Pursues Business Method Patent At The Federal Court Of Appeal Pursues Business Method Patent At The Federal Court Of Appeal

Nora Sleeth is a JD candidate at Osgoode Hall Law School.

On June 21, 2011, appeared before the Federal Court of Appeal responding to an appeal of the Federal Court’s decision that Amazon’s “one click” business method constituted patentable subject matter.

The one click model simplifies Internet shopping by allowing users to purchase their desired items without having to repeatedly enter payment information. When a user signs up with, a client identifier, know as a “cookie”, is stored in the potential shopper’s computer. The user can then browse Amazon and select a series of items that can be immediately purchased with one click, as the cookie enables Amazon’s server to instantly recognize the client. Amazon’s attempt to patent this method was initially rejected by the Commissioner of Patents who found that a business method was not patentable subject matter under s. 2 of the Patent Act.

The Commissioner’s decision was overturned by Justice Phelan of the Federal Court last year. It was found that the one click method constituted an art and a process and, as such, was patentable under s. 2. Justice Phelan’s decision was appealed on the grounds that what was actually invented by Amazon was not patentable as an “invention” under the Patent Act.

The Appellants, the Crown and the Commissioner of Patents, began their submissions by stating that the case was “about an idea” and advanced arguments that stressed the abstract nature of the Respondent’s “invention.” The Respondent in turn countered that its invention was not merely a disembodied idea, as it had a practical application.  This case is an illustration of the impact of technology on legal developments. As technical advancements become increasingly abstract, it is to be expected that traditional notions of tangibility will be challenged.

The Appellants submitted that it was necessary to determine what was actually invented by the Respondent. They argued that Justice Phelan applied only a “claim construction” approach and thus defined the claims as framed by the Respondent. While a framing approach identifies the boundaries of the patent-holder’s rights, conducting an actual invention analysis is necessary to serve the public interest in preventing monopolies.

Using an actual invention analysis, according to the Appellants, requires that Amazon’s use of computers, the Internet, cookies, and the customer’s action be disregarded. These are not new inventions and are operating as they have always operated. Thus, the actual invention is the idea of implementing cookies to identify a particular Internet user in order to simplify the online shopping process.

In using the actual invention analysis to describe the invention as a scheme of instructions, the Appellants are able to argue that it is not patentable subject matter. Although a scheme may fit into the definition of “art” or “process” in s. 2 of the Patent Act, a practical application that brings about a physical change in character or condition is required. The physical change in the one click process is a result of the computerized components; however, these components are not part of the actual invention as they are operating as they always have. Therefore, according to the Appellants’ analysis, the one click business method is not patentable.

The Interveners, the Canadian Life and Health Insurance Association and the Canadian Bankers Association, supported the Appellants’ argument that the use of computers and the Internet must be disregarded as these components are not part of the actual invention. The Interveners argued that to do otherwise would open the floodgates as simply adding the word “computer” to a patent claim would make it a patentable invention. The Interveners were concerned about the impact this might have in their respective industries and their participation thus served to highlight the broad influence of this appeal.

The Respondent took an entirely different approach to characterizing patentable subject matter. It was submitted by the Respondent that the framing and actual invention analyses are unsupported by statutory and case law. Instead, a purposive analysis, as established by the Supreme Court of Canada, should be applied. This purposive approach discloses the monopoly that is sought through the claim and thus promotes certainty and fairness.

The Respondent submitted that the Appellants' definition of “art” is overly restrictive and is reflective of older decisions. The appropriate definition, according to the Respondent, is a commercially useful, new method of applying skill or knowledge. An art cannot be a disembodied idea and must have a practical application.

The Appellants’ attempt to conduct an actual invention analysis results in a disregard for several of the components of the Respondent’s proposed invention. The Respondent submitted that it is inappropriate to dissect patent claims and that a holistic approach must be taken when analyzing the invention. Canadian patent law allows for protection of known ideas that are implemented through new means. The use of the computer, Internet, and other known elements is essential for the practical result of Amazon’s business method. Further, even if the Appellants' physical change test is applied, the one click model still constitutes patentable subject matter because the physical changes occur in the computerized elements, albeit on a micro level.

The Appellants and Respondent have clearly identified two different interpretations of patent law as applied to this case. This decision is likely to have great future significance as technological advancements test the boundaries of patent law.