Amazon.com Inc v Canada (Commissioner of Patents)

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Amazon.com Inc v Canada (Commissioner of Patents)
Court Federal Court of Appeal
DecidedNovember 24, 2011
Citation(s)2011 FCA 328
Case history
Prior action(s)Amazon.com Inc. v. Canada (Commissioner of Patents), 2010 FC 1011
Court membership
Judge(s) sittingSharlow J.A., Trudel J.A., Stratas J.A.
Keywords
Patent, Software, Computer, Business Methods

Amazon.com Inc v Canada (Commissioner of Patents) is a decision of the Federal Court of Appeal concerning the patentability of business methods within the context of the Patent Act. [1] At issue was the patentability of a method that allowed customers shopping online to make purchases with one-click buying.

Contents

Background

In 1998, Amazon.com filed a patent application for a "Method and System For Placing A Purchase Order Via A Communication Network". [2] This invention allowed customers shopping online to make purchases with one-click buying, which circumvents the process of entering address and billing information in the traditional shopping cart mode of online shopping. The patent application was rejected by the Commissioner of Patents as non-statutory subject matter. Following litigation, the Commissioner of Patents issued the patent in December 2011.

Judicial History

Commissioner of Patents

In 2009, the Commissioner of Patents made several findings in its rejection of Amazon.com's patent application. First, it noted that both the form and substance of the claim must be evaluated. Form refers to the text of the claim and understanding the claim based on the text alone. Substance connotes the nature of the invention in question and what it adds to human knowledge. The Commissioner noted that the substance of the invention, defined by its new and inventive features, must fall within one of the statutory categories of invention found within section 2 of the Patent Act. [3]

Applying this approach to the facts, the Commissioner found that, although Amazon.com's claim, on the fact of its text, was directed towards a "machine", a patentable subject matter, the Commissioner found that the substance of all its claims were directed to streamlining the process of sales and reaping benefits flowing from it, and therefore constituted a "business method". [4] In Monsanto Canada Inc v Schmeiser, Justice Arbour, in dissent, had listed a number of examples where courts had excluded subject matter from patentability, including (incorrectly [5] ) "business systems and methods". [6] The Commissioner relied on Justice Arbour's observation to find that business methods had no historical basis of patentability in Canada, and were therefore per se unpatentable. [7] No definition of "business method" was supplied by the Commissioner.

In considering whether business methods could fall under the statutory category of an "art", the Commissioner found that all five statutory categories of invention were technological in nature. It concluded that an "art" that is not technological cannot be a statutory subject matter. The Commissioner dismissed that the Amazon.com's invention provided any technological benefits and advances because Amazon.com's decision to proceed with one-click shopping with business in nature and yielded only a "convenience advantage". [8]

Amazon.com proceed to commence an appeal of the Commissioner's decision at the Federal Court of Canada in 2010.

Federal Court of Canada

At the Federal Court, Justice Phelan decisively quashed the Commissioner's decision. [9] First, the Court found that the "form and substance" formulation and analysis of Amazon.com's claims departed from the approach articulated by the Supreme Court of Canada in Free World Trust v Électro Santé Inc [10] and Whirlpool Corp v Camco Inc , [11] which stated that the identification of the invention must be done through a purposive construction of its claims. [12] Second, the Court found that the "technological" requirement was too restrictive in the test for an "art". The Court could find nothing in Canadian jurisprudence which would support such a requirement. [13] Third, Justice Phelan concluded that there was no "tradition" for the categorical exclusion of "business methods" from patentability in Canada. [14] Instead, the Court states that business methods were to be assessed pursuant to the five categories found within section 2 of the Patent Act.

The Court then went on to consider the claims and find that a purposive construction of Amazon.com's claims disclosed a "machine", a patentable subject matter under section 2 of the Patent Act, which implemented something more than just a "mathematical formula". [15] Given this characterization of Amazon.com's claims and its rejection of the Commissioner's decision, the Court sent the case back to the Commissioner with the direction that the claims constitute patentable subject matter. [16]

The Commissioner of Patents then appealed the decision to the Federal Court of Appeal, which released its decision in late 2011.

