First Application by PAB of New Guidelines On Patentable Subject Matter

Re Application 2,306,540, CD 1334, Pitney Bowes / Postal Tax Information System
Re Application 2,344,781, CD 1336, Progressive Directrac / Insurance Monitoring System

These two decisions from the PAB and Commissioner of Patents are the first to address patentable subject matter since the FCA Amazon.com decision, 2011 FCA 328, and since the revised Guidelines on Examination Practice Respecting Computer-Implemented Inventions PN2013-03, released in March. As discussed in my previous post, the Guidelines repudiated the earlier contribution approach, which asked whether inventive contribution was itself patentable subject matter, in favour of an approach which asks whether the invention as claimed is patentable subject matter. The effect of this change is to allow a broader range of valid claims. So, on the contribution approach, a computer implemented invention in which the inventive contribution lay in an ingenious algorithm would not be patentable unless there were some ingenuity in its implementation, whereas under the more recent approach, it will be patentable if the invention is implemented in a machine or other system which is statutory subject matter, regardless of where the inventive ingenuity is found.

These decisions illustrate the approach set out in the Guidelines. In CD 1336 the inventive concept appears to be the idea of basing insurance rate on driver risk factors derived from real-time monitoring, rather than on risk categories, and providing insurance premium information back to the driver. (I say this appears to be the inventive concept, because, as is often true in judicial decisions as well, the inventive concept as stated by the PAB is basically a paraphrase of the claims, rather than an identification of the point of inventiveness which sets the invention apart from the prior art.) As I understand it, the system would in effect say to a driver “Your GPS system shows you have been speeding a lot this month. Unless you start driving at the speed limit, your premiums will go up by $X.” This idea might be characterized as a business method, but that characterization was irrelevant to the PAB’s analysis:

82. The monitoring of operating characteristics limitation being essential, the claimed subject matter not being merely abstract, and the subject matter not being otherwise excluded from patentability, the panel finds that method claims 1-9 and system claims 10-17 are directed to statutory subject matter.

That is, regardless of whether the inventive concept is a business idea, the claim is to a system, which is patentable subject matter, and not merely to the idea in the abstract. The decision in CD 1334 is very much to the same effect. (The claims at issue in CD 1336 were nonetheless refused on the basis of obviousness, while those in CD 1334 were allowed, subject to clarifying amendment.)

In my post on the FCA Amazon.com decision I argued that the crucial paragraph 63 contained two different and contradictory ideas. Consequently:

If the Patent Office wishes to refuse a patent in which the inventive step lies in a business idea, it will focus on the first aspect of [63], and say that "the only inventive aspect of the claimed invention is the [business idea]" which is to be assimilated to a mathematical formula, and is therefore unpatentable. On the other hand, if the Patent Office wishes to grant the patent, it will focus on the second aspect of [63] and says that on a purposive construction the business idea is "only one of a number of essential elements in a novel combination," just as software patents were granted on the basis that the invention pertains "to a useful system" and "more than calculations are involved."

In CD 1336, the PAB focused on the second aspect of [63], saying “The feature 'determining the cost of insuring', although a mathematical calculation "is not the whole invention but only one of a number of essential elements in a novel combination,'" with the result that the claimed invention was patentable subject matter. It appears from the Guidelines and these two decisions, that CIPO has settled on this interpretation of Amazon.com. As I argued in my post on the Guidelines, this is the correct approach, as it is consistent with the SCC Shell Oil decision.