Amazon.com appeal allowed - business methods patentable in Canada - International Law Office

On October 14 2010 the Canadian Federal Court released a decision allowing an appeal by Amazon.com Inc of a decision of the commissioner of patents that rejected Amazon.com's patent application directed to single-action/one-click ordering. In rendering its decision, the court concluded that a business method may be patented in Canada in appropriate circumstances.

The court overturned the commissioner on many aspects of her decision. Notable findings of the court include the following:

• The commissioner incorrectly adopted foreign legal principles stated by the European and UK courts having regard to important differences between the European and English statutes and the Canadian Patent Act.
• The commissioner was not correct to apply a form and substance analysis of the claims for the purpose of assessing patentable subject matter. Based on this analysis, the commissioner had assessed whether a claim was directed to patentable subject matter by considering only the elements of the claim that were new. The court found that the principles of purposive construction, as stated by the Supreme Court of Canada, were to be applied.
• The commissioner had adopted an overly restrictive definition of patentable 'art' (based on the 1970 decision in Lawson v Commissioner of Patents),(1) which the commissioner found to require "an act or series of acts performed by some physical agent upon some physical object and producing in such object some change either of character or of condition".

Following the decision of the Supreme Court of Canada in Shell Oil Co of Canada v Canada (Commissioner of Patents),(2) and the subsequent decision of the Federal Court in Progressive Games Inc v Canada (Commissioner of Patents),(3) the court adopted the following broader test for a patentable art:

• It must not be a disembodied idea, but must have a method of practical application;
• It must be a new and inventive method of applying skill and knowledge; and
• It must have a commercially useful result.

The court also rejected the per se prohibition on business methods and the requirement that patentable subject matter be technical or technological, which had been adopted by the commissioner.

Applying these principles to Amazon.com's application, the court found that the system claims disclosed a machine (eg, a computer), whose described components are essential elements in implementing an online ordering process. Therefore, the court was of the view that the claims were not directed to merely a mathematical formula that could be carried on without a machine or to simply a computer program.

Regarding the method claims in Amazon.com's application, the court considered a method to be an art and that it therefore must not be a disembodied idea, but must have a method of practical application. The court found illustrative the aforementioned Progressive Games decision, which involved new rules for a game of poker. The court noted that while the rules in and of themselves were just an idea, they required the use of cards to constitute the whole invention - manipulation of the cards was enough to constitute a practical application of the idea.

The court further considered that the new knowledge reflected in Amazon.com's method claims was not simply a scheme, plan or disembodied idea, but was instead a practical application of the one-click concept, put into action through the use of cookies, computers, the Internet and the customer's own action.

Thus, both the system claims and method claims in the application were held to constitute statutory subject matter.

It is not known whether the commissioner will appeal this decision. Any appeal must be filed within 30 days of the decision.

For further information on this topic please contact Colin B Ingram at Smart & Biggar/Fetherstonhaugh's Ottawa office by telephone (+1 613 232 2486), fax (+1 613 232 8440) or email (cbingram@smart-biggar.ca). Alternatively, contact Ronald D Faggetter at Smart & Biggar/Fetherstonhaugh's Toronto office by telephone (+1 416 593 5514), fax (+1 416 591 1690) or email (rdfaggetter@smart-biggar.ca).

Endnotes

(1) [1970] 62 CPR 101.

(2) [1982] 2 SCR 536.

(3) 177 FTR 241 aff'd [2000], 9 CPR (4th) 479 (FCA).