Ruling

The Federal Court of Appeal essentially agreed with the three criticisms the Federal Court offered for the Commissioner's decision. The Court, however, also added that "it does not necessarily follow…that a business method that is not itself patentable subject matter because it is an abstract idea becomes patentable subject matter merely because it has a practical embodiment or a practical application. In my view, this cannot be a distinguishing test, because it is axiomatic that a business method always has or is intended to have a practical application." [17] Thus, the Court of Appeal did not affirm Justice Phelan's finding that Amazon.com's claims constituted patentable subject matter. Instead, it noted that Amazon.com's claim may still fail if, per Schlumberger Canada Ltd v Canada (Commissioner of Patents) , [18] the only novel aspect of the claimed invention was the business method and the business method was interpreted as a "mere scientific principle or abstract theorem", which cannot be the subject matter of an invention according to section 27(8) of the Patent Act, mentioned above. [19]

Despite agreeing with most of the substance of the Federal Court's judgement, Justice Sharlow, writing for the Federal Court of Appeal, found that it was inappropriate for Justice Phelan to pursue his own purposive construction of the claims advanced by Amazon.com. Purposive construction must be executed with a foundation of knowledge about the relevant art. Justice Phelan did not have expert evidence before the Federal Court from persons skilled in the art, and therefore it would have been more appropriate for the Commissioner to re-examine the claims, given the expertise of the Patent Office. Accordingly, the Federal Court of Appeal remanded the application to the Commissioner for expedited reconsideration. [20]

Aftermath

The Commissioner of Patents issued the patent in December 2011.

Later, on March 8, 2012, the Canadian Patent Office announced changes in patent examination practice based on the ruling in the Amazon.com case. CIPO published new guidelines for determining whether an invention constitutes statutory subject matter based on a purposive construction of the claims. [21] Updated guidance on examination practice for computer-related inventions was also published at the same time. [22]

See also

Related Research Articles

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Patentable, statutory or patent-eligible subject matter is subject matter of an invention that is considered appropriate for patent protection in a given jurisdiction. The laws and practices of many countries stipulate that certain types of inventions should be denied patent protection. Together with criteria such as novelty, inventive step or nonobviousness, utility, and industrial applicability, which differ from country to country, the question of whether a particular subject matter is patentable is one of the substantive requirements for patentability.

<i>Aerotel Ltd v Telco Holdings Ltd</i>

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<span class="mw-page-title-main">Canadian patent law</span>

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<i>In re Bilski</i>

In re Bilski, 545 F.3d 943, 88 U.S.P.Q.2d 1385, was an en banc decision of the United States Court of Appeals for the Federal Circuit (CAFC) on the patenting of method claims, particularly business methods. The court affirmed the rejection of the patent claims involving a method of hedging risks in commodities trading, as non-patentable subject matter. Most importantly, the Court concluded, that machine-or-transformation test "was proper test to apply to determine patent-eligibility of process", and that the “useful, concrete and tangible result” of State Street Bank v. Signature Financial Group and AT&T Corp. v. Excel Communications, Inc. should no longer be relied upon.

<i>In re Ferguson</i>

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<span class="mw-page-title-main">Sufficiency of disclosure in Canadian patent law</span>

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<span class="mw-page-title-main">Defences and remedies in Canadian patent law</span>

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<span class="mw-page-title-main">Subject matter in Canadian patent law</span>

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<i>Shell Oil Co v Canada (Commissioner of Patents)</i> Supreme Court of Canada case

Shell Oil Co v Canada (Commissioner of Patents), [1982] 2 S.C.R. 536, is a landmark decision by the Supreme Court of Canada in the area of Canadian patent law. Prior to this decision, there was no general principle of patent law, and no direct authority, for the proposition that a new use of an old compound can be claimed as a patentable invention. Furthermore, the decision is a leading case on the test for patentable "art".

<i>Tennessee Eastman Co v Canada (Commissioner of Patents)</i> Supreme Court of Canada case

Tennessee Eastman Co v Canada (Commissioner of Patents), [1974] S.C.R. 111, is a leading Supreme Court of Canada authority for the proposition that medical or therapeutic methods are not patentable in Canada.

