Progressive Games, Inc. v. Canada (Commissioner of Patents), docket T-439-98

Date: 19991022

Docket: T-439-98

BETWEEN:

     PROGRESSIVE GAMES, INC.

     Appellant,

     - and -

     THE COMMISSIONER OF PATENTS,

     Respondent.

     REASONS FOR JUDGMENT

DENAULT J.

[1] This is an appeal, pursuant to Section 41 of the Patent Act¹ (the "Act"), from a decision of the Commissioner of Patents which refused to grant the Appellant"s application for a patent.

[2] The Appellant, Progressive Games, Inc., is the assignee of inventors James P. Suttle and Daniel A. Jones, and the invention is entitled "POKER GAME". The invention is a modified version of a five-card stud poker game which can be played in a casino or cardroom environment.

[3] The Appellant"s method provides a game of chance in which each player plays his poker hand against a poker hand held by the house and in which a player receives a bonus payment based on the type of poker hand that a player holds. The method is briefly summarized in the Patent application as follows:

"In a preferred method of play, after each player places an ante in a designed location, the dealer deals five cards to each player and to himself; all cards being dealt face down except for one of the dealer"s cards. Each player views his hand and then decides whether to continue to play by making an additional bet or to fold or drop (i.e. retire), in which case he loses his ante. The dealer then reveals his entire hand; if the dealer"s hand does not have a poker value of at least Ace-King, then the dealer is not permitted to continue to play. In this case, the dealer pays even money on the remaining player"s antes, and returns their bets to them. If the dealer"s hand has a poker value of Ace-King or better, the dealer compares his hand to each player, paying or collecting the bets as appropriate. The dealer also pays odds of more than even money on each winning player"s hand of two pairs or better according to a bonus payment schedule."2

[4] Filed on April 17 , 1989, the Patent application contains 35 claims, with claims 1, 14, 34 and 35 being independent claims with the remainder being dependent claims. Claim 1 is representative of the independent claims in the application:

"1. A method of playing a poker game comprising the steps of:

(a) a player anteing a first bet means,

(b) a dealer dealing a hand comprising a predetermined number of cards to each of the player and the dealer,

(c) the player either folding in which case the player loses his first bet means to the dealer, or betting a second bet means,

(d) the player comparing his hand to the hand of the dealer using poker rank as the criterion for comparison,

(e) if the dealer"s hand is not at least a predetermined rank, the player wins a preselected amount based on the player"s first bet means and the player keeps his second bet means,

(f) if the dealer"s hand is at least a predetermined rank, and the dealer"s hand is higher than the player"s hand, the player loses both his fist bet means and his second bets means,

(g) if the dealer"s hand is at least a predetermined rank, and the player"s hand is higher than the dealer"s hand, then the player wins a first predetermined amount on his fist bet means and the player wins a second predetermined amount on his second bet means based on the type of poker hand combination that the player has, said second predetermined amount having a potential return of at least twenty times the amount of the second bet means."3

[5] The method of claim 1 wherein the second predetermined amount that a player wins on his second bet follows this schedule:

Poker Hand                  Odds

Royal Flush                  250-to-1

Straight Flush                  50-to-1

Four of a kind                  20-to-1

Full House                  7-to-1

Straight                  5-to-1

Three of a kind              3-to-1

Two Pair                  2-to-1

Any other hand              1-to-1

[6] The Examiner"s Final Action was issued on January 18, 1994. All 35 claims were refused on the ground that they did not satisfy the definition of invention set out in Section 2 of the Act because they were directed to a method of playing a game. In the examiner"s opinion, methods of playing games do not produce results in any way associated with trade, commerce, or industry, nor may they be "worked on a commercial scale". Therefore, it was deemed not to be in the public interest to grant patents for methods of playing games.

[7] On May 18, 1994, the Appellant requested that the Examiner"s refusal be reviewed by the Commissioner of Patents.

[8] On September 25, 1997, the Commissioner of Patents rendered his decision. Relying upon excerpts from patent law textbooks, the Commissioner found that in carrying out the Appellant"s method, there is no change in the character or condition of any material objects. The Commissioner also noted that there are two elements absent in the proposed method -- i.e. the procedure and the material to which it is applied. The Commissioner described the Appellant"s method as being "an abstract idea directed to the means of playing a game, comparable to the rule of playing golf for example".

