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Alice Counterpart Decision in Canada: One and the Same

Authored byGiselle Chin

PAB 1408 re CA 2,163,768

In August 2016, the Patent Appeal Board (“PAB”) in Canada issued a decision (PAB 1408) regarding Canadian application No. 2,163,768 (“the ‘768 application”), entitled “Methods and Apparatus Relating to the Formulation and Trading of Risk Management Contracts”, owned by Alice Corporation Pty Ltd.

This is the counterpart to the invalidated US patent 5,970,479 owned by Alice Corp., one of four patents (U.S. Patents No. 5,970,479, 6,912,510, 7,149,720, 7,725,375) considered in the seminal 2014 United States Supreme Court decision on the eligibility of certain computer implemented inventions, Alice Corp. v. CLS Bank International, 573 U.S. __, 134 S. Ct. 2347 (2014).

Case Summary

The claims of the ‘768 application are directed towards a risk management method and apparatus that enables users to construct insurance contract orders for third-parties, contingent on the occurrence of specified future events, to reduce their exposure to these specified risks.

The crux of the issue was whether on a purposive construction the computer element was to be an essential element of the invention, and therefore whether the claims were permissible subject matter under the Patent Act.

The Examiner, relying on CIPO’s Practice Notice 2013-03 on Computer-Implemented Inventions, asserted that while the computerized features were material to the operation of the invention, they were not essential to the solution of enabling the formulation of multi-party risk management contracts. According to the Examiner, any advantages to using a computer to perform the method of the invention flowed from the known capabilities of computers in performing calculations, and did not point to the computer implementation being essential. Accordingly, the Examiner found that the claims were directed to subject-matter that lay outside the definition of “invention” contrary to section 2 of the Patent Act.

The Applicant, relying on the Federal Court of Appeal (FCA) decision in Amazon (Amazon FCA) and the Supreme Court of Canada Decision Free World Trust, argued that variations of the claimed invention to exclude the inputs, data storage, and data processing means and their interaction, would clearly make a difference in the way the invention worked. Those features must therefore be considered essential features of the claim.

The Patent Appeal Board sided with the Examiner, alleging that Amazon FCA recognized that merely including a computer in a claim may not be sufficient to make a claim patentable subject-matter. The PAB further concluded that the specification did not indicate that computers were essential to the invention, and as such, the computer was nothing more than the operating environment in which the contract formation takes place. The Commissioner therefore refused the ‘768 application.


The PAB relies heavily on Amazon FCA in dismissing Alice, focusing on the assertion that merely including a computer in a claim does not necessarily render it patentable subject matter. The PAB failed to mention, however, that Amazon FCA also noted that the one-click method may be patentable if the “new one-click method of completing an online purchase is not the whole invention but only one of a number of essential elements in a novel combination” [para 63]. In fact, the patent application at issue in Amazon FCA did eventually grant as Patent No. CA2246933, and could very well be used as an example that would satisfy this criteria.

Applicants seeking to protect computer-implemented inventions may therefore draft their patent specifications to clearly indicate that the software and computer components are not only themselves essential, but are also part of a number of essential elements in a novel combination.

Additionally, as the Commissioner will look to the specification in order to breathe meaning into the claims, applicants should consider crafting software specifications and claims in a manner that describes a technical solution to a technical problem, and present the manner in which the invention is an improvement over the prior art. An applicant may consider highlighting particular deficiencies in conventional systems in order to show the advantage presented by the inventor’s solution.

Finally, applicants should consider crafting claims to focus on an improvement to the functionality of the computer itself, and not on other generic computer tasks for which a computer is used in its ordinary capacity.

Authors: Stacy Rush, Giselle Chin , Andrew Kaikai

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This article is for information purposes only and does not constitute legal or professional advice.