Canada: Business Methods Are Patentable In Canada

Intellectual Property Update edited by Robert Irani

The Federal Court of Appeal Rules in; the Canadian Patent Office Allows Amazon's Patent Application

The Federal Court of Appeal released its decision on the patentability of Amazon's "one-click" Internet shopping invention on November 24, 2011. The Court ruled that business methods remain patentable subject matter under Canadian law, and the patentable subject matter test advanced by the Commissioner of Patents is incorrect and not supported by law. On December 22, 2011, the Commissioner of Patents allowed Amazon's patent application.

The Federal Court of Appeal decision follows an appeal by the Commissioner of Patents of the Federal Court's ruling on the Patent Office's rejection of Amazon's patent application for its one-click Internet shopping method. In that decision, the lower Court overturned the Patent Office's rejection and held that business method patents constituted patentable subject matter in Canada and that the form-and-substance test for determining patentable subject matter applied by the Commissioner was inconsistent with Canadian law. The Federal Court of Appeal directed that the Commissioner and the Patent Office reconsider Amazon's patent application on an expedited basis and in accordance with the legal principles set forth by the court.

The Commissioner of Patents rejected Amazon's patent application on the basis that the claimed invention did not fall within the statutory definition of invention under Section 2. The Commissioner advanced a two-part test for determining patentable subject matter under Section 2, which requires: (1) identifying, independently of the construction of the patent claims, what the inventor has claimed to have invented – the actual invention; and (2) determining whether the actual invention falls within one of the subject matter categories enumerated in Section 2.

The Federal Court of Appeal held that the Commissioner's test for determining patentable subject matter on the basis of inventive concept or actual invention is incorrect in law. The determination of statutory subject matter must be based on a purposive construction of the patent claims according to the Supreme Court of Canada in Free World Trust and Whirlpool. The Commissioner cannot consider the issue of patentable subject matter without first construing the patent claims in the application.

The Court did however note that by applying a purposive construction to the patent claims, what appears on its face to be a claim to an art or a process may, on a proper construction, be a claim for a mathematical formula and therefore not patentable subject matter. The Court made reference to Schlumberger. In Schlumberger, the Federal Court of Appeal found that a method for collecting, recording and analyzing data according to a mathematical formula using a computer did not constitute patentable subject matter. The Court concluded that the method claim amounted to a mathematical algorithm, that could otherwise be solved manually, being executed using a computer. The Court held that a mathematical algorithm fell within the prohibition under Section 27 against patenting a mere scientific principle or abstract theorem. The presence or absence of a computer did not change the patentable nature of the claim.

In its rejection of Amazon's patent application, the Commissioner of Patents concluded that the one-click invention failed the three tests that were considered to be implicit in the meaning of art under the Patent Act: (1) it does not add to human knowledge anything that is technological in nature; (2) it is merely a business method and a business method is not patentable; and (3) it does not cause a change in the character or condition of a physical object.

The Court criticized the Commissioner for devising or relying on such tests, and stated that the focus should remain on the principles to be derived from the jurisprudence. The Court further noted that "catch phrases, tag words and generalizations can take on a life of their own, diverting attention away from the governing principles".

The Court found that the technological requirement applied by the Commissioner is vague and likely to be highly subjective and unpredictable in its application. It should therefore not be used as a stand-alone basis for distinguishing patentable subject matter from non-patentable subject matter.

The Court held that there is no Canadian jurisprudence that determines conclusively that a business method cannot be patentable subject matter. The Court further noted that the Commissioner of Patents has granted patents for applications directed to business method inventions.

On the requirement of a change in the character or condition of a physical object, the Court agreed with the lower Court and held that because a patent cannot be granted for an abstract idea, it is implicit in the definition of invention that patentable subject matter must be something with a physical existence, or something that manifests a discernible effect or change. The Court did not, however, accept that the physicality requirement could be satisfied merely by the fact that the claimed invention has a practical application. This appears to narrow the broad definition of art from the Supreme Court of Canada in Shell Oil.

In allowing the appeal by the Commissioner of Patents, the Court found on the narrow ground that the lower court had erred in undertaking its own purposive construction of the patent claims in Amazon's application on the basis of the available record, which did not include expert evidence to assist the Court. The Court held that anyone who undertakes a purposive construction of a patent "must do so on the basis of a foundation of knowledge about the relevant art, and in particular, about the state of the relevant art at the relevant time". The Court added that "[f]or the Commissioner, that assistance comes in the form of submissions from the patent application, and I assume, from staff at the patent office with the appropriate experience" and that courts generally require the expert evidence of persons skilled in the art as per Whirlpool. On this basis, the Court did not adopt the lower court's construction of the claims and instead directed the Commissioner of Patents to re-examine the patent application on an expedited basis.

The application was allowed by the Commissioner on December 22, 2011, and on December 28, 2011, Amazon paid the final fee to issue the patent. It is expected that the one-click patent will issue under Canadian Patent No. 2,246,933 in the weeks to come.

Amazon filed a patent application for its one-click ordering system on September 11, 1998. Some 13 years later the application has been allowed by the Canadian Patent Office, with both the Federal Courts and the Commissioner of Patents affirming the patentability of business method 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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.