International Law

A ?One-Click? Patent: Canada (Finally) Allows Business Method Patents in Amazon.com, Inc. v. AG Commissioner of Patents

By Tiffany Wong

In a previous post on the U.S. Supreme Court decision, Bilski v. Kappos (?Bilski?), I discussed how SCOTUS alluded to the possibility that ?business methods? could be patented in the United States, without outlining precisely what kinds of business methods entail protection. Canadian courts, by contrast, had shut the door on these types of patents –  that is, until October 14, 2010, when the Federal Court of Appeal (?FCA?) released its decision for Amazon.com, Inc. v. AG Commissioner of Patents, 2010 FC 1011 (?Amazon?) (pdf link).

Judicial History

Prior to the FCA decision, Amazon succeeded over ten years ago at the regulatory level when the U.S. Patent Examiner?s Office granted two American patents for the applicant?s ?one-click? business method. Amazon then tried and failed to patent the same concept in Canada.

Amazon appealed to the FCA an earlier decision by the Canadian Commissioner of Patents (the ?Commissioner?) that denied the US-based multinational electronic commerce company a patent for a single mouse click? dubbed a ?one-click? business method for the purchase of online items.

The Commissioner?s decision has now been overruled by the FCA. Last month, the Court concluded that business methods are now patentable in Canada. In granting patent rights to this business method, the FCA gave Amazon monopoly rights over a one-click business method, which allows Amazon to sue other users for patent infringement. This decision therefore has pressing implications (excuse the pun) for internet e-commerce? a massive industry based on millions of clicks per day.

Is Internet Shopping a Patentable Invention?

Over ten years ago, Amazon applied to the Canadian Patent Examiner (the “Examiner”) to patent an invention entitled ?Method and System for Placing a Purchase Order via a Communication Network.? It had already claimed priority on two similar American patents. Amazon?s patent application described the usual process of ?internet shopping:?

The customer visits a website, enters address and payment information and is given an identifier stored in a ?cookie? in their computer. A ?server? (a computer system operating a commercial website) is able to recognize the ?client? (customer computer with the identifying cookie) and recall the purchasing information which is now stored in the vendor?s computer system. The customer can thus purchase an item with a ?single click? ? the order is made without the need to ?check out? or enter any more information.

After a lengthy process, Amazon?s patent application was rejected by the Examiner on June 1, 2004 on the basis of ?obviousness? and ?non-patentable subject matter.? On March 4, 2009, on appeal, the Commissioner rejected the Examiner?s findings on obviousness, but upheld the second part of the decision regarding non-patentable subject matter. It cited s.2 of the Patent Act that defines a patentable ?invention? as ?any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter.? Unperturbed by the sting of Canadian patent rejections, Amazon appealed to the FCA.

What Everyone Else Decided

Like the patent regulators, the FCA also reviewed statutory subject matter available for patents under the Patent Act. In reaching a decision to overturn the Commissioner?s findings, Justice Phelan for the FCA concluded that a ?business method? is a patentable subject matter that allows a patent to be issued in appropriate circumstances. According to the Court, a single-mouse click for online shopping is now one of them.

The FCA was wary of this as a novel case. In analysing the Commissioner?s decision, Justice Phalen criticized her application of foreign jurisprudence, especially the British statute. Justice Phalen also remarked that ?the language used in the American and Canadian [Patent] Acts to describe patentable subject-matter is almost identical.? He referred to British, European and Australian judicial approaches as lacking a ?technical test? that points mostly to a ?horribly imprecise concept? that ?lacks authority in Canada for a ?business method exclusion.? Nevertheless, the Court was persuaded by the fact that this invention was found to be patentable subject matter in other jurisdictions particularly in the United States and Europe. The Court further noted that ?the practical application requirement ensures that something which is a mere idea or discovery is not patented? it must be concrete and tangible.? As such, the Court was driven by a ?practical application? requirement despite a lack of established jurisprudence on the matter in Canada.

Narrowing the Definition of ?Patentable? Subject Matter

A ?practical application? requirement is troubling because the FCA did not consider an in-depth analysis of policy considerations, particularly for a potential floodgate of innocuous user-technology-interactions to be granted patent protection. Technological inventions consist of both concrete and abstract processes occurring inside a computer information system and the free-flowing nature of the internet. It?s almost absurd that a single-mouse click is the ?concrete and tangible? aspect of the patent under consideration. This conclusion forgoes the practicality of clicking a mouse on a website as a required actions ranging from simple web-surfing to actual purchases conducted online.

In light of other open-ended jurisprudence, such as Bilski, Canadian courts seem just as confused about how to approach ?business method patents,? especially when these inventions involve processes intertwined with technology. Instead of leaving the common law courts to speculate about a legislative exclusion, it would have been safer in my opinion to hold off granting a business method patent until a clearer Canadian test is established. What may be required is legislative reform to provide additional clarity about how abstract inventions such as ?business methods? narrow an overly broad definition of patentable subject-matter.

Full post as published by The Court on November 08, 2010 (boomark / email).