Two Clicks Forward, One Click Back? In The Latest Instalment In The Amazon.com Saga, The Federal Court of Appeal Establishes That Statutory Subject Matter Is To Be Assessed By Purposive Claim Construction. However, This Is Not The Final Chapter

Published November 29th, 2011

Attorney General of Canada et al. v. Amazon.com, Inc.  (2011 FCA 328)

After much anticipation, on November 24, 2011 the Canadian Federal Court of Appeal (FCA) delivered its decision regarding the patentability of Amazon.com’s (Amazon) “one-click” online shopping system and method. 

The FCA’s decision was the result of an appeal by the Commissioner of Patents (the Commissioner) of a Federal Court (FC) decision in favour of patentability (see Amazon.com, Inc. v. Canada (Attorney General), 2010 FC 1011), which itself had stemmed from Amazon’s appeal of the Commissioner’s refusal to grant a patent.

The FCA largely affirmed the FC’s decision, and also established a clear approach for how subject matter of a patent application is to be assessed for compliance with Section 2 of the Patent Act.  The FCA’s decision, while broadly applicable, is of particular significance to Applicants seeking patents directed to business methods or to computer-based methods. 

Amazon’s “one-click” system and method simplifies the online shopping process by storing a client identifier, known as a cookie, on the Internet user’s computer.  The user can subsequently purchase items with a single mouse click while still being immediately recognized by the server for security and payment purposes.  The “one-click” business model thus removes the need for the user to enter such information repeatedly.

In its decision, the FCA established an analytical framework, grounded in the statutory provisions of the Patent Act, for determining what constitutes patentable subject matter.  Importantly, the FCA held that it is the “subject matter defined by the claim”, and not the “invention” or “what the inventor claims to have invented”, that must be assessed for compliance with Section 2.

In establishing the analytical framework, the FCA also relied on the jurisprudence established by the Supreme Court of Canada in Free World Trust v. ElectroSante (2000 SCC 66) and Whirlpool Corp. v. Camco Inc. (2000 SCC 67).  In particular, the subject matter defined by the claim is to be assessed on the basis of a purposive construction, rather than on the basis of either a literal interpretation of the claim or the “substance of the invention”, as had been argued by the Commissioner.  The FCA stated that its analytical framework is fully consistent with the findings of pivotal Canadian jurisprudence pertaining to patentability of subject matter, namely Canada v. Farbewerke Hoechst (1964 SCR 49), Schlumberger Canada Ltd. v. Canada (1982 1 FC 845 CA) and Shell Oil Co. of Canada v. Canada (1982 2 SCR 536).

For clarity, the FCA stated that a two-step claim analysis proposed by the Commissioner, which required the claims to be assessed in “form” and in “substance” and which allowed a claim to be rejected on either ground, is not consistent with this analytical framework, nor is any approach requiring a determination of “the actual invention” prior to performing claim construction.

The FCA cautioned the Commissioner against the use of generalized tests derived from jurisprudence, and stated that the focus for analysis should remain on the principles established in the jurisprudence, not a paraphrasing of these principles.

The FCA also generally agreed with the FC that a “scientific or technological in nature” requirement for a claimed “art” as set out in Section 2 is vague and should not be used as a stand-alone basis for assessing the patentability of subject matter.  Furthermore, the FCA agreed with the FC that business methods may be patentable in Canada provided that the statutory provisions are otherwise complied with.  However, regarding the Commissioner’s test for whether subject matter must “cause a change in the character or condition of a physical object”, the FCA clarified that such a “physicality requirement” cannot be satisfied merely by the fact that the claimed invention has a practical application.  Rather, the “physicality requirement” is to be determined upon purposive construction.

The FCA overturned the FC’s order to the Commissioner to allow Amazon’s application, because the FCA noted that the FC had actually construed the claims literally, rather than purposively as required.  Instead, the FCA ordered the case back to the Commissioner for an expedited re-examination on the basis of a purposive construction of the subject matter defined by the claims.

It remains to be seen whether this latest decision by the FCA will be appealed to the Supreme Court of Canada.  Whether or not such a further appeal proceeds, Amazon’s patent application will eventually be returned to the Commissioner for further examination.  At that stage, it will be possible for the Commissioner to find reason to reject the application, even if the claims are construed purposively.  Thus, while the requirement for an examiner to construe claims purposively is a positive development for Applicants in general, for those applying for business method or computer application patents there will remain a level of uncertainty for a time: the Commissioner’s application of a test for statutory subject matter in these fields may raise more questions than it answers.

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