2023 saw a number of developments in Intellectual Property (IP) law that will be of interest to developers of electrical and computer technologies. This article provides a review of key events and updates including: expanded IP funding programs for Canadian small and medium enterprises; court decisions on the patentability of computer-implemented inventions in Canada and the UK; the rise of generative AI and the patentability of inventions made by AI systems; changes to Europe's patent system; and a setback for Apple in the US.
IP Funding Programs for Canadian SMEs
2023 saw a significant expansion of IP funding programs targeted to Canadian small and medium-sized enterprises (those with fewer than 500 employees). In general, these funding programs provide financial grants that can be applied to the cost of IP-related projects such as IP strategy development, IP audits, patent and trademark filings and prosecution and more. Eligible Canadian businesses can also mix and match funding from different programs to support their IP needs.
In 2023, the Federally funded Elevate IP program launched to provide targeted IP supports to Canadian startups. Elevate IP provides funding for various types of projects including developing an IP strategy and implementing it through patent, trademark, or copyright filings. The funding from Elevate IP can be applied directly to the costs of drafting, filing and prosecuting patent and trademark applications. Elevate IP funds are distributed through a group of Canadian Business Accelerators and Incubators (BAI), with each BAI responsible for a particular geographic region. More details on Elevate IP can be found here.
Intellectual Property Ontario (IPON) is an organization established by the government of Ontario to provide intellectual support to businesses that operate in Ontario. IPON provides funding and support for Ontario businesses to develop and implement an IP strategy, including funding for patent and trademark drafting, filing, and prosecution with upwards of $100,000 in funding available. IPON continued to expand their offerings in 2023, with new programs to fund and support IP owners including a three-month intensive IP Bootcamp program. More details on the programs and funding available through IPON can be found here.
In addition to IPON and Elevate IP, Canadian innovators can also receive IP support through the NRC/IRAP IP Assist program. IP Assist provides funding for IP education and IP strategy projects (but not filings) for companies that qualify for IRAP support. The IP Assist program may be particularly helpful for existing IRAP clients who can access funding through their Industry Technical Advisor (ITA).
The expansion of IP-funding programs provides innovative Canadian businesses with access to IP services at minimal costs. These funds are a great opportunity to obtain high-quality IP assets with minimal financial outlay.
Patentability of Computer-Implemented Inventions
The last half of 2023 saw court decisions in Canada and the UK dealing with the patentability of computer-implemented inventions. These decisions will impact how patent offices in Canada and the UK treat patent applications involving computer and software processes.
Canada
In July, the Federal Court of Appeal (FCA) released its decision in the Benjamin Moore case1. Unfortunately, the FCA decision fails to provide much clarity on the patentability of computer-implemented inventions.
The FCA decision relates to a pair of patent applications filed by Benjamin Moore for computer-implemented colour selection methods. These patent applications were rejected by the Canadian Intellectual Property Office (CIPO) for a lack of patentable subject matter. The approach applied by CIPO in evaluating the patent applications, allows patent examiners to ignore some elements of the claims when assessing patentable subject matter.
Benjamin Moore appealed the rejections of the patent applications to the Federal Court. The Intellectual Property Institute of Canada (IPIC) intervened at the Federal Court. IPIC took the position that CIPO's approach to patentable subject matter was not consistent with Canadian patent law. IPIC also proposed a test (the "Benjamin Moore test") for evaluating patentable subject matter. In its decision, the Federal Court adopted the test proposed by IPIC. The Federal Court sent the patent applications back to CIPO for further review, and instructed CIPO to apply the Benjamin Moore test in their review. CIPO appealed to the FCA.
The FCA allowed CIPO's appeal. The FCA held that the Benjamin Moore test imposed requirements that had no basis in law. Unfortunately, the FCA did not provide much in the way of specific directions for evaluating computer-implemented inventions. Rather, the FCA highlighted unsettled issues in Canadian law, including whether novelty and ingenuity can be considered when evaluating the patentability of a claimed invention. This leaves both CIPO and patent applicants with uncertainty on the proper legal test for patentable subject matter in Canada.
Following the FCA decision in Benjamin Moore, we expect to see CIPO continue to make and follow its own rules about the patentability of computer-implemented invention—even though Courts keep finding those rules to be inconsistent with Canadian law.
In late 2023, CIPO's Patent and Appeal Board (PAB) released its first decisions following the FCA decision in Benjamin Moore. These decisions suggest that CIPO's approach will focus on whether claims have sufficient physicality to define patentable subject matter.
In Senior, Rodney (Re) 2023 CACP 23, the PAB dealt with the patentability of a computer-implemented invention for purchasing and redeeming units of motor fuel. The PAB relied on the Benjamin Moore decision to reinforce the requirement from Amazon that patentable subject matter "be something with physical existence, or something that manifests a discernible effect or change". The PAB decision further clarified (based on Amazon) that a practical application of an invention is insufficient to satisfy the physicality requirement. To establish the required physicality, the PAB looked to computer elements that represented something other than typical components of a computer or perform operations beyond those of a computer. In its decision, the PAB found that a step of "redeeming, by pumping action...physical motor fuel at the retail service station" would meet the physicality requirement from Amazon.
