A newly composed Patent Appeal Board has rejected Amazon.com's "One-Click" application in a decision that outlines a new approach to statutory subject matter in Canada.
In Re Amazon.com Inc. Patent Application No. 2,246,933 (Commissioner's Decision No. 1290, March 4, 2009), Amazon.com Inc. appealed an Examiner's final rejection of its Canadian patent application titled "Method and
System for Placing a Purchase Order via a Communications Network" (the "Application"). The Application was filed in Canada on September 11, 1998 and claimed priority from two United States patent applications, which have since given rise to at least three issued U.S. patents and several pending U.S. applications.
Generally, the Application discloses Amazon.com's "One-Click" online purchasing method, which allows a client to purchase an item with a single mouse-click. On an initial visit to the vendor's website, the client enters his or her identification, billing and shipping information, which is then stored in the vendor's server, while a client identifier is stored in the client's computer in the form of a cookie. Once the client's information has been stored on the vendor's server, the client is not required to log into the vendor's website on any subsequent visit, unless the client wishes to change the previously supplied information. Rather, the client can simply visit the vendor's website and, without logging in, the client can purchase an item with a single mouse-click, which causes a request to purchase the item to be sent to the vendor's server, along with the client identifier stored in the client's computer. In response, the server uses the client identifier to retrieve the client's billing and shipping information, which is used to ship the item and bill the client.
The Application contains 75 claims. Claims 44 to 50 are system claims, while the remaining claims are method claims. Claim 44, the sole independent system claim, recites three elements, each of which is "a component" defined in terms of the functions that it performs.
The Examiner had rejected all 75 claims on the grounds that they were obvious over the prior art and directed to non-statutory subject matter. Amazon.com appealed this rejection to the Patent Appeal Board, and a hearing was held on November 16, 2005. Unfortunately, two of the three Board members retired from public service after the hearing but before a decision could be finalized. As a result, a new Board was formed and a further hearing was held on September 18, 2008.
The new Board overturned the Examiner's finding of obviousness, ruling that the claims are all inventive in comparison to the prior art. However, the Board ruled that all 75 claims, even the seven apparatus claims, are directed to non-statutory subject matter.
Obviousness. The Board applied both the traditional judicial test for obviousness and the newer analytical framework for obviousness outlined by the Supreme Court of Canada in Sanofi-Synthelabo Canada Inc. v. Apotex Inc., 2008 SCC 61.
The Examiner had argued that the Applicant should not be permitted to rely upon certain elements of the claims to establish non-obviousness on the ground that the elements in question were "non-technical" and "non-statutory." In the Examiner's view, such non-statutory elements could not be relied upon to patentably distinguish the claim from the prior art.
The Board rejected the Examiner's argument but expressly recommended that the treatment of non-technical features in a test for obviousness should be subject to further analysis by CIPO to determine proper practice.
Instead, the Board directed its obviousness analysis to each claim as a whole, ruling that the required inventiveness can be found either in any individual feature of the claim or in the combination of features as a whole. The Board concluded that the single-action ordering aspect of the claims would not have been obvious having regard to the cited prior art and held that all 75 claims are not obvious.
Statutory subject matter. The new Board adopted an entirely new approach to statutory subject matter. The three main aspects of this new approach are "form-and-substance" analysis, "excluded subject matter," and a new "technological subject matter" requirement. These three aspects are all inherently interrelated.
Under the form-and-substance approach applied by the Board, it is not sufficient for the form of a claim to fall within one of the categories of statutory subject matter found in the definition of "invention" in section 2 of the Patent Act. In addition, the substance of the invention must also fall within one of the statutory categories. Moreover, it is possible for the substance of the invention to be subjected to the requirements of a different statutory category than that to which the form of the claim is directed.
The "substance" of the invention appears to mean "what has been added to human knowledge," meaning the "contribution" of novel and non-obvious features. Other parts of the Board's decision indicate that the "substance" of the invention would not include features that are either excluded subject matter or non-technological.
In other words, the Board does not consider it to be sufficient for the claim as a whole to fulfill the requirements of statutory subject matter; rather, the applicant must show that the subset of features of the claim that are novel, non-obvious, technological and not excluded subject matter would constitute statutory subject matter if claimed by themselves.
Regarding excluded subject matter, the Board held that business methods are excluded from statutory subject matter and are therefore unpatentable in Canada. The Board also commented that methods of playing games are similarly excluded, as are "computer programs if the discovery involved is a method of calculation, methods of medical treatment, higher life forms, business systems and methods and professional skills." Moreover, the concept of excluded subject matter is tied in with the form-and-substance analysis such that even if the form of a claim is directed to a machine, if the substance of the invention is viewed as a business method, the claim to the machine is considered non-statutory.
Regarding the "technological" requirement, the Board held that "subject matter that is not technological is not statutory subject matter, and cannot fit under one of the categories of invention". Again, this proposition is tied in with the "form and substance" approach: "the substance of the claimed invention … must not be directed towards … non-technological subject matter."
Applying this new analytical approach, the Board characterized the substance of the invention by stating that "what has actually been discovered … is limited to streamlining the traditional online ordering method, and the benefits and advantages that flow from it. In other words, the essence of the claimed invention is the particular rules for carrying out an online order."
