On June 21, 2011, the Federal Court of Appeal (Sharlow, J.A., Stratas, J.A. and Trudel, J.A) heard arguments in Canada (Attorney General) v. Amazon.com. The appeal involves one of the fundamental principles of patent law—what constitutes patentable subject matter.

The Attorney General appeals from the Order of Justice Phelan of the Federal Court. Justice Phelan had found that Amazon.com's patent application for its one-click ordering method and system constituted patentable subject matter and reversed the decision of the Commissioner of Patents rejecting the application.

Before the Federal Court of Appeal, the Attorney General modified its arguments from those made to Justice Phelan. Instead of arguing a form and substance approach, it advanced arguments of a framing analysis (as per the claim construction approach described by the Supreme Court of Canada in Whirlpool v. Camco) to be used for determining the boundaries of the claims for the purposes of infringement and invalidity and an actual invention analysis for determining what the applicant has actually invented and whether the actual invention falls within the statutory definition of a patentable invention.

In determining the actual invention, the Attorney General argued one is to determine the inventive concept and disregard claim elements which are not new and do not contribute anything unexpected to the alleged invention. In the context of the present application, the Attorney General argued that cookies, computers and the Internet were all known elements operating as expected and should be disregarded in determining the actual invention. The Attorney General submitted that all that was left in determining the actual invention was the idea of using a client identifier for one-click ordering, and that alone could not constitute patentable subject matter.

The appeal also involved an intervenor, the Canadian Life and Health Insurance Association Inc. and the Canadian Bankers Association. The intervenor submitted brief arguments to the Federal Court of Appeal concerning the state of the law in the United States with respect to patentable subject matter. In brief, it cautioned against "post-solution activity" or "extrasolution activity" being permitted to convert non-patentable subject matter into patentable subject matter. In other words, simply adding a computer to claims to a series of mental steps or for implementing calculations does not create a patentable invention.

In response, Amazon.com defended the decision of Justice Phelan, noting that the Attorney General was advancing a similar argument to Camco in the Supreme Court case of Whirlpool v. Camco, where Camco unsuccessfully argued that purposive construction only applied to an infringement analysis, not an invalidity analysis. The Supreme Court of Canada was clear in Whirlpool v. Camco and the companion case of Free World Trust v. Électro Santé that the claims of a patent are construed only once, purposively, and that claim construction is antecedent to determinations of infringement and invalidity. While the present appeal concerns the decision of the Commissioner of Patents, Amazon.com argued that whether a patent constitutes patentable subject matter is fundamentally an invalidity question.

In explaining the invention to the Court, Amazon.com described that the invention was not simply the idea of one-click ordering. One-click ordering was the result enabled by a clever and elegant design to use a cookie with a number of other physical elements (the vendor's server computers, the purchaser's computer and computer communication networks) to simplify the ordering process for consumers. Amazon.com supported its explanation with the fact that the Patent Office withdrew its obviousness rejection at the Patent Appeal Board and therefore the Commissioner of Patents necessarily agreed that the claimed invention is new and inventive.

Amazon.com also argued for the application of the Supreme Court of Canada decision in Shell Oil v. Commissioner of Patents, in which the Court held that the new use of an old compound constituted patentable subject matter. The rationale being that where the idea is new and inventive, its implementation need not also be new and inventive.

Shell Oil further provided a three-part test where an art is patentable if:

  1. It is not a disembodied idea but has a method of practical application;
  2. It is a new and innovative method of applying skill or knowledge; and
  3. It has a result or effect that is commercially useful.

Amazon.com argued that this test for a patentable art applied to its application, as it was subsequent to, and from a Court of higher precedence than, the test in Lawson v. Commissioner of Patents argued by the Attorney General which requires some change in either character or condition in some physical object. The Attorney General argued that the phrase practical application in Shell Oil still needs to be informed by the earlier physical transformation test in Lawson as the phrase on its own is unclear.

In conclusion, although the Attorney General recast its previous arguments on appeal, the substance of them remains largely the same. Parsing patent claims to remove elements which are old, known and used as expected to determine patentable subject matter is inconsistent with the general principle that an inventive new use of a known machine (or system) is patentable. The claims in the Amazon. com patent application involve a number of known computing components used according to their normal function in a new and innovative way. Moreover, the method and system have a practical application and a commercially useful result—a more efficient and simpler computerized ordering process.

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