2020 Engineering & Technology Year In Review – Intellectual Property – Canada – Mondaq News Alerts

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2020 saw some notable developments relating to the patentability
of software and computer-related inventions. Here, we review some
of the key highlights: 1) the Federal Court of Canada’s
decision regarding the proper test for patentable subject matter;
2) the subsequent updates to the Canadian Intellectual Property
Office’s (CIPO) examination guidelines; and 3) related updates
in the United States.

Subject Matter Eligibility in Canada

To be patentable in Canada, an invention must meet four main
criteria: it must be new, it cannot be obvious, it must be useful
and, crucially, it must fall within the definition of
“invention” (as defined in the Patent Act).
The last criteria can be a sticking point for some types of
inventions, particularly those involving computer software
(including AI) or business methods. Section 27(8) of the
Canadian Patent Act specifically prohibits
patents for “any mere scientific principle or abstract
theorem.” Software and business method inventions often are
alleged to fall within one of those categories.

CIPO’s approach to the question of patentable subject matter
– what can be patented – was much-criticized in recent
years as departing from that which was required in law. In
upholding an appeal by Amazon.com in 2011, the Federal Court of
Appeal ruled that CIPO’s attempts to use a “substance of
the invention” test of its own creation was “incorrect in
law.” Rather, the Court made clear that “determination of
subject matter must be based on a purposive construction of the
patent claims.” Nevertheless, CIPO in the intervening years
directed its patent examiners to use yet another, novel
“problem-solution” approach to claim construction when
considering the issue of patentable subject matter. This approach,
while couched in the language of purposive construction, differed
markedly from that test as defined by the Supreme Court of Canada
in two landmark decisions.1

On August 21, 2020, the Federal Court of Canada handed down its
ruling in the appeal of Yves Choueifaty against the rejection of
his application by the Commissioner of Patents (Yves Choueifaty v Attorney General of
, 2020 FC 837, [Choueifaty]). Choueifaty
had argued that CIPO was wrong to use the problem-solution approach
in construing patent claims. Ruling in Choueifaty’s favour, the
Court found that the Commissioner of Patents had indeed “erred
in determining the essential elements of Choueifaty’s claimed
invention by using the problem-solution approach,” rather than
the approach the Supreme Court has directed to be used, in
particular, one that considers the inventor’s intention and the
words of the claim. It remanded the application to CIPO, to perform
a fresh assessment of the claims in view of the decision.

As noted above, the Supreme Court of Canada has set out the
principles of purposive construction to be used when construing
patent claims. Among other steps, purposive construction involves
establishing whether particular claim elements should be considered
essential or non-essential to the invention. CIPO’s previous
problem-solution approach interpreted this as a directive to
exclude elements from consideration, unless they are deemed
essential to solving the problem faced by the
applicant. CIPO’s approach thus allowed a patent examiner to
disregard certain claim elements even in cases where the applicant
insisted that they were indeed essential to the invention. It
justified this departure by relying on a 2008 Federal Court
decision, which it argued held that the Supreme Court’s
direction regarding purposive construction applied only to court
proceedings involving issued patents, and not the examination of
patent applications.2 The decision
in Choueifaty firmly rebukes this position.

Although the ruling in Choueifaty has
implications in all cases where purposive construction is to be
used during examination, it has particular importance with respect
to the question of patentable subject matter. CIPO’s
problem-solution approach created great difficulty for
computer-based and medical diagnostic inventions. For example, in
computer-related cases, patent examiners often characterized the
alleged “problem” in such a manner that any computer
elements recited in a claim were deemed non-essential and thus
disregarded. Once the computer elements were disregarded, what
remained was easily classified as an abstract idea or mere scheme
and thus the entire invention excluded from patentability.

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The decision in Choueifaty rests solely on
the issue of claim construction, and the Court was careful to steer
clear of the thorny issue of what constitutes patentable subject
matter. Nevertheless, both topics are inextricably linked.
Therefore, this case has had and will have an immediate impact on
patent prosecution, particularly in the computer-related

CIPO Updates Subject Matter Guidelines for Examiners

In response to Choueifaty, CIPO published a
practice notice – a guidance document for patent examiners
– to aid in correctly applying purposive construction.
While Choueifaty did not specifically delve into
what constitutes patentable subject matter, the practice notice
does also provide guidance on this topic. Therefore, the notice
undoubtedly will have significant implications for patentable
subject matter, particularly in the fields of artificial
intelligence and other computer-implemented inventions.

The practice notice reaffirms that the previous
“problem-solution” approach in the identification of
essential elements during purposive construction (for
identification of patentable subject matter) should no longer be
applied. CIPO examiners are directed to apply the purposive
construction test as set out in Free World Trust.
That is examiners must consider the entirety of the specification
and determine what a person skilled in the art would have
determined the nature of the invention to be. All claim elements
are to be presumed essential, until shown otherwise.

