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Unlocking Efficiency: Fintech Patent Success in Canada
June 18, 2024
In Canadian patent law, the determination of the “actual invention” is a relevant and necessary question in assessing patentable subject matter. Generally, a computer is only considered part of the actual invention if running an algorithm on the computer improves the computer's efficiency (for example, processing speed, capacity, or memory use). Otherwise, the patent application may be rejected for claiming an abstract algorithm which is prohibited under Section 27(8) of the Patent Act.
The Patent Appeal Board recently decided in Creditex Group, Inc (Re), 2024 CACP 8 to allow a patent for an invention involving the pre-reconciling of trade data before submitting a trade ticket to a downstream trade processing system. Initially, the PAB interpreted the input as trade data and the output as an executed trade. The PAB concluded that the invention lacked physical meaning and that the only physicality is in the computer system. Thus, the patent as it stood was rejected.
Creditex Group, Inc. argued that their invention improves efficiency by preventing unmatched trade tickets from reaching the downstream trade processing system. They emphasized that this system can integrate with existing third-party systems, thereby enhancing throughput without requiring a redesign of existing infrastructure.
The PAB found this argument persuasive. However, the PAB identified an issue with claim 1, which only referred to generating “at least one trade ticket” as this left cases where there would be no efficiency in the utilization of the downstream system. Consequently, the PAB requested that the Applicant address this issue in their final proposed claim set.
In response, the Applicant submitted an amended claim set that specified that a copy of the trade ticket is submitted by each party to the trade confirmation system. The PAB decided that the amended claim set was sufficient in providing an efficiency improvement to a downstream trade processing system. By pre-reconciling data, only reconciled trade information reaches the downstream system and this results in a physical improvement to computer efficiency of the downstream system. As a result, the PAB deemed the computer system part of the actual invention and that the claims were directed towards patentable subject matter.
This decision is significant as it demonstrates that fintech and securities trading patents can be patentable in Canada, provided the claimed invention provides an improvement to a computing system. Interestingly enough, the corresponding U.S. application is currently under appeal, with the remaining rejection focused on non-patentable subject matter.