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.
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
Lacking any technological contribution as it relates to the
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
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;
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.
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
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.
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A recent Saskatchewan Court of Queen's Bench decision allowed a court-appointed receiver to sell and transfer intellectual property rights free and clear of encumbrances, finding that a license to use improvements of an invention was a contractual interest and not a property interest.
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