Additionally, the practice notice categorically states that any
claim construction that looks only at the so-called “substance
of the invention” is incorrect. Despite this, the notice
attempts to distinguish between elements deemed essential for
establishing the boundaries of a patent monopoly, and those
involved in the patentable subject matter analysis. For example,
according to the practice notice, an element may be an essential
element of a claim only because the applicant intended to limit the
scope of the monopoly being claimed to less than what the applicant
actually invented. An element may thus be an essential element of
the claim because the applicant intended it to be essential even
though it has no material effect on the working of the invention.
Such an element “would not form part of
the actual invention because the fact
that it has no material effect on the working of the invention
means it does not cooperate with other
 of the claimed invention

(emphasis added). Keen readers may inquire as to the difference
between this new “actual invention” test and the
now-discredited “substance of the invention” test. This
remains to be seen, but it may be hoped that the emphasis on
“cooperating” with other elements of the invention will
lead to more predictable results.

The notice further adds that there may not necessarily be
patentable subject matter even if a computer is necessary to put a
disembodied idea, scientific principle or abstract theorem into
practice, and even if the computer cooperates together with other
elements of the claimed invention. Citing the Federal Court of
Appeal’s 1982 decision in Schlumberger v Canada
(Commissioner of Patents),
 [1982] 1 FC 845 (FCA),
the notice states that “if a computer is merely used in a
well-known manner, the use of the computer will not be sufficient
to render the disembodied idea, scientific principle or abstract
theorem patentable subject-matter.” Further, the practice
notice asserts that an abstract idea “must cooperate with
other elements of the claimed invention so as to become part of a
combination of elements making up an actual invention.”

CIPO’s new approach bears a resemblance to that used in the
United States, where examiners are directed to consider whether an
abstract idea is sufficiently “integrated into a practical
application” and where additional elements – such as a
computer – must be meaningful limitations that provide more
than “extra-solution activity.” The notice also provides
examples of patentable subject matter analysis for
computer-implemented method and system claims.

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Taken at face value, the new guidance is a welcome development.
For examiners, it provides a reasonably clear roadmap for assessing
patentable subject matter. For applicants, the new guidance gives
hope that computer-implemented inventions will be considered more
holistically. Specifically, all computer elements of an invention
should now be considered for the purposes of assessing subject
matter, so long as they “cooperate with other elements”
to form the “actual invention.” There remains a risk,
however, that under the new guidance examiners will continue to
disregard computer elements of claims that they deem insufficiently
connected to the “actual invention.” It remains to be
seen how the guidance will be implemented in the coming months.

Subject Matter Eligibility in the United States – USPTO
Revises Examination Manual

On June 30, 2020, the United States Patent and Trademark Office
(USPTO) revised the Manual of Patent Examining Procedure (MPEP)
Ninth Edition and updated it to reflect current USPTO patent
practice and relevant case law as of October 31, 2019. In
particular, these changes updated the MPEP to reflect current USPTO
practice regarding the patent subject matter eligibility of high
tech and life sciences inventions.

The MPEP is a guidance document regarding patent prosecution
practices and procedures used extensively by U.S. patent examiners,
patent agents and the public. While the MPEP does not have the
force and effect of law, USPTO patent examiners routinely follow
the guidance it contains. An up-to-date MPEP increases the
predictability of patent examination and consequently reduces the
cost of patent prosecution.

The June 2020 MPEP revision was the first such revision in over
two years and, as a result, included significant substantive and
administrative updates.

One of the most significant updates pertained to Subject Matter
Eligibility guidance. Since the 2013 decision of the U.S. Supreme
Court in Alice Corp v CLS Bank
(“Alice“), which itself
built on the Court’s decision in Mayo Collaborative
Services v Prometheus Laboratories, Inc. 

(“Mayo“), the USPTO has released numerous
guidance documents in order to clarify this area of law. The latest
MPEP revision incorporated the USPTO’s two most recent
documents on this topic: the October 2019 Patent
Eligibility Guidance Update,
 84 FR 55941 (October 18,
2019) (“the October Guidance”) and the 2019
Revised Patent Subject Matter Eligibility Guidance,
 84 FR
50 (January 7, 2019) (“the 2019 PEG”). Previously, the
October Guidance and the 2019 PEG had been separate documents that
superseded the sections of MPEP concerning subject matter
eligibility. With this revision, MPEP was updated and may be relied
on to reflect current practices.

