PAB Applies Amazon, Finds a Computer-Implemented Method of Communicating the Cost of Insurance to Be Patentable Subject Matter

PAB Applies Amazon, Finds a Computer-Implemented Method of Communicating the Cost of Insurance to Be Patentable Subject Matter

Re. Patent Application No. 2,344,781, CD 1336

This is an Appeal Board decision regarding patent application number 2,344,781 entitled "Monitoring System for Determining and Communicating a Cost of Insurance". In a Final Action the Examiner rejected the application for obviousness and for being directed to unpatentable subject matter.

The Board confirmed that claims 1 to 17 are obvious, but decided that the claims are patentable under section 2 of the Patent Act.

Claim 1, which is illustrative of the invention, recites:

1. A computer-implemented method of communicating a cost of insuring a unit of risk and corresponding operating characteristics for the unit monitored for a selected period, comprising steps of: 

providing a Web site system for communicating data between an insurer's rate processing system and an insured relative to the unit of risk; 

monitoring the operating characteristics during the selected period; 

determining the cost of insuring for the period based upon the operating characteristics monitored in that period; and 

selectively communicating the monitored operating characteristics and decided cost to the insured through the Web site system.


The Board applied the Sanofi test, and found that the claims were obvious in view of the prior art cited during prosecution. [69]

Subject Matter

The Board found that “method claims 1-9 and system claims 10-17 are directed to statutory subject matter.” [82]

The Board applied FCA’s Amazon decision, performed a purposive construction, and found that “‘monitoring the operating characteristics’ is an essential feature of the solution given the various data gathering and processing steps involved, which cannot be omitted, or substituted for mental means, without having a material effect on the operation of the invention.” [80] On this basis the Board also distinguished this case from Schlumberger. [80]

The Board found that “[t]he feature of ‘monitoring the operating characteristics’ comprises technical features and physical steps sequenced to achieve the practical result of updating an insurance premium based on monitored characteristics and transmitting specific information to the insured over the Internet.” [81] Furthermore, the Board stated that “[t]he feature ‘determining the cost of insuring’, although a mathematical calculation ‘is not the whole invention but only one of a number of essential elements in a novel combination.’” [81]


The two most recent PAB decisions (CD 1334 and CD 1336) may signal a shift in CIPO’s approach to patentability of computer-implemented business methods. Both patent applications were assessed by the PAB in the wake of the Amazon FCA decision (2011 FCA 328) and found to claim patentable subject matter. These decisions represent a more liberal approach to subject matter by CIPO, and may have the makings of tide-turning decisions similar to the US Alappat (33 F.3d 1526) and State Street (149 F.3d 1368) decisions of the 1990s.

In the meantime, it remains questionable whether CIPO’s post-Amazon examination practice respecting purposive construction (PN2013-02) can be squared with Supreme Court’s Free World decision (2000 SCC 66), which strongly cautions against peering under the hood to divine the invention rather than reading the claims in the context of the patent as a whole.