“Disclose” Has the Same Meaning in Claim Date and Novelty Provisions

Paid Search Engine Tools, LLC v Google Canada Corporation 2021 FC 1435 McDonald J

2,415,167 / Paid Search Engine Bid Management

In this decision, McDonald J held all the asserted claims of PSET’s 167 patent were invalid for insufficiency, anticipation, or obviousness [5] in a decision that turned largely on the facts. (If I’m counting right, PSET asserted 64 claims from 6 independent claims.)

The patent relates to a system for search engine bid management. In the early 2000s advertisers were reaching internet users by paying search engines to have their information or advertisements displayed in response to user searches for sites for specified keywords. Advertisers could bid on search keywords, so that a higher bid would get the advertiser a higher place in the search results for that keyword [11]. Advertisers wanted to manage their bids to get the best placement for the least money. This could be cumbersome for an advertiser managing a large number of keywords. The inventors of the 167 patent developed what they called a Keyword Bid Optimizer tool (KBO). The KBO collected information from the search engine on their customers’ keywords and the bids on those keywords, and produced a report showing: the keyword(s), the number of times it was searched (views), the top 20 bids for the keyword, and where the advertiser’s bid (in red) ranked relative to others, as shown in this figure from the patent [17]:

With the report in hand (or on-screen), the advertiser could then easily scan the table and see, for example, that they could reduce their bid on “earth friendly product” from 5¢ to 4¢ while still maintaining their first place ranking. The claimed invention seems to have been an automated version of the KBO tool, which incorporated automatic bid reduction as an essential element [236].

McDonald J held on the facts that two of the key independent claims (1 and 17) were undoubtedly obvious:

[260] This is not a case where the application of the obviousness analysis strains credulity. The evidence is clear that even on a rigid application of the obviousness considerations there were multiple other commercial products that performed the same essential features, and in some cases more, as those described in claims 1 and 17 of the 167 Patent.

This is a classic obviousness scenario, where the development of a new product or technology drives a demand for complementary technologies. There were no doubt many new and useful products that were nonetheless obvious, as companies rushed to pluck the low hanging fruit from the new opportunities opened up by search engine advertising, which was relatively new at the time [62].

A number of the claims were also anticipated. The 167 patent claimed priority from a US provisional patent application, which was referred to as the 976 patent. McDonald J held that a number of the claims were not entitled to claim priority from the 976 patent as the claimed invention was not sufficiently disclosed [222]. PSET argued that the claim to priority is met “if an ‘inference’ can be drawn that the 976 Patent discloses the 167 Patent” [220]. McDonald J rejected this, pointing out that “The word “disclose” appears in various sections of the Patent Act. I do not accept that a different meaning should apply to disclosure as it is used in subsection 28.1(1) such that disclosure is achieved merely if an inference can be drawn” [221]. This holding strikes me as clearly correct. Section 28.1(1), the claim date provision, refers to “a patent disclosing the subject-matter defined by the claim”; s 28.2(1), the novelty provision, states “The subject-matter defined by a claim . . . must not have been disclosed.” It is not just the word “disclosed” that is the same; the two provisions have parallel construction, both dealing with the relationship between disclosure and the claimed subject matter, and of course the claim date defined in s 28.1(1) is incorporated into s 28.2(2). Surely the same meaning was intended. PSET conceded that many of the asserted claims were anticipated if they could not rely on the priority claim [231]. Other claims were anticipated by the prior art [245].

McDonald J also held that a number of the claims were not sufficiently disclosed, particularly those based on automatic reduction of a bid based on the demographic information of searchers, as the patent did not provide sufficient description of how to actually use that information: see eg [199], [204]. In effect, patent says “Check out these cool stats and then optimize.” We don’t see successful insufficiency attacks very often, but this strikes me as a pretty clear case, at least judging from McDonald J’s relatively brief discussion.

Finally, I’ll note that the patentee appears to be a variety of patent assertion entity. PSET did actually implement and sell the KBO tool, but it was not commercially successful, and they stopped selling it in 2003 [20]–[22]. As noted, the invention claimed by the 167 patent is an improved version of that tool, with automated bid adjustment, and it doesn’t seem that PSET ever implemented an embodiment of the invention. So far as I can tell, PSET was one of many firms that jumped into an exploding new market, but they didn’t survive the shake out. This litigation was an (unsuccessful) attempt to monetize the patent.

 UPDATE: See further discussion of the priority point here.