[9] Therefore, the Commissioner concluded that the application is directed towards subject matter that is not patentable under section 2 of the Act since the methods set forth in the claims are not directed to either an "art" or a "process" as contemplated by section 2.

[10] Finally, the Commissioner made the following observations at page 6 of the decision:

"When the Board studies the methods disclosed in the application it is evident that they are designed in such a way that when they are used the odds of winning are such as to favour the house/banker. In other words the house/banker will always have an edge over the players and is therefore guaranteed to be on the winning side.

This can be illustrated by referring to the situation where, when the house/banker"s cards show a poker hand of less than Ace-King combination, the house/banker only pays each remaining player one-to -one odds on the amount of each player"s ante and the player keeps his bet. In a normal game if the house/banker had a poker hand of less than Ace-King then it would have to pay out both the player"s ante and his bet where the player"s hand was better than Ace-King combination. In other words by adopting this method of play the Applicant"s method tilts the odds in favour of the house/banker.

Whether or not to choose to pay out using for, instance, the Ace-King combination as the criterion is, in the opinion of the Board, a combination of a mathematical calculation of the odds of the appearance of certain card combinations and what edge or advantage the Applicant wishes to give to the house/banker. In other words Applicant"s method is the result of mere mathematical calculation rather than the exercise of the inventive faculty resulting in the discovery of some previously unknown advance in human knowledge by the exercise of the human intellect."

[11] On March 17, 1998, the Appellant appealed from the Commissioner"s decision to this Court.

[12] The sole issue in this appeal is whether or not the Appellant"s changes in the method of playing poker fall within the definition of the terms "art" or "process" as those terms are used in the definition of "invention" at Section 2 of the Act, which reads as follows:

2. In this Act, except as otherwise provided, [...] "invention" means any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter;

2. Sauf disposition contraire, les définitions qui suivent s"appliquent à la présente loi. [...] "invention" Toute réalisation, tout procédé, toute machine, fabrication ou composition de matières, ainsi que tout perfectionnement de l"un d"eux, présentant le caractère de la nouveauté et de l"utilité.

[13] In Canada, it is well established that the expression "art" has a broad meaning that includes the term "process". In Refrigerating Equipment Limited v. W.A. Drummond and Waltham System Incorporated, [1930] Ex. C.R. 154, at page 166, the Honourable Justice Maclean wrote:

"The Patent Act recognizes a method or process as having the same title to protection as a machine or article of manufacture; I conceive method and process to be one and the same thing, but in any event that "art" may include a method or process patent is well settled."

[14] With respect to the definition to be applied to the word "art", the leading case in Canada is the decision of the Supreme Court in [1982] 2 S.C.R. 536">Shell Oil Company v. The Commissioner of Patents, [1982] 2 S.C.R. 536. In that case, the Appellant sought to obtain a patent on certain chemical compounds mixed with adjuvants. The Appellant acknowledged that there was nothing inventive in mixing the compounds with the adjuvants. Rather, the "invention" was the discovery of a new use for these known compounds, namely as plant growth regulators. The issue before the Court was whether such a "discovery" could be the proper subject of a patent. After concluding that the discovery of a new use for an old compound was patentable, the Honourable Justice Wilson, for the Court, stated as follows at page 554:

"A disembodied idea is not per se patentable. But it will be patentable if it has a method of practical application. The appellant has shown a method of practical application in this case."

[15] Referring to Tenessee Eastman Co. v. Commissioner of Patents, [1974] S.C.R. 11, her Ladyship wrote:

"The Court, however, affirmed that "art" was a word of very wide connotation and was not to be confined to new processes or products or manufacturing techniques but extended as well to new and innovative methods of applying skill or knowledge provided they produced effects or results commercially useful to the public."

[16] Accordingly, the definition of the term "art" as provided by the Supreme Court includes a process that:

(i) is not a disembodied idea but has a method of practical application;

(ii) is a new and innovative method of applying skill or knowledge; and

(iii) has a result or effect that is commercially useful.

