Federal Court rules ‘practical application’ methods are patentable

Federal Court rules ‘practical application’ methods are patentable

In a trend-setting decision for patenting business methods in Canada, the Federal Court has ruled Amazon.com Inc. should be able to patent its one-click order process.


Federal Court Justice Michael Phelan released his verdict Oct. 14 in Amazon.com Inc. v. Canada (Attorney General). The case stems from a patenting process in which Canada’s commissioner of patents had in 2004 denied the online retailer’s request to patent a method that allows users to pay with one click by using information previously stored in the system.

“It is accepted that the ‘one-click’ method is novel; the Court finds that an online ordering system which facilitates this adds to the state of knowledge in this area,” Phelan wrote in his decision. “The Commissioner’s decision is quashed and is to be sent back for expedited re-examination.”

The commissioner had said the method was obvious and thus not patentable. But Amazon.com, which already holds similar U.S. patents, took the matter to court.

In a strongly worded decision, Phelan also indicated he wasn’t too happy the commissioner relied heavily on foreign jurisprudence throughout the decision to deny the patent.

“This becomes troubling and even problematic when she ignores fundamental differences between the foreign and the domestic regimes, or ignores Canadian legal principles altogether,” Phelan wrote.

He added there is no tradition or assumption in Canada that business methods can’t be patented.

There needs to be a “practical application” for the method, affirming that abstract ideas or theorems would not be patentable, said Phelan.

That ruling and reasoning has brought Canada in line with its southern neighbour after the recent Supreme Court of the United State’s Bilski v. Kappos ruling said a method can be patented under certain circumstances.

The commissioner of patents and the Canadian Intellectual Property Office have not announced whether they will appeal the decision, but they have 30 days from the ruling to decide.

The Amazon.com case clarifies an important element of Canadian intellectual property law and was much awaited, say legal experts.

“This decision clarifies that claims for business methods are patentable where they have some practical application, embodiment, or link to hardware,” says Adam Haller of Ogilvy Renault LLP. “However, where a claimed invention can be described merely as a scheme, plan, or disembodied idea not put into action, the claimed invention may not be considered patentable subject matter.”

Anne Kinsman, an Ottawa lawyer and partner at Borden Ladner Gervais LLP says the decision can be applied to several technology sectors.

“The decision has important implications for computer-implemented and business-method inventions, which must now be assessed against the same standards as more conventional industrial inventions,” she says.

In business terms, it also opens the field for new patents.

“Following this decision, it appears that a broad and open view of patentable subject matter exists in Canada,” says Yasin Bismilla, a patent agent with Lang Michener LLP. “With this decision, an area of uncertainty in Canadian patent law has been clarified, and there is no outright exclusion to business-method patents in Canada.”

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