sufficient detail—by describing the software in terms of its function—to allow a skilled programmer to implement the invention. As for the obviousness rejection, the Board found that the claimed invention was not obvious in view of the references cited by the examiner.
On the subject matter rejection, the Board found that the examiner had confused the concepts of "invention" and "obviousness". The Board noted that the concept of obviousness is not mentioned in section 2 of the Patent Act as it relates to the definition of invention, and thus found that the subject matter of the claims fell within the definition of invention. In particular, the Board rejected the notion that the Schlumberger decision formed the basis for a subject matter objection.
Noteworthy in the Board’s decision is its implied tolerance of the method claims in the application. Since February 2005, the Canadian Intellectual Property Office has taken the administrative position that examiners should not reject claims merely because they are associated with a business method. In this case, the examiner had rejected all of the claims of the application, which included three method claims "for computerized trading", as lacking patentable subject matter. Although the Board did not explicitly endorse these method claims, in reversing the examiner’s subject matter rejection, the Board appears to be sending another signal to examiners that business method claims should be considered on their substantive merits, and not rejected as improper subject matter merely because such claims are related to business methods.3
Patent Application for Data Processing System for Facilitating Transactions in Diamonds
In this second decision, the Board considered claims directed to systems for facilitating data communication between a host computer and a remote computer regarding transactions involving diamonds.4
The examiner rejected these claims for several reasons, including obviousness (in view of a number of cited references) and non-patentable subject matter (on the basis that the claims related to a method of doing business that involved the exercise of a professional skill).
In reversing the examiner’s rejection on the basis of obviousness, the Board noted that the "essence of the invention" appeared to be the orderly and structured manner in which information concerning diamonds is gathered and displayed. The Board rejected the examiner’s contention that the data structures and array subcategories identified in the claims were "administrative details left to persons running the business" and therefore obvious in view of prior art. By contrast, the Board found that the claimed features were not disclosed in the cited art and thus no basis existed for finding the subject matter to be obvious.
In respect of rejections based on the exercise of professional skill, the Board found that such a rejection can be properly made when there is a step in a claimed method that is carried out by a human and that relies on human intelligence and reasoning to make a judgment. The Board concluded that this restriction is not an appropriate basis for rejecting the apparatus claims in the application, which set out "machines" rather than methods. The Board further noted that the skill involved in the creation of a complicated system is not a professional skill that is prohibited under the Patent Act.
These two decisions provide some clarity on what the Board considers to be proper and improper grounds for rejecting applications directed to financial service–related innovations. These decisions clearly signal to examiners that they must follow a more rigorous approach in applying the Patent Act during examination of applications, including those that might be instinctively classified as relating to business methods or financial services.
The IP Financial Services Industry Group concentrates on intellectual property strategies relevant to financial services companies—in recognition of the growing interest among financial services companies of the importance of IP, particularly of patents, in the management and operations of their businesses. This cross-border practice group has advised various companies in the financial services industry on strategies for managing IP, including in preparing and filing patent applications directed to financial service innovations, and in assessing infringement risks related to third-party patents.
1. Re Patent Application No. 2,119,921 (January 25, 2007), Patent Appeal Board and the Commissioner of Patents Decision.
2. Schlumberger Canada Ltd. v. Commissioner of Patents, (1981) 63 C.P.R. (2d) 161 (Federal Court of Appeal).
3. Although the Manual of Patent Office Practice is only a guide and has no legal authority, its guidance and this Board decision appear to show a trend in Canada toward increased acceptance of business method patents. However, we will have to await an explicit ruling from the Patent Appeal Board or the courts to provide greater certainty on this issue.
4. Re Patent Application No. 2,298,467 (January 25, 2007), Patent Appeal Board and the Commissioner of Patents Decision.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.