In Landmark Graphics Corporation (Re), 2023 CACP 25, the PAB similarly relied on Amazon for the requirement "that patentable subject matter must be something with physical existence, or something that manifests a discernible effect or change".2 The PAB held that claims to a method for prospecting, drilling, or developing an oil field defined patentable subject matter because a step of performing drilling and collecting data during the drilling cooperates with the computer processing steps (b-f) to produce better results by using the claimed modeling algorithm. However, the PAB held that claims that omitted the step of performing drilling and collecting data during the drilling did not satisfy the physicality requirement.
United Kingdom
In more promising news for developers of AI technologies, the United Kingdom Intellectual Property Office (UKIPO) updated its practice guidelines to make it easier to patent AI-related inventions. In particular, the UKIPO directed its examiners to not object to patent applications involving artificial neural networks under the UK's general exclusion of a program for a computer as such. The UKIPO updates its guidelines in response to a High Court decision that a patent application involving artificial neural networks was not excluded from patentability for being a computer program as such. This decision, and the updated guidelines, are a good sign for patent applicants that patent law in the UK is becoming more receptive to patenting AI-based inventions.
Generative AI
Generative AI was also in the news throughout 2023, particularly with the increasing prominence and profile of ChatGPT and other publicly accessible generative AI programs. Generative AI technologies often involve a cross-section of trade secret, copyright, and potential patent rights along with other important considerations such as the use and impact of open-source software. The increased development and adoption of generative AI systems will continue to pose challenges to existing legal regimes and frameworks in 2024 and beyond. A more in-depth exploration of these issues can be found here.
Inventions made by AI
In late December, the UK Supreme Court released its decision on whether artificial intelligence (AI) can be named as an inventor for a patent application. As we discussed last year, the question of whether artificial intelligence can be an inventor has been a contentious issue with court decisions across various jurisdictions considering whether an AI can be named as an inventor of a patent application. The decision of the UK Supreme Court follows decisions in Canada, Australia, Germany and the United States in rejecting AI as an inventor. However, courts and lawmakers continue to grapple with how rights in these inventions should be allocated. Like many legal issues surrounding AI, existing legal frameworks may need to be updated and adjusted to account for inventions made by AI systems—especially as the capabilities of generative AI grow.
European Unitary Patent System
In other notable developments, Europe's Unitary Patent System came into effect in mid-2023. European patent applications with a notice of allowance that sets a response deadline after January 1, 2023 can now be registered for unitary effect. This allows patentees to obtain a Unitary Patent that provides protection in all EU states that have ratified the Unified Patent Court Agreement (UPCA) at the time of registration for unitary effect. Patentees are still able to validate their European patents in other jurisdictions that are either not EU member states or have not ratified the UPCA.
The UPCA also establishes a Unified Patent Court (UPC). All European patents (UP and conventional European Patents) fall within the jurisdiction of the UPC and can be litigated at the UPC. Decisions of the UPC will have effect across all UPC states (for decisions relating to a UP) or all UPC states in which a conventional European patent has been validated.
The Unitary Patent System is currently operating in a transitional period during which a patentee can choose to opt out of the jurisdiction of the UPC. Once the transitional period has ended, validations of European patents in UPC countries (along with Unitary Patents) will fall within the exclusive jurisdiction of the UPC. A more in-depth review of the unitary patent system can be found here.
Apple Watch Setback
The end of 2023 saw time run out for Apple Watch sales in the United States. The US International Trade Commission (ITC) issued a ban on importation of Apple Watch products with an integrated pulse oximeter. Masimo Corporation claimed that the pulse oximeter feature violated its patent rights and the ITC agreed. In response, Apple pulled its current Apple Watch Series 9 and Ultra products, and previous models going back to the Apple Watch Series 6, from its stores on December 24, 2023. While the battle rages on in appeals and other legal wrangling, Apple announced that they will work around Masimo's patents by removing the pulse oximeter from its Apple Watch, degrading its usefulness as a wholistic health monitor.
The US ITC is a powerful weapon for patent owners dealing with competitors who import infringing physical products into the United States. A patent owner can make a claim of infringement and obtain an order that the infringing products cannot be imported into the United States, typically within 18-24 months. In contrast, a patent infringement case in the US Federal District Courts can take twice as long and cost much more than an ITC proceeding. The ITC process is available to Canadian companies so long as they have sufficient business operations in the United States.
A ban imposed by the ITC is only effective against importation of infringing products into the US, so sales may continue in Canada and other countries. Apple continues to sell Apple Watch Series 9 and Ultra models with the pulse oximeter feature in Canada and elsewhere. However, given the importance of the US as a market for most Canadian companies, leveraging the US ITC can be a powerful tool in protecting market share and profit margins. If you are concerned about a competitor that is importing products into the US in violation of your company's patent rights, get in touch with us to find out if the ITC process might be a useful way to protect your technology and your business.
Footnotes
1. Canada (Attorney General) v Benjamin Moore & Co, 2023 FCA 168 [Benjamin Moore FCA].
2. Landmark Graphics Corporation (Re), 2023 CACP 25 at [25].
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.
