Canada: Federal Court Of Appeal Overturns Commissioner On’s 1-Click: Business Methods Not Excluded From Patentability

Last Updated: November 27 2011
Article by Michael Ladanyi

Originally published in November 2011

On November 24, 2011, the Federal Court of Appeal released its judgment in The Attorney General of Canada and The Commissioner of Patents v., Inc., 2011 FCA 328. The Court ruled that business methods may be patented in Canada but stopped short of establishing a strict test to determine whether a claim directed to a business method contains patentable subject matter. filed a patent application for its "1-Click" online purchasing process in September 1998 (Canadian Patent Application No. 2,256,933). On March 3, 2009, following a hearing before the Patent Appeal Board, the Commissioner of Patents refused to grant the patent (see "CIPO Rejecting Business Method Patents," November 2009). The Commissioner's refusal was appealed to the Federal Court, which rejected the Commissioner's "form and substance" analysis, and the Commissioner's requirements that patentable subject matter must be technological and not a business method (see "Federal Court of Canada Grants's Appeal for 1-Click Business Method Patent Application," October 2010). In its ruling, the Federal Court went on to apply the test set out in Shell Oil Co. of Canada v. Canada (Commissioner of Patents), [1982] 2 S.C.R. 536, and Progressive Games, Inc. v. Canada (Commissioner of Patents), 177 F.T.R. 241 (T.D.) at para. 16, aff'd (2000), 9 C.P.R. (4th) 479 (F.C.A.), for determining whether an art was patentable subject matter, namely: (i) it must not be a disembodied idea but have a method of practical application; (ii) it must be a new and inventive method of applying skill and knowledge; and (iii) it must have a commercially useful result.

In its application of this test, the Federal Court determined that's claims were patentable subject matter through a purposive construction of the essential elements of the claims. The Commissioner and Attorney General of Canada appealed to the Federal Court of Appeal arguing that the Commissioner's analysis was the correct approach.

In allowing the appeal, the Federal Court of Appeal affirmed the Federal Court's rejection of the Commissioner's analytical framework. Accordingly, the patentability of subject matter may not be determined solely on literal wording of the claims. Rather, the identification of the inventive concept of the claims must be based on a purposive construction of the claims to "ensure that the Commissioner is alive to the possibility that a patent claim may be expressed in language that is deliberately or inadvertently deceptive." By way of example, the Court noted that "what appears on its face to be a claim for an 'art' or a 'process' may, on a proper construction, be a claim for a mathematical formula and therefore not patentable subject matter."

The Federal Court of Appeal also found the Commissioner's requirement that claims be "technological" in nature "is likely to be highly subjective and unpredictable in its application" and "this test should not be used as a stand-alone basis for distinguishing patentable from non-patentable subject matter." The Court further stated 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 physical existence, or something that manifests a discernible effect or change."

However, the Federal Court of Appeal ruled that the Federal Court erred by construing the claims in the absence of expert evidence. As a result, without "the benefit of expert evidence about how computers work and the manner in which computers are used to put an abstract idea to use," the Federal Court engaged in a literal interpretation of the claims. As the Federal Court of Appeal would be in a similar position to construe the claims, the Court referred the construction of the patent claims back to the Commissioner for re-examination on an expedited basis in accordance with the Court's reasons.

Although the test to determine the patentability of an art is, presumably, the one used by the Federal Court in its decision, the Federal Court of Appeal did not explicitly direct the Commissioner to use that test. Accordingly, it may be open to the Commissioner to devise a new analytical approach to assess the patentability of business methods so long as none of the Commissioner's previously rejected tests are used.

Additionally, the Federal Court of Appeal did not rule on the correctness of the Federal Court's construction of the claims or application of any test for patentable subject matter. Instead, the Federal Court of Appeal suggested that for a business method claim to be patentable, the claim must be distinguished from the claims ruled to be unpatentable in Schlumberger Canada Ltd. v. Canada (Commissioner of Patents), [1982] 1 F.C. 845 (C.A.). In Schlumberger, the patent claims were rejected because the Court found that the only novel aspect of the claimed invention was a mathematical formula – that the formula was programmed into a computer was insufficient to render the claims patentable.

According to the Federal Court of Appeal in the present decision, the distinguishing test for a business method claim must be something more than "a practical embodiment or a practical application" as "a business method always has or is intended to have a practical application." The Court further stated that's "particular business method – itself an abstract idea – is realized by programming it into the computer by means of a formula or algorithm, which is also an abstract idea." In the Court's view, "the task of purposive construction of the claims in this case should be undertaken anew by the Commissioner, with a mind open to the possibility that a novel business method may be an essential element of a valid patent claim."

Although the Federal Court of Appeal did not construe the claims, it did reach the following conclusions: (1) that's claims are directed to a business method; and (2) that the business method is an abstract idea. While the Court has directed the Commissioner to re-construe the claims, the Court appears to imply that the Commissioner should start from the position that's claims are directed to an abstract idea, which may well influence the outcome.

Nevertheless, in a positive step for prospective patent filers, by ruling that each one of the Commissioner's tests for refusing's claims is improper, the Court has left open the door for the patentability of business methods in Canada.

The parties have 60 days to seek leave to appeal this decision to the Supreme Court of 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.

Similar Articles
Relevancy Powered by MondaqAI
Goldman Sloan Nash & Haber LLP
Bennett Jones LLP
Heenan Blaikie LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Goldman Sloan Nash & Haber LLP
Bennett Jones LLP
Heenan Blaikie LLP
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions