Canada: No "Problem"? Then You Might Have A Problem

Last Updated: October 31 2018
Article by Edward T. Fan and Steve Hundal

The Commissioner of Patents of the Canadian Intellectual Property Office (CIPO) has released its decision in CD 1457 (Decision).1 In the Decision, the Commissioner concurred with the Patent Appeal Board (PAB) in finding a computer-implemented invention to comprise statutory subject matter within the definition of “invention” under section 2 the Patent Act.

What You Need To Know

  • The “problem and solution” approach was applied by the PAB in finding as patent-eligible an improved payment card system that automatically identifies whether a customer is potentially eligible for a value-added tax (VAT) refund.
  • The PAB’s analysis turned on whether computing elements were essential elements to the invention.
  • Patent applicants may wish to be conscious of how problems, and their solutions, are described in view of the CIPO’s current practice, to better frame claim elements likely to comprise statutory subject matter as being essential to a claimed solution.

The “Problem and Solution” Approach

At issue were claims directed to systems and methods for the identification of persons potentially eligible for VAT refunds and the processing of such refunds.

The PAB employed a purposive approach to claim construction to first determine which of the claim elements were essential, which comprised employing a “problem and solution” approach as endorsed in CIPO Practice Notice PN2013-03 pertaining to computer-implemented inventions.2 This approach, laid out in the Practice Notice, provides that after identifying the problem to be addressed by the inventor and the solution put forth in the patent application, the essential elements can be identified as those required to achieve the disclosed solution as claimed. While this approach arguably represents a departure from established law on the matter, it is nonetheless the approach adopted by the PAB and CIPO.3

According to PN2013-03, and as adopted by the PAB in the Decision:

“where a computer is found to be an essential element of a construed claim, the claimed subject-matter will generally be statutory. Where, on the other hand, it is determined that the essential elements of a construed claim are limited to matter excluded from the definition of invention (for example, the fine arts, methods of medical treatment, mere ideas, schemes or rules, etc.), the claimed subject-matter will not be compliant with section 2 of the Patent Act.”4

The PAB characterized the problem to be addressed by the applicant’s claims as “[improving] the existing manual, paper-driven process with a more convenient and efficient process to identify whether a customer is potentially eligible for a VAT refund,”5 and the solution as “an improved payment card system that automatically identifies whether a customer is potentially eligible for a VAT refund.”6

The PAB found there was one essential element that was common to all claims and which was sufficient to dispose of the statutory subject matter analysis in favour of the applicant. This recited essential element was a “data capture device for receiving card details” in the independent system claim 1, and the step of “obtaining payment card details” in the later independent method claim 18. The PAB considered this essential element to comprise the computer embodiment of the improved payment card system for receiving and processing payment card details to automatically identify whether a cardholder is potentially eligible for a VAT refund.

Given the guidance of PN2013-03, once at least one aspect of the computer embodiment of the improved payment card system was found to be an essential element, then the claims would be considered to comprise statutory subject matter.


The characterization of the problem and solution in the Decision appears to have been central to the PAB’s determination that the computer element was an essential element. In particular, the problem was characterized in the Decision as: “the current process of identifying customers eligible for a VAT refund [is] a manual, paper-driven process that is inconvenient, time consuming and has a heavy administrative burden.”7

The Decision further notes “the solution is directed to an improved payment card system to automate the identification of customers eligible for a VAT refund. The computer embodiment is essential: without it, the advantages associated with automatic identification based on payment card details at the point of sale system would be lost and the identified problem would not be solved.”8

The characterization of the problem as involving a manual and labour-intensive process, along with the solution as providing convenience over the manual process via some form of automation using an improved computer, appears to have been a pivotal aspect of the factual underpinnings that led the PAB to the view that the computer is essential to the solution.

What Patent Applicants Should Consider

When faced with the prospect of a subject matter objection before the CIPO, consider whether it is an option to amend and characterize claims as being directed to an alternative problem and solution than that put forth by the examiner during prosecution. In particular, it may be helpful to set out a problem and solution that may result in a determination of essential elements more likely to be viewed as statutory (such as an improved computer element that is more than a mere automated solution to an existing manual process, but which provides a solution that would not be possible without the computer element).

However, care should be taken in relying on Commissioner’s decisions as they tend to be fact-specific. While they serve as useful tools for formulating arguments, a thoughtful analysis of the alignment of facts of a particular situation is always warranted. For example, the Decision can be contrasted with CD 1422,9 in which the Commissioner did not find as comprising statutory subject matter a software-based patent application that was directed to a problem similarly related to the effort involved in a process (particularly, the need for bank customers to repeatedly provide the same data in order to open new accounts). In CD 1422, the solution was characterized as opening a single, integrated account for a customer in a single session, and the Commissioner held that the subject matter of the essential claim elements was not patentable, on the basis that it comprised a mere scheme or set of rules, which did not require a computing device as an essential element.


1 See

2 “Examination Practice Respecting Computer-Implemented Inventions,” PN2013-03 (CIPO, March 2013).

3 See, for example, CD 1420, CD 1422 and CD 1425.

4 CD 1457 at para. 18.

5 Ibid. at para. 46.

6 Ibid. at para. 49.

7 Ibid. at para. 44.

8 Ibid. at para. 50, emphasis added.

9 See

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.

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