[17] As the Commissioner did not consider this leading case on the definition of the term "art", he failed to apply the adequate test. Consequently, it is appropriate for this Court, on appeal pursuant to Section 41 of the Act, to apply this test. As the Honourable Justice Lamer (as he then was) wrote in Pioneer Hi-Bred v. Canada (Commissioner of Patents), [1989] 1 S.C.R. 1623, at page 1635:

Section 44 4 simply states that "Every person who has failed to obtain a patent by reason of a refusal or objection of the Commissioner to grant it may... appeal from the decision of the Commissioner to the Federal Court..." "..." Accordingly, s. 44 of the Patent Act gives the Federal Court exclusive jurisdiction to hear and determine an appeal once the Commissioner has indicated an objection or refusal in respect of a patent application. The Federal Court of Appeal 5 may even discuss aspects of the matter not commentated on by the Commissioner (Thurlow J. in Sarco Co. v. Sarco Canada Ltd., [1969] 2 Ex. C.R. 190). The power contemplated by this section enables the Federal Court to arrive at its own conclusions on the evidence presented, not merely to determine whether the Commissioner"s conclusions are correct in law (p.193)."

[18] To begin with, I am of the opinion that the changes in the method of playing the poker game, as suggested by the Appellant, meet two of the criteria set forth by the Supreme Court in Shell Oil:

a) it is not simply a disembodied idea; there is in fact a practical application as those changes involve the physical manipulation of cards;

b) I also believe that the Appellant"s method reaches a result that may be commercially useful. In this regard, the Appellant filed before the Commissioner an affidavit of one of his employees, John Mercy. In his affidavit, dated May 18, 1994, Mr Mercy testified that the Appellant licensed games which are played in accordance with the methods described and claimed in the subject patent application to casinos in British Columbia. He also testified that the licensing fees obtained by the Appellant for those games totalled $43,200.00 per month. Considering those fees, I have no doubt that the Appellant"s method works on a commercial scale.

[19] However, I am of the view that the Appellant"s method does not conform to the method of applying skill or knowledge as described by the Supreme Court in Shell Oil . In that case, the Court concluded that the discovery of a new use for old compounds had added to the cumulative wisdom in the subject area of compounds because the Appellant had recognized certain properties that had been unrecognized prior to that time. The Court wrote at page 549:

" What then is the "invention" under s.2? I believe it is the application of this new knowledge to effect a desired result which has an undisputed commercial value and that it falls within the words "any new and useful art". I think the word "art" in the context of the definition must be given its general connotation of "learning" or "knowledge" as commonly used in expressions such as "the state of the art" or "the prior art". The appellant"s discovery in this case has added to the cumulative wisdom on the subject of these compounds by a recognition of their hitherto unrecognized properties and it has established the method whereby these properties may be realized through practical application. In my view, this constitutes a "new and useful art" and the compositions are the practical embodiment of the new knowledge."

[20] I don"t believe that the Appellant"s changes in the method of playing poker are a contribution or addition to the cumulative wisdom on the subject of games. In my view, those changes do not refer to "learning" or "knowledge" as commonly used in expressions such as "the state of the art" or "the prior art".

[21] At the hearing, the Appellant first submitted that he has invented a new game. To illustrate his argument, he referred to an American case: Cusano v. Kotler (1947), 72 U.S.P.Q. 62. Although one must be prudent when reviewing American jurisprudence, it constitutes an useful guide⁶. In that case, the Court of Appeals, 3^rd Circuit, had to determine the validity of the plaintiff"s patent. The subject matter of the plaintiff"s patent was a game board that was described by the Court as follows:

"The plaintiff conceived the notion of combining some of the features of the shuffleboard with some of those of the billiard table and produced a game board which was short enough to go into a fair sized room without monopolizing all of the space there. The product of the patent generally measures ten feet in length, although there is nothing in the specifications to prevent its either being made larger or smaller.

