Amazon sent back to the Patent Office

The Federal Court of Appeal recently released its decision regarding Amazon.com's now famous patent application for a 'one click' internet shopping method, filed in 1998. The patent application has survived this latest test and has been returned to the Patent Office for expedited examination. This is an important decision for anyone interested in protecting software-implemented innovations and business methods, particularly in view of the serious lack of jurisprudence in that field in Canada.

The decision followed an appeal by the commissioner of a recent Federal Court decision. The Federal Court had ruled that:

• Business methods were not excluded from patentability.
• The claims constituted patentable subject matter. 
• The patent application was to be sent back to the Patent Office for expedited examination.

The Federal Court of Appeal agreed with the Federal Court decision that the commissioner erred when she determined the subject matter of the claims solely on the basis of the inventive concept from a literal reading of the claims or a determination of the “substance of the invention”. The determination of the actual invention and of subject matter must be based on a purposive construction of the patent claims.

However, the court stated that "it does not necessarily follow that the commissioner was wrong in the result". Indeed, Justice Sharlow indicated that it remains an open question whether the claimed subject matter is an “invention” within the statutory definition of such.

On the issue of whether patentable subject matter must be scientific or technological in nature, an issue raised by the commissioner, the court agreed with the lower court in finding that this question is unclear and confusing.

On the issue of whether a business method can ever be patentable subject matter in Canada, the court mentioned that "I agree that no Canadian jurisprudence determines conclusively that a business method cannot be patentable subject matter".

On the issue of whether a patentable art must cause a change in the character or condition of a physical object, the court agreed with the lower court on the fact 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 court then pointed out that the physicality requirement cannot be met merely by the fact that the claimed invention has a practical application.

Although the door is not closed to the patentability of business methods and software-implemented innovations, the court has raised doubt as to patentability of the claims in the Amazon application. A purposive construction of these claims will determine whether they contain patentable subject matter. This construction will be carried out by the Patent Office and will therefore be decisive for the fate of the patent application.

It is interesting to note that no clear direction was given to the commissioner for purposive construction of the claims. Therefore, it is likely that the commissioner will appeal the Federal Court of Appeal decision and seek guidance from the Supreme Court.

In view of this decision, applicants should still file patent applications for business methods in Canada but should ensure that the detailed description includes support for different embodiments with different types of claim. One strategy for pending applications would be to delay examination until the commissioner’s take on the Federal Court of Appeal decision is known.

Needless to say, the public would greatly benefit from a review by the Supreme Court of the issues related to the patentability of software-implemented innovations and business methods.