Canada — Back In Business MethodsAMAZON.COM, INC. v CANADA (Attorney General)

Update:The Commissioner of Patents has recently filed an Appeal against the Federal Court’s recent Amazon decision, arguing that the court erred in fact and in law in finding that Amazon’s claims constitute patentable subject matter. In particular, the Commissioner contests the majority of the court’s findings with respect to the validity of her original approach in assessing patentable subject matter. The Commissioner does NOT however question the Court’s finding that there is simply no tradition of excluding business methods from patentability in Canada.

The much anticipated decision rendered by the Federal Court of Canada October 14, 2010 in respect of Amazon’s infamous “One-Click” patent application has brought great relief to patent practitioners and applicants alike who support the issuance of business-related patents in Canada. A series of ill-supported revisions to Canadian practice, imposed by the Canadian Intellectual Property Office in light of an earlier decision by the Commissioner of Patents on the matter, had practically put the practice on its head. The pendulum has swung once again, however; as the Federal Court blatantly put it last week: ‘[t]he misapprhension of the Commissioner and the Examiner as to the subject-matter in these claims is a fundamental error of law.’ The decision further reinforced the position for business-related patentees in Canada, acknowledging ‘[t]he absolute lack of authority in Canada for a “business method exclusion”’ and stating that ‘a “business method” can be patented in appropriate circumstances.’

For those less familiar with this case, the claims at issue were directed to a process and system for online shopping, whereby online shoppers whom had previously registered with a Website could benefit from an accelerated “one-click” purchasing mechanism enabled by associating a unique customer identifier, such as an electronic “cookie”, with stored customer-related purchasing information accessible to the system. The Commissioner argued in her decision that both the process and system claims, while novel and inventive, were directed to non-statutory subject matter under Section 2 of the Patent Act.

The Federal Court took aim at the Commissioner’s four-step approach in rendering her decision, as outlined below.

  1. Form and Substance of the Claims The Court ruled that the Commissioner had erred in applying a form and substance analysis of the claims. Namely, the Commissioner had concluded that, whereas the form of the system claims at issue was consistent with traditionally patentable subject matter (i.e. a machine), its substance was directed to unpatentable subject matter (i.e. a business method). Namely, the Commissioner sought to distinguish that which was new, from that which was old in establishing the substance of the invention on which to base her finding on statutory subject matter. The Court clearly dispelled the proposed revival of this approach, highlighting the clear directive of the Supreme Court of Canada over the past ten years to apply purposive claim construction universally, whereby the language of a claim is to be interpreted as a whole as would be understood by a person of ordinary skill in the art with a mind willing to understand the intention of the author of the patent.
  2. Definition of an Art The Court ruled that the Commissioner erred in her interpretation of the meaning of an art under section 2 of the Patent Act, relying too heavily on the physicality of an invention. Namely, the Court found that while an invention should manifest some form of practical application (as opposed to a disembodied idea, i.e. it must be concrete and tangible), such applicability should not be limited so as to exclude a broader definition of what may be considered physical, to constitute a change in character or to constitute a concrete embodiment of an idea. The Court further rejected the Commissioner’s requirement that for an invention to be deemed patentable, it must provide new learning or knowledge in the art that is of a scientific or technological nature; such limitation is simply not supported by Canadian case law.
  3. Excluded Subject Matter As stated by the Court: ‘There is no basis for the Commissioner’s assumption that there is a “tradition” of excluding business methods from patentability in Canada.’ Rather, a patent may be obtained for a “business method” as has been the case for some time, provided this method falls within the meaning of an art under Section 2 of the Patent Act. The Court goes on to propose that the implementation of a business method exclusion would be a radical departure from the current regime, and would require parliamentary intervention.
  4. Technological Requirement As noted above, the Court ruled that the Commissioner erred in imposing that an invention be technological or scientific in nature.

In examining the claims de novo, the Court found the claims to constitute patentable subject matter, as art and process claims (process), and as machine claims (system). As expressed in the decision, ‘[t]he new learning or knowledge is not simply a scheme, plan or disembodied idea; it is a practical application of the one-click concept, put into action through the use of cookies, computers, the internet and the customer’s own actions. Tangibility is not an issue. The “physical effect”, transformation or change of character resides in the customer manipulating their computer and creating an order.’

In light of the above, the Appeal was granted and the Application was sent back for expedited re-examination with the direction that the claims constitute patentable subject matter.

Clearly, for the rest of us, the door is reopened for the pursuit of business-related patent protection in Canada. As reaffirmed in this decision, not all under the sun is patentable, however, under the right circumstances, patent protection for claims directed to a business-related method, process or system may once again be pursued to allowance in Canada.

If you have any questions on the above, or wish to discuss how this decision may affect your or your client’s options in pursuing patent protection in Canada, please do not hesitate to contact us and we will be pleased to assist you.