The Federal Court of Canada recently delivered the eagerly anticipated judgment in Amazon.com Inc. v. Canada (Commissioner of Patents), 2010 FC 1011, (October 14, 2010), concluding "that a 'business method' can be patented in appropriate circumstances", noting the absolute lack of authority for a "business method exemption" in Canada. Domestic and foreign inventors and patentees of computer related inventions should take this opportunity to reconsider their Canadian patent filing strategy.

BACKGROUND

At issue in this case was Amazon's patent application for a "Method and System for Placing a Purchase Order via a Communication Network", filed on September 11, 1998, claiming priority from two US patent applications.

The patent application covers a method and system for the online placement of orders for goods and services by a registered user using a single action, i.e. without the further need to register payment information at the time of purchase. This is the so-called "1-click Patent" that recently survived re-examination before the USPTO and was also recently issued in Europe after protracted and controversial examination in both jurisdictions.

In Canada, the patent office examiner initially rejected the patent application as obvious and covering unpatentable subject matter. Following an appeal by Amazon to the patent appeal board, the Commissioner reversed the finding that the application was obvious, but rejected the claims that it was unpatentable on various grounds, including:

  • Essentially related to a business method, and therefore unpatentable as such;
  • Lacking any physical element as it relates to the inventive aspect; and
  • Lacking any technological contribution as it relates to the inventive aspect.

DECISION

Amazon appealed further to the Federal Court of Canada where Phelan J., in a strongly worded judgment, ejected many Canadian Patent Office policies and explained how the legal test for assessing the patentability of process from Progressive Games Inc. v. Canada (Commissioner of Patents), 177 F.T.R. 241 (T.D.), aff'd (2000), 9 C.P.R. (4th) 479 (F.C.A.) is generally applied to business methods.

Guidance and Rejected Practices

The decision provides the following guidance, which are contrary to certain (past) practices of the Canadian Patent Office:

  • There is an "absolute lack of authority in Canada for a 'business method exclusion'" to what constitutes patentable subject matter;
  • Inventions need not be either physical in nature or effect;
  • Tangibility is not an issue;
  • There is no requirement that inventions be technological;
  • It is improper to parse out the novel and known elements of an invention for the purpose of determining patentability based on the novel elements alone.

The Correct Test: Definition of Practical Application

The Court confirmed that the test enunciated in Progressive Games for the patentability of arts and processes applies to business methods, including:

  • A practical application;
  • A new and inventive method of applying skill and knowledge; and
  • It must be commercially useful.

The key finding was the Court's interpretation of "practical application", which is no longer limited to methods which have "physical effects". It also extends to those which result in "a change in character or condition", and those that are "the concrete embodiment of an idea". Mere abstract ideas or business schemes lack practical application and, therefore, remain unpatentable.

CONCLUSIONS

By applying the technology neutral test for the patentability of processes to business methods the Court has endorsed a broader scope of patent protection for computer related inventions in Canada.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.