CASL's Computer Law Programs
The computer program sections of Canada’s Anti-Spam Law (CASL) came into force in January 2015. They have been much criticized for their breadth. The main objection is that the provisions regulate all computer programs installed on all computer systems that are part of a commercial activity rather than confining them to real malware or spyware. Indeed, no other country has similar laws.
CASL prevents anyone from installing a “computer program” on another’s “computer system” as part of a commercial activity unless express consent has been obtained and certain disclosure requirements met. The prohibitions do not apply to software updates, upgrades or patches.
Still, the difficulty is that implied consents do not qualify as consent. On the other hand, written agreements or click-wraps do comply as long as the consent is not bundled in the agreement. Web wrap agreements likely do not comply.
Otherwise, “computer programs” are not limited to malware or spyware, and “computer systems” are broadly defined to include any device that contains computer programs and other data and performs logic and control functions. Computer systems, therefore, could include servers, PCs, smartphones, tablets, e-book readers, cloud websites and web services, industrial machines, appliances, autos, and other consumer products.
Software Patents Still a Tough Go
A patent application by the company that manages retirement funds for doctors could be doomed by the Canadian Intellectual Property Office’s (CIPO) continued reluctance to grant business method or software patents (BMPs). In 2014, MD applied for Canadian and US patents for its proprietary fund management “Manage the Manager” process, which was engineered exclusively for Canadian physicians. The process contains qualitative and quantitative elements that combine a business method with deep predictive analysis. But it is unclear whether MD will succeed in obtaining patents for its process. Indeed, statistics from CIPO evidence a disinclination to grant “computer-implemented patents,” which include BMPs. Statistics show that the ratio of allowed computer-implemented patents are low, even taking into account applications under that heading that are not controversial.
The difficulty is that the law in both Canada and the US remains in flux. In Canada, the Federal Court of Appeal’s 2011 decision in the Amazon “one-click” case is the seminal decision. In that case, Amazon obtained a US patent for the one-click feature in 1998. But in 2004 the Canadian Intellectual Property Office refused to issue a Canadian patent for the process. On appeal, Canada’s Patent Appeal Board shocked the intellectual property community with a definitive statement against the patentability of BMPs in Canada. The Board also categorically stated that previous decisions allowing BMPs were wrong.
In November 2011, however, the Federal Court of Appeal rejected the PAB’s analysis and ordered CIPO to re-examine whether the one-click patent was “patentable subject matter.” While the Court was clear that business methods could be patented, the decision left considerable uncertainty as to how specific applications would be treated by CIPO and the courts going forward.
Still, CIPO granted the “one-click” patent shortly thereafter — but the decision received little fanfare. Since then, the patentability of BMPs has remained largely under the radar, partly because the Amazon case has not sparked the wave of applications that some thought it would. Still, there may be more applications around than is generally known given the reluctance of applicants to publicize their applications.
The difficulty with obtaining patents for BMPs is that many examiners regard them as abstract schemes or methods or ideas, which have never been patentable. What are clearly patentable are computer implementations of mathematical formulas that achieve practical results. For example, there is no dispute about the patentability of an image compression system in which a mathematical algorithm compresses a picture on a cell phone so it can be transmitted. But Canadian patent examiners don’t take the same view of applications directed at business methods or software. With the computer included as part of the process, it’s difficult to treat a BMP or software as merely abstract, so examiners tend to strip out the computer elements as non-essential, and say that all that is left is an abstract scheme or method.
Applicants have been known to overcome examiners’ resistance, however, with well-considered arguments that the computer elements are essential for the implementation of a business method or software application.