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Canadian Patent Appeal Board Rules Against Business Method Patents

By Michael Geist

Catching up from a column last week (Toronto Star version, homepage version), the Canadian Patent Appeal Board recently denied an appeal by Amazon.com over a "one-click" ordering system patent with strong language that challenged the notion that business method patents are patentable under Canadian law.  Business method patents took off in the U.S. in 1998, when the U.S. Court of Appeals for the Federal Circuit (one notch below the U.S. Supreme Court) ruled that patents could be awarded for business methods in a case called State Street Bank v. Signature Financial Corp.

In the aftermath of the State Street Bank decision, companies rushed to file patent claims for a wide range of business practices.  Amazon.com became the most visible business method patentee with its one-click patent for a service that allows repeat visitors to move directly to the virtual checkout with one click (completing payment and shipping information in the process). The Canadian experience with the Amazon.com one-click business method patent has been much different.  The Canadian Patent Office rejected the application in 2004 based on obviousness and non-statutory subject matter.  Amazon.com appealed to the Canadian Patent Appeal Board.

At first blush, the CPAB could have relied on the Manual of Patent Office Practice to support Amazon.com's claim for a business method patent.  The 2005 Manual provides 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."

Yet the panel delivered very strong language rejecting the mere possibility of business method patents under Canadian law.  The panel noted that "since patenting business methods would involve a radical departure from the traditional patent regime, and since the patentability of such methods is a highly contentious matter, clear and unequivocal legislation is required for business methods to be patentable."

In applying that analysis to the Amazon.com one-click patent, the panel concluded that "concepts or rules for the more efficient conduct of online ordering, are methods of doing business. Even if these concepts or rules are novel, ingenious and useful, they are still unpatentable because they are business methods."

The CPAB decision is not necessarily the end of the road for the one-click patent since Amazon.com has the option of appealing to the Federal Court. However, the decision provides a strong signal that the business method patents face a rough ride under current Canadian law.

Full post as published by Michael Geist on June 05, 2009 (boomark / email).