<i>Teva Canada Ltd v Pfizer Canada Inc</i> Supreme Court of Canada case

Teva Canada Ltd v Pfizer Canada Inc, 2012 SCC 60 is a leading Supreme Court of Canada decision on the disclosure requirements for a patent in Canada.

Neither computers nor software are specifically mentioned in the Canadian Patent Act. Canadian courts have held that the use of a computer in an invention neither lends, nor reduces patentability. Therefore, that an invention involves a computer is not determinative of patentability; instead, whether a computer-using invention is patentable turns on whether that invention meets the general requirements for patentability as would apply to any invention.

<i>In re Alappat</i>

In re Alappat, 33 F.3d 1526, along with In re Lowry and the State Street Bank case, form an important mid-to-late-1990s trilogy of Federal Circuit opinions because in these cases, that court changed course by abandoning the Freeman-Walter-Abele Test that it had previously used to determine patent eligibility of software patents and patent applications. The result was to open a floodgate of software and business-method patent applications, many or most of which later became invalid patents as a result of Supreme Court opinions in the early part of the following century in Bilski v. Kappos and Alice v. CLS Bank.

References

  1. ↑ Patent Act, RSC 1985, c P-4
  2. ↑ CAapplication 2246933,"METHOD AND SYSTEM FOR PLACING A PURCHASE ORDER VIA A COMMUNICATIONS NETWORK",published 1999-03-12
  3. ↑ Re Application No. 2,246,933 of Amazon.Com (2009) C.D. 1290 at para. 124-5.
  4. ↑ Re Application No. 2,246,933 of Amazon.Com (2009) C.D. 1290 at para. 167, 172.
  5. ↑ Canadian Patent Appeal Board Denies Amazon.com's One-Click Patent Application
  6. ↑ Monsanto Canada Inc v Schmeiser, [2004] 1 S.C.R. 902 at para. 133.
  7. ↑ Re Application No. 2,246,933 of Amazon.Com (2009) C.D. 1290 at para. 178-9.
  8. ↑ Re Application No. 2,246,933 of Amazon.Com (2009) C.D. 1290 at para. 184-194.
  9. ↑ Crowne , Emir Aly and Arman, Varoujan, Business Methods Patentable in Canada According to Federal Court (February 4, 2011). Journal of Intellectual Property Law & Practice (Oxford), 2010
  10. ↑ Free World Trust v Électro Santé Inc, [2000] 2 S.C.R. 1024.
  11. ↑ Whirlpool Corp v Camco Inc, [2000] 2 S.C.R. 1067.
  12. ↑ Amazon.com Inc v Canada (AG) (2010), F.C. 1011 at para. 38.
  13. ↑ Amazon.com Inc v Canada (AG) (2010), F.C. 1011 at para. 60, 69-71.
  14. ↑ Amazon.com Inc v Canada (AG) (2010), F.C. 1011 at para. 61.
  15. ↑ Amazon.com Inc v Canada (AG) (2010), F.C. 1011 at para. 73.
  16. ↑ Amazon.com Inc v Canada (AG) (2010), F.C. 1011 at para. 82.
  17. ↑ Canada (Attorney General) v. Amazon.com, Inc. (2011), F.C.A. 328 at para. 61.
  18. ↑ Schlumberger Canada Ltd v Canada (Commissioner of Patents) (1981), 56 C.P.R. (2d) 204 (F.C.A.).
  19. ↑ Canada (AG) v Amazon.com Inc (2011), F.C.A. 328 at para. 62-3.
  20. ↑ Canada (AG) v Amazon.com Inc (2011), F.C.A. 328 at para. 72–75.
  21. ↑ Examination Practice Respecting Purposive Construction - PN2013-02, Canadian Intellectual Property Office, March 8, 2013
  22. ↑ Examination Practice Respecting Computer-Implemented Inventions - PN 2013-03, Canadian Intellectual Property Office, March 8, 2013
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