15 October 2010

Business Methods Patentable (Again) in Canada

Amazon.com v The Attorney General of Canada and the Commissioner of Patents 2010 FC 1011 (14 October 2010)

Ordering cheese online with just
one click!
The keenly-awaited decision in the appeal by Amazon.com against the rejection of its so-called '1-click' patent application has just been released.

The outcome – the Commissioner's decision has been overturned.  The court considered Amazon's claims to comprise patentable subject matter, and concluded that "a 'business method' can be patented in appropriate circumstances" (at [3]).

In the original decision of the Patent Appeal Board, all of Amazon's claims were found to be novel and nonobvious, notwithstanding their rejection on subject matter grounds.  Therefore, barring an appeal by the Commissioner of Patents, the Amazon '1-click' patent is now on-track to be granted in Canada.


A good analysis of the earlier Patent Appeal Board decision from Canadian firm Dimock Stratton can be found here.

In effect, the Board created a new test for patentable subject matter by blending European principles found in the UK Court of Appeal decision of Aerotel Ltd v Telco Holdings Ltd [2006] EWCA Civ 1371, the en banc decision of the US Court of Appeals for the Federeal Circuit in In re Bilski 88 USPQ 2d 1385 (which had not yet been heard in the Supreme Court), and a dissenting opinion of Canadian Supreme Court Justice Arbour in Monsanto v Schmeiser 2004 SCC 34. 

The Board's decision was rather strange, and completely lacking in clear Canadian precedent.  At the time, the Canadian Manual of Patent Office Procedure, as revised in February 2005, stated that business methods "are not automatically excluded from patentability, since there is no authority in the Patent Act or Rules or in the jurisprudence to sanction or preclude patentability based on their inclusion in this category."

Introducing the decision, the Canadian court states (at [2]):

In coming to the conclusion she did, the Commissioner in effect created a test for assessing patentable subject matter, outlined new exclusions and requirements for patentability and outlined her view of the scope of patentable 'art'. Her decision not only raises significant questions of law and interpretation, but extends into policy-making which stands to fundamentally affect the Canadian patent regime. This appeal is thus of consequence not only to the Appellant, but to many who navigate our patent system. It also revisits the powers given – and not given – to theCommissioner under the Patent Act and the limitations which the statutory regime and jurisprudence impose upon her.
The court makes the further point (at [34]) that Canadian patent law owes more to the US than to the current UK law, or even the UK law "pre-Europeanisation".  The fundamental requirements for patentable subject matter under Canadian law are identified at paragraph [52]:
  1. it must not be a disembodied idea but have a method of practical application;
  2. it must be a new and inventive method of applying skill and knowledge; and
  3. it must have a commercially useful result.
While "not everything under the sun is patentable but the definition of invention in the Patent Act is broad and encompasses 'unforeseen and unanticipated technology'" (at [54]). 

The Canadian decision also references the US Supreme Court Bilski decision (at [55]). Of particular interest to Patentology is the court's citation of Australian jurisprudence referring (at [57]) to the decision of the Full Federal Court in Grant v Commissioner of Patents [2006] FCAFC 120, which "specifically considered whether what was alleged to be a 'business method' was patentable. The Australian Federal Court noted that an 'artificially created state of affairs' was meant in the sense of a 'concrete, tangible, physical or observable effect.'" The Canadian court then noted (at [58]) that "[t]he Australian Court's interpretation of physical effects is quite broad. It is on point, however, as some sort of embodiment or change in state is required."

With regard to the general principles for assessing patentable subject matter, the court concludes (at [71]):

Even if patents generally concern the protection of advances in technology broadly defined, it is difficult to see how introducing this sort of technological test into the Canadian patent system would do anything but render it overly restrictive and confusing. It would be highly subjective and provide little predictability. Technology is in such a state of flux that to attempt to define it would serve to defeat the flexibility which is so crucial to the Act. This view is supported by authorities in both the USA and Australia: see Bilski/USCA, above at 1395 and Grant, above at paragraph 38. The current assessment of subject matter, without reference to such concepts, is preferable.
The decision puts the Canadian law back on a solid footing.  In view of her comparatively belligerent stance on this issue, it will be interesting to see whether the Commissioner lodges an appeal to the Federal Court of Appeal.


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