Financial services technologies, even if they rely to some degree on a computer system, remain a challenge to patent in Canada. In this case, the Patent Appeal Board (“PAB”) rejected the Canadian version of one of the computer-implemented financial services patent applications from the famous U.S. case on software patent eligibility, Alice Corp v CLS Bank International, 573 U.S. __, 134 S. Ct. 2347 (2014), for lack of patentable subject matter.
The decision is of limited insight, however, since it was made only on the basis of Alice Corp’s response to its final office action – not on any additional arguments on appeal. [12-17] This may have been in part because of the expiry of the 20-year period from the 1993 filing date.  Nevertheless, the rejection of Canadian Patent Application No. 2,163,768 (“the ‘768 Application”) is another example of the PAB’s problem-solution approach to claim construction, laid out in the Manual of Patent office Procedures §13.05 and Practice Notice PN2013-03, which has been criticized as being at odds with Canadian Supreme Court jurisprudence.
Canadian Patent No. 2,163,768: Methods and Apparatus Relating to the Formulation and Trading of Risk Management Contracts
The ‘768 Application relates to enabling the management of risk relating to specified, yet unknown future events, by constructing compensatory claim contract orders on yet-to-be-identified counter-parties, being contingent on the occurrence of the specified future events.  The patent specification describes the invention as operating via a computer system, as do the claims. 
Claim 1 is representative:
- A data processing system to enable the formulation of multi party risk management contracts, the system comprising:
at least one stakeholder input means by which ordering stakeholders can input contract data representing at least one offered contract in at least one predetermined phenomenon, each said phenomenon having a range of future outcomes, and said contract data specifying a future time of maturity, entitlements due at maturity for the range of outcomes, and a consideration due to a counter-party stakeholder;
at least one counter-party stakeholder input means by which at least one counter-party stakeholder can input registering data as to a respective view of the outcomes in said predetermined range of outcomes in the future for one or more of said predetermined phenomena;
a data storage means linked with each said stakeholder input means and linked with each said counter-party stakeholder input means to store said contract data and said registering data;
and data processing means, linked with the data storage means, for pricing and matching contracts from said contract data and said registering data, said pricing including selecting the registering data corresponding to the time of maturity for each predetermined phenomenon, and calculating a counter-consideration derived from said entitlements, and said matching including comparing said consideration and said counter-consideration to match an offered contract with at least one of said counter-party stakeholders according to predefined criteria. [24, emphasis added]
The only issue before the PAB was the statutory subject matter of the claims. 
Financial Services Patent Rejected for Subject Matter: Solution to Problem does not involve a Computer System as an Essential Element
Applying the MOPOP Guidelines as outlined in PN2013-03 for claim construction regarding computer-implemented inventions, the PAB looked to the problem to be solved, the solution to the problem, and the claim elements that are essential to providing the solution. 
The PAB considered the problem to relate to “enabling the management of risk relating to specified, yet unknown, future events”, and the disclosed solution to be “the scheme of formulating multi-party risk management contracts”.  With regard to the computer system recited in the claims:
 Moreover, we also agree that, on this basis, the elements in the claims that define the computer (i.e. data processing system having input means, data storage means and processing means) do no more than define the “operating environment of the conventional ordering system” and that these elements “are not essential to the solution of enabling the formulation of multi-party risk management contracts”. Instead, we agree with the Examiner that the essential elements of the claims are the steps needed for the scheme of formulating multi-party risk management contracts.
Therefore, the PAB concluded that the essential elements define “abstract disembodied rules that can be considered equivalent to mental steps”.  The computer elements only form part of the context or working environment, but are not part of the solution to the problem. 
The claims were therefore rejected as lacking patentable subject matter under Section 2 of the Patent Act. 
Final Office Action: The Argument for Free World Trust Remains Unanswered
In its response to its final office action, Alice Corp made arguments in its response to the final office action, back in June of 2014, that the examiner’s approach to claim construction is inconsistent with the Supreme Court of Canada in Free World Trust v Électro Santé Inc, 2000 SCC 66. Alice Corp’s arguments are worth reproducing at length: 
The Examiner has not applied the principles set forth in Free World to determine the essentiality of features recited in the claim, but rather has parsed the claim in to two sets of elements, one of which is deemed to be “inessential”. This is an approach that is not based on any jurisprudence of the Canadian Courts, and is in fact precisely the type of analysis rejected by the Federal Court in Amazon.com.
Following the direction in Free World, a POSITA is to determine whether a variant of a particular element would make a difference in the way in which the invention works or whether the intent of the inventor expressed or inferred from the claims that a particular element is essential irrespective of the practical effect.
The POSITA is believed to be a systems engineer, familiar with the operation of large computer systems used in the financial services industry.
From that perspective, the variation 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 works. For example, without data storage, the data supplied at the inputs could not be used as contemplated. There would be a difference in the manner in which the invention operates. Those features must therefore be considered essential features of the claim.
Similarly, applying the second test, there is nothing in the claim to indicate that those elements are not essential.
The claim recites not only the presence of the specific elements, thereby indicating a prima fascia [sic] essentiality, but also the interoperability of those elements to obtain the desired result. Clearly those elements are required for that result to be achieved, and therefore there is no indication of the intent of the inventor to consider such elements inessential.
Applying the principles of Free World therefore, the elements of the data processing system recited in claim 1 are essential elements and are to be considered when determining the eligibility of claim 1 for protection under section 2 of the Patent Act. 
Interestingly enough, the PAB rejected Alice Corp’s arguments as relying too much on the Federal Court decision in Amazon (2010 FC 1011), rather than the Federal Court of Appeal decision which overturned it (2011 FCA 328), but made no comment as to Free World Trust, which is clearly what predicated the thrust of Alice Corp’s argument. [38-42] In fact, Free World Trust is only mentioned in this case as prelude to the claim construction analysis, but is never specifically addressed in response to Alice Corp’s arguments above.
The PAB went on to defend PN 2013-02 as being consistent with Amazon FCA, explicitly noting that it is not consistent with the overturned Amazon FC,  and, again, neglected to comment as to whether PN 2013-02 is consistent with Free World Trust.
Without the benefit of arguments made by Alice before the PAB, there is little value that could be gleaned from this decision, other than the indication that the PAB appears to be content to rely on PN2013-02 and Amazon FCA, without a need to reconcile PN 2013-02 with Free World Trust.
For reference, the Alice Corp v CLS Bank International decision, which has caused so much controversy regarding the patentability of software inventions, and particularly financial services patents, involved four U.S. patents: (U.S. Patents No. 5,970,479, 6,912,510, 7,149,720, 7,725,375). The Canadian ‘768 Application relates to these patents in that they disclose much the same subject matter, though with different final claim sets, and that it has the same PCT filing date, and title, as the ‘479 U.S. patent.