With respect to method claims 1 to 43 and 51 to 75, the Board concluded that these claims did not qualify as an "art" or "process" within the definition of "invention" because they did not satisfy a definition of "art" found in a 1970 Exchequer Court decision, which purported to require a change in the character or condition of a physical object.
With respect to system claims 44 through 50, the Board acknowledged that the form of these claims was directed to a "machine," which is one of the categories of statutory subject matter within the definition of "invention." However, the Board nevertheless held that the substance of these claims is the same as that of the method claims and concluded that the machine claims were not statutory subject matter because the substance of the invention failed to fall within the separate categories of "art" or "process."
Despite having ruled all 75 claims, including the machine claims, to be non-statutory because they did not constitute an "art," the Board proceeded to address the further questions of excluded subject matter and non-technological subject matter.
Reiterating its view that business methods are unpatentable per se, the Board held that all 75 claims are directed to excluded subject matter, including the machine claims, on the ground that the substance of the invention was a business method.
Furthermore, although the Board acknowledged that the claimed invention did involve some technical or technological aspects, such as the technological capability of a cookie, this was not sufficient for patentability because that technological aspect was known from the prior art. Again, tying this new technological requirement in with the form-and-substance approach, only the features that are novel and non-obvious over the prior art, constituting the substance of the invention, can be relied upon to qualify as statutory subject matter. The Board viewed the technological features as known and viewed the novel and non-obvious features as non-technological. Therefore, the Board concluded that all 75 claims were also excluded from patentability because "the substance of the claimed invention is not technological in nature."
Commentary. On the issue of obviousness, the newly composed Board was correct in rejecting the Examiners' submissions that "non-technical" features of the claim should be disregarded in assessing obviousness. Although such a dissection or distillation of the claim may be permissible in Europe, it is clearly not permissible in Canada. Canadian jurisprudence has always adopted a claim-as-a-whole approach to obviousness, and it is well-established that inventiveness need not lie in the technical means of implementation of an invention — it is sufficient for inventiveness to be found in the underlying idea. Moreover, at least in respect of patents and applications filed on or after October 1, 1989, obviousness is codified in section 28.3 of the Patent Act, which merely requires "the subject matter defined by a claim" to be non-obvious; there is clearly no additional requirement that inventiveness be found in a subset of features of the claim that are deemed "technical" as opposed to "non-technical."
However, it is difficult to understand how the Board's new approach to statutory subject matter could be reconciled with Canadian law. Section 27(4) of the Patent Act states that the claim or claims define, distinctly and in explicit terms, the subject matter of the invention. In contrast, the "substance" of the invention is clearly something less than the subject matter that is defined distinctly and in explicit terms by the claim in question. Therefore, to treat the "invention" for the purpose of section 2 as merely the "substance" of the invention contravenes section 27(4). It is also clear from section 2 of the Patent Act that a claimed invention is not required to fall within more than one of the statutory categories of "art, process, machine, manufacture or composition of matter," yet the form-and-substance approach resulted in the rejection of claims that clearly fell within the category of "machine" because the Board felt that they failed to satisfy the additional requirements of a second category, "art." The form-and-substance approach is also inconsistent with numerous Canadian Court decisions on statutory subject matter and claim construction. Regarding excluded subject matter and the proposition that business methods are not patentable, the UK and European authorities relied upon are irrelevant in Canada because those authorities are based upon express statutory exclusions of business methods found in section 1(2)(c) of the UK Patents Act, 1977 and Article 52(2)(c) of the European Patent Convention. In contrast, the Canadian Patent Act does not contain any such express statutory exclusion of business methods from patentability. The sole Canadian judicial authority cited for the exclusion of business methods was a dissenting opinion, which is clearly not a source of "law" that the Commissioner would be permitted to rely upon to reject an application under section 40 of the Patent Act. The Board's view regarding business methods also contradicts section 12.04.04 of the Manual of Patent Office Practice, in which CIPO — after years of careful consideration — adopted the official position that "'business methods' refers to a broad category of subject matter which often relates to financial, marketing and other commercial activities. These methods are not automatically excluded from patentability, since there is no authority in the Patent Act or Rules or in the jurisprudence to sanction or preclude patentability based on their inclusion in this category." The purported exclusion of non-technological subject matter was similarly based on foreign decisions under foreign statutes that bear no similarity to the Canadian Patent Act in respect of statutory subject matter.
Amazon.com now faces a September 4, 2009 deadline to appeal this decision to the Federal Court of Canada. Such an appeal would enable our courts to provide helpful guidance on this issue.
In the meantime, CIPO has recently released new draft chapters 12 and 13 of the Manual of Patent Office Practice to solicit public comments. Draft chapters 12 and 13 outline a new examination framework, including a new approach to statutory subject matter that closely resembles the Board's approach in the Amazon.com decision, albeit with greater complexity. The deadline for submission of comments to CIPO has been extended to September 16, 2009. Canadian practitioners and other interested parties are encouraged to submit their comments to CIPO either directly or through professional organizations and associations.
Stephen J. Ferance, Vancouver
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