Canada’s Intellectual Property Law Firm

Canada's Federal Court of Appeal affirms that business methods may be patentable

In a decision released November 24, 2011, Canada's Federal Court of Appeal (FCA) held that the Patent Office should be "open to the possibility that a novel business method may be an essential element of a valid patent claim."

In the decision (A-G of Canada v. Amazon.com, 2011 FCA 328), the Court agreed with an earlier decision of the Trial Judge that the framework for analysis of the Patent Office in rejecting Amazon.com's one-click ordering process as non-statutory subject-matter was deficient. The FCA held that a determination of whether or not an invention constitutes statutory subject matter must be based on a purposive construction of the claims. The Court referred the matter back to the Patent Office to undertake a purposive construction of the claims as the Court considered it was not in a position to construe the claims since it did not have the benefit of expert testimony.

Section 2 of Canada's Patent Act defines an invention as including any new and useful art or process. Section 27(8) states that no patent shall be granted for any mere scientific principle or abstract theorem. The Court stated that earlier decisions of the Supreme Court of Canada required identification of the invention to be grounded in a purposive construction of the patent claims.

The Court noted the Patent Office had refused Amazon's application on the basis that the invention failed three tests the Office considered were implicit in the meaning of "art" in section 2 of the Patent Act: (1) it does not add to human knowledge anything that is technological in nature; (2) it is merely a business method and a business method is not patentable; and (3) it does not cause a change in the character or condition of a physical object. The Court then stated "[i]n my respectful view, the [Patent Office] should be wary of devising or relying on tests of [this] kind... The focus should remain on the principles to be derived from the jurisprudence. Catch phrases, tag words and generalizations can take on a life of their own, diverting attention away from the governing principles."

Specifically with regard to business methods, the Court noted that "no Canadian jurisprudence determines conclusively that a business method cannot be patentable subject matter." Moreover, the Court stated that "[i]n my view the task of purposive construction of the claims in this case should be undertaken anew... with a mind open to the possibility that a novel business method may be an essential element of a valid patent claim."

The Court stated that anyone who undertakes a purposive construction of a patent must do so on the basis of a foundation of knowledge about the relevant art. Courts generally require the expert evidence of persons skilled in the art to undertake this and the Court did not have the benefit of expert evidence. On the other hand, the Patent Office could undertake this task with the assistance of submissions of the patent applicant and from staff at the Office with the appropriate experience. Accordingly, the Court allowed the appeal and referred the matter back to the Patent Office to undertake this analysis.

John R. Morrissey, Steven B. Garland and Colin B. Ingram of Smart & Biggar represented Amazon.com on the appeal.

 

The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.