The plaintiff"s device has one end of the playing surface enclosed by cushions on three sides. These cushions operate as a rebounding medium, the same way as the cushions on a billiard table operate. The opposite end may be called the playing end, and there the playing surface is surrounded by gutters in the same fashion as a shuffleboard. The scoring space is at this playing end. If this description is clear it is apparent that a game like regular shuffleboard can be played except that the disc gets into the scoring area by rebound from the cushions instead of by direct application of force from the player. It is also apparent that the game board device can be used equally well to play a three cushion modification of shuffleboard comparable to a three cushion version of billiards. It is likewise clear that the plaintiff"s table is equally capable of being used for tenpins, or any modification of that game, with equal appropriateness and that the games can be played either with discs or with balls."

[22] The Court recognized that the plaintiff"s table game constituted an art. At pages 64-65, the tribunal stated:

"We think the plaintiff"s table has offered a contribution to the game playing art, and it is an art, that is new and different. The facilities offered by this table are not a form of billiards and certainly, if shuffleboard, a highly modified form of shuffleboard . We cannot ask anyone to produce an entirely new kind of game for we think a few basic ideas underlie most of them. But the plaintiff"s invention did provide for playing something different from what existed before and, therefore, he can properly be found to have invented something."

[emphasis added]

[23] In the present case, I believe that the Appellant"s changes in the method of playing poker -- i.e. by adding a new player referred to as "the house"- - do not substantially modify the poker game as it exists nor do they create a new game. The Appellant"s method uses the standard deck of playing cards, uses the five-card poker hand where the priority of winning hands is determined by the conventional rules of poker. Regarding the bonus payment schedule, although it can make the game more attractive to the consumer, it does not modify the way a poker game is played. The winnings that a player earns refer to wagering and not to the game itself.

[24] This Court was made aware of the fact that the Appellant"s method of playing poker has been patented in the United States. It is not bound by this fact.

[25] As a second argument, the Appellant claims to have invented a method of using the old card game in a new way. He argues that it has always been difficult to adapt the traditional way of playing the poker game to a casino environment. The Appellant submits that in including what he refers to as "the house" (the casino itself) in his method of playing poker, he makes the game applicable to a casino environment, and this would be a new use for the old card game.

[26] I cannot accept this submission. In [1982] 2 S.C.R. 536">Shell Oil Company, the Appellant had found a new use for old compounds as plant growth regulators. Here, the Appellant has a known use for playing cards: the use of the latter for wagering in casinos. Playing cards have been used in casinos for years and played versus the house, the casino itself.

[27] I therefore conclude that the Appellant"s changes in the method of playing a card game are not an "art" or "process" as found in the definition of invention at Section 2 of the Act.

[28] For these reasons, this appeal must be dismissed.

                             _________________________

                             Judge

Ottawa, Ontario

October 22, 1999

__________________

     ¹ R.S.C. 1985, c. P-4.

     ² Appeal Book, Tab 3, pp. 20-21.

     ³ Patent application p.16, Appeal Book, Tab 3, p.33.

     ⁴ Section 44 is now Section 41. It is to the same effect and reads like this:
41. Every person who has failed to obtain a patent by reason of a refusal of the Commissioner to grant it may, at any time within six months after notice as provided for in section 40 has been mailed, appeal from the decision of the Commissioner to the Federal Court and that Court has exclusive jurisdiction to hear and determine the appeal.
41. Dans les six mois suivant la mise à la poste de l"avis, celui qui n"a pas réussi à obtenir un brevet en raison du refus ou de l"opposition du commissaire peut interjeter appel de la décision du commissaire à la Cour fédérale qui, à l"exclusion de toute autre juridiction, peut s"en saisir et en décider.

     ⁵ By An Act to Amend the Federal Court Act, the Crown Liability Act, the Supreme Court Act and Other Acts in Consequence Thereof , S.C.1990, c. 8, amending R.S.C. 1985, c. F-7, the Federal Court Trial Division now hears the appeal instead of the Federal Court of Appeal. In this regard, the Court possesses large powers conferred by Section 41 of the Patent Act, namely as to "hear and determine the appeal".

     ⁶ Tele-Direct (Publications) Inc. v. American Business Information, Inc. (1997), 76 C.P.R. (3d) 296, at p.309.