Alice/Mayo Test

The Alice  decision confirmed the two-step
test that should be used by USPTO patent examiners for determining
whether the subject matter of patent claims is patentable under
U.S. law. The first step of the test calls for examiners to
determine if the claims of a patent application fall within one of
the four statutory categories: a process, machine, manufacture, or
composition of matter. If yes, the examiners should determine if
the claims are directed to a judicial exception, such as a law of
nature, a natural phenomenon, or an abstract idea. If no, the
claims qualify as eligible subject matter. Otherwise, if it is
believed that the claims are directed to a judicial exception,
examiners assess whether the claim recites additional
elements that amount to significantly more than the judicial

The Revisions: The 2019 PEG and the October Guidance

In the aftermath of the Alice decision, the
USPTO identified that there was ambiguity with respect to what
constituted a claim “directed to a judicial exception.”
The 2019 PEG was intended to provide guidance in two areas. First,
the 2019 PEG enumerated three groups of abstract ideas, a category
of judicial exception that had previously lacked well-defined
boundaries. Second, the 2019 PEG provided a more consistent
approach for determining whether a claim is “directed to”
a judicial exception. These changes are reviewed in 
an earlier article

The October Guidance was released in response to public
commentary regarding the 2019 PEG and contained additional
guidance. Specifically, the October Guidance provided additional
guidance for evaluating whether a claim “recites” a
judicial exception and, if so, whether the judicial exception is
“integrated into a practical application” such that the
claim as a whole is not “directed to” the judicial

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Both the 2019 PEG and the October Guidance set out that the
three enumerated groups of abstract ideas are mathematical
concepts, mental processes, and certain methods of organizing human
activity. The other judicial exceptions include laws of nature and
natural phenomena.

MPEP Revisions Concerning Engineering and Technology

The June 2020 MPEP revision updates guidance concerning abstract
ideas, but not for laws of nature or natural phenomena. For laws of
nature and natural phenomena, examiners are directed to follow
previous guidance.

With regard to abstract ideas, examiners are now directed to:
(a) identify the specific limitation(s) in the claim under
examination (individually or in combination) that the examiner
believes recites an abstract idea; and (b) determine whether the
identified limitation(s) falls within the subject matter groupings
of abstract ideas enumerated in the 2019 PEG and, now, MPEP (see
section 2106.04(a)(2)).

The subject matter groupings enumerated in the 2019 PEG reflect
the USPTO’s movement away from the case-comparison approach.
The three enumerated groupings are rooted in U.S. Supreme Court
precedent and Federal Circuit decisions. While the previous MPEP
revision had identified some of these groupings, the June 2020
revision now contains all relevant categories and sub-categories
previously found only in the 2019 PEG and October Guidance.

Notably, the guidance issued under the new “Mental
Processes” group provides clarity for software inventions
which was somewhat lacking in the previous MPEP edition. In
particular, the June 2020 revision clarifies that “a claim
with limitation(s) that cannot practically be performed in the
human mind does not recite a mental process”. However, it
should be noted “a claim that requires a computer may still
recite a mental process”. In order to evaluate whether a claim
that requires a computer recites a mental process, an examiner
should, “review the specification to determine if the claimed
invention is described as a concept that is performed in the human
mind and applicant is merely claiming that concept performed 1) on
a generic computer, or 2) in a computer environment, or 3) is
merely using a computer as a tool to perform the concept”.

The updated MPEP also includes updated guidance for determining
whether a claim integrates a judicial exception into a practical
application. For example, whether the invention effects “an
improvement in the functioning of a computer, or an improvement to
other technology or technical field” is now set out as a
consideration. This consideration was present in the previous MPEP
edition, but at a later step of the analysis. The updated MPEP
places this consideration in earlier stages of
the Alice  analysis, where the examiner is
directed to exclude consideration of whether the additional
elements represent well-understood, routine, conventional activity.
This may serve to improve the chances of claims for
software-related inventions to qualify as eligible subject

Impact of the Revisions

The 2019 PEG was issued in accordance with judicial precedent
and was to increase consistency and predictability in examination
practice. In “Adjusting to Alice: USPTO patent
examination outcomes after Alice Corp. v. CLS Bank
“, the USPTO’s Office of the Chief
Economist reported a 25% decrease in the likelihood
of Alice-affected technologies receiving a first
Office Action rejection in the year following
the Alice  decision. Furthermore, in that same
one-year period, “uncertainty in patent examination
for Alice-affected technologies decreased by
44%”. The USPTO clearly believes that its guidance updates and
the recent MPEP revision serve to increase clarity and


1 Free World Trust v Électro Santé
, 2000 SCC 66 [Free World Trust]
and Whirlpool Corp v Camco Inc, 2000 SCC 67

2 Genencor International Inc v Canada
(Commissioner of Patents)
, 2008 FC 608.

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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