Written By: Liz Gray (IP Lawyer) & Charlotte Tyhurst (Articling Student)
With the rapid rise of AI and other innovative technologies, patent offices worldwide are grappling with clear and actionable guidelines for patenting software inventions. For foreign-owned companies looking to expand into the Canadian market, understanding Canadian patent law and the Canadian Patent Office’s evolving approach to software patents is crucial.
Interpreting the Canadian Patent Act
Section 27(8) of the Patent Act states that “no patent shall be granted for any mere scientific principle or abstract theorem”. For instance, mathematical formulas are considered abstract ideas without physical existence and are thus unpatentable. This principle is consistent with patent regulations in many jurisdictions.
In Canada, the courts have broadly interpreted Section 27(8) to include calculations, pure mathematical formulas, mental operations, processes, plans, or information transformations that do not involve changes to physical entities. The Office often classifies software inventions as computer-implemented algorithms, which fall under the category of “abstract theorems”. Consequently, some applicants encounter office actions during prosecution of their software patents.
What Is the Office Looking for in Software Patent Applications?
Subject Matter Must Have “Physicality”
The Office’s interpretation of “physicality” is guided by the leading Canadian decision of the Federal Court of Appeal in Canada (A.G.) v. Amazon.com, Inc. Specifically, the Court stated that “patentable subject matter must be something with physical existence, or something that manifests a discernible effect or change”.
Software inventions can be patented if they include components that manifest real-world change. Some possible examples are as follows: the computer component performs physical measurement and collection steps (i.e., the invention uses sensors or cameras) to generate data; the invention requires subsequent performance of physical actions on the basis of results generated by the computer component.
Canadian Patent Office Practice
The 2020 Practice Notice explains that Examiners are instructed to identify the “actual invention” within a claimed subject matter to assess its patent eligibility. This “actual invention” analysis, which is not grounded in law, is to be based on a purposive construction of the claim and further requires identifying the element or combination of elements that solve a particular problem. For a claim to be patent-eligible, the “actual invention” must either have physical existence or otherwise manifest a physical effect or change and pertain to the manual or productive arts.
The “actual invention” test is not grounded in Canadian patent law and in fact may be likened to the pith and marrow test rejected by the Supreme Court of Canada in Whirlpool Corp. v. Camco Inc., 2 SCR 1067 and Free World Trust v. Électro Santé Inc., 2 SCR 1024.
The US “Machine-or-Transformation Test”
The current Canadian legal test of “physicality” reflects a similar pattern of reasoning in the United States following Bilski v Kappos 561 U.S. 593 (2010). In Bilski, the US Supreme Court endorsed the “machine-or-transformation” test, which considers whether a process is implemented by a machine or whether it transforms an object into a different physical state.
Both the Canadian physicality requirement and the United States’ “machine-or-transformation” test appear to reflect the need for some real-world tangible aspect of an invention that distinguishes patentable software and business methods from their unpatentable counterparts that would be dismissed as merely abstract ideas.
How to Improve Your Chances of Obtaining a Software Patent
Incorporate Elements That Root the Invention in the Physical World
Including terms like “processor”, “server”, and “processing circuitry” throughout the claims can add a layer of physicality to the invention. While this alone may not be sufficient to overcome a patentable subject matter rejection, it primes the Office to consider the invention’s physical aspects.
Highlight any interactions the invention has with the physical world. Input and output modules, which generally indicate an external interaction, should be explicitly claimed if applicable.
Demonstrate That the Invention Manifests a Physical Effect or Change
In recent Canadian practice, steps that result in physical consequences have been deemed sufficient to convey physicality. For example, if the invention enhances computer performance or solves a problem in computer operation—such as improving speed, reducing resource use, or automating tasks—these features should be clearly claimed.
Including details about the invention’s interactions with the physical world can increase the chances of overcoming patentable subject matter rejections. For instance, in a Canadian case related to oil well planning, a step involving the physical completion of a well field “according to [a] well completion plan [generated by a computer algorithm previously described in the claim]” was considered to direct the claims toward patentable subject matter (Landmark Graphics Corporation, Canadian Patent No. 2,939,218).
The topic of patentable subject matter for software inventions in Canada is complex and continuously developing. We have been very successful in keeping up to date with this evolving area of practice, including working with Canadian Patent Examiners to understand the approach of the Canadian Patent Office. If you have questions about patentable subject matter or software patents in Canada, contact our team of experts.
