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Canadian Patent Appeal Board Rules Against Business Method Patents

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Friday June 05, 2009
Catching up from a column last week (Toronto Star version, homepage version), the Canadian Patent Appeal Board recently denied an appeal by Amazon.com over a "one-click" ordering system patent with strong language that challenged the notion that business method patents are patentable under Canadian law.  Business method patents took off in the U.S. in 1998, when the U.S. Court of Appeals for the Federal Circuit (one notch below the U.S. Supreme Court) ruled that patents could be awarded for business methods in a case called State Street Bank v. Signature Financial Corp.

In the aftermath of the State Street Bank decision, companies rushed to file patent claims for a wide range of business practices.  Amazon.com became the most visible business method patentee with its one-click patent for a service that allows repeat visitors to move directly to the virtual checkout with one click (completing payment and shipping information in the process). The Canadian experience with the Amazon.com one-click business method patent has been much different.  The Canadian Patent Office rejected the application in 2004 based on obviousness and non-statutory subject matter.  Amazon.com appealed to the Canadian Patent Appeal Board.

At first blush, the CPAB could have relied on the Manual of Patent Office Practice to support Amazon.com’s claim for a business method patent.  The 2005 Manual provides that "[business] 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."

Yet the panel delivered very strong language rejecting the mere possibility of business method patents under Canadian law.  The panel noted that "since patenting business methods would involve a radical departure from the traditional patent regime, and since the patentability of such methods is a highly contentious matter, clear and unequivocal legislation is required for business methods to be patentable."

In applying that analysis to the Amazon.com one-click patent, the panel concluded that "concepts or rules for the more efficient conduct of online ordering, are methods of doing business. Even if these concepts or rules are novel, ingenious and useful, they are still unpatentable because they are business methods."

The CPAB decision is not necessarily the end of the road for the one-click patent since Amazon.com has the option of appealing to the Federal Court. However, the decision provides a strong signal that the business method patents face a rough ride under current Canadian law.
Comments (16)add comment

Paul said:

Good Work
I'm very happy with the CPAB decision. The last thing this country needs is to follow more US policy that is anti-competitive and anti-innovation.
June 05, 2009

David said:

As much as I love Amazon.
I agree that, business methods shouldn't be patentable.
June 05, 2009

Maynard G. Krebs said:

Just say No
Business methods patents and software patents are the most bogus invention of the legal community. They have no place in patent law.

I seen far too many instances of patent examiners who have no conception of what 'prior art' is or what an 'obvious extension' to prior art may be.
June 05, 2009

fair_n_hite_451 said:

As they will say when this comes up on slashdot "suddenoutbreakofcommonsense"
June 05, 2009

Ryan Standeven said:

well done
there's no place for business methods patents here. Good choice CPAB :)
June 05, 2009

Robert Lavigne said:

Finally some common sense
I think this part summed up the decision the best "based on obviousness and non-statutory subject matter". Next thing you will want to patent common sense.

June 07, 2009

thomastvivlarenDOTse said:

Just wanted to inform you...
...that the Swedish Pirate Party got 2 seats in the European Parliament! We made it!

Keep up the good work fighting the good fight!

Cheers and a big AAAR from Stockholm, Sweden! :)
June 07, 2009

Bob said:

Bad Decision
The CPAB decision is a bad one. A few senior examiners (the patent appeal board) basically took it upon themselves to make a policy decision that has larger implications than they realized. Other countries, such as Australia, have had open policy discussions led by their patent offices. Upon reading the decision, I do not have confidence that the examiners on the board correctly applied the law. For example, they reference the comments of a dissenting judge (instead of the majority, which is what forms the law) to justify their position that business methods aren't patentable. Look at the Amazon claim. It is not stopping people using one-click. It is directed to a specific system that implements this function. Why can't they exclude competitors from implementing such a system on their website? If one-click is common sense, why wasn't it done before Amazon?
June 09, 2009

Vaudevillian said:

It was done before Amazon.

What Amazon was proposing is the same kind of proposition as: I go to the patent office and patent the method for making babies, the way humans naturally do.

Just because I attempted to patent it first means nothing at all.
June 09, 2009

Chris said:

It was done before
Hey bob it was done before and it's called cookies. They are used to identify people from previous sessions. They tied it into payments or billing accounts. BIG DEAL. It's been done before it's called CREDIT CARD and before that BILLING ACCOUNT. They tied COOKIES to a BILLING ACCOUNT.
June 10, 2009

Matt Kantor said:

You cant say that..
...I have a patent on "method and operations to discuss not having patents on business methods." Please cease all communications forthwith.
June 10, 2009

Reed Solomon said:

Some ideas
I am disgusted at the anti-business attitude our patent office has chosen to take. They haven't gone far enough. They should allow major corporations like DuPont to patent molecules. DiHydrogen Monoxide is still freely available in much of this great country of ours, it is a useful but highly dangerous chemical used in the generation of electricity, as a growth suppliment in farming, and can even be sold as a beverage, and we have a great opportunity to capitalise on this, but unless we allow major business to own the molecule outright, whose to say others wont synthesise this dangerous chemical without paying us a royalty?

Frankly, the notion that we allow people to type online without paying a communications tax is equally worrisome. The television industry is dying. DYING in this country. They can barely afford the billions it costs to purchase american products and keep hulu offline in this country. Where will we get our prepackaged corporate news releases and advertisements disguised as news and canadian content without such a tax? We are being held hostage by our lacklustre IP strategy. Thank GOD our cable and telephone companies at least are still able to charge us as much as they do or this country would grind to a halt.

Also there should be an irony license. People shouldn't be allowed to make ironic statements without having such a license. It should be granted by a new government agency and ideally a secret irony police force should be created to oversee it. Frankly, irony is a dangerous thing and only those practiced and licensed in its proper use should be allowed to express it.
June 10, 2009

Charlie CL said:

I agree to this decision. The "one-click" like patent is a virus to patent system. US patent system had gone too far away. US Patent system makes more jobs for lawyers instead of manufacturers.
June 11, 2009

Jeffery said:

Common Sense
"Next thing you will want to patent common sense."
I'm pretty sure there already is a patent for that in the US. :P This is at least a step in the right direction for Canada.
@PP Guy: Arrrr to you too!!
June 16, 2009

Q said:

Do you know what you are talking about?
Can anyone of you, rejoiced by the CPBA decision, explain what is a business method patent?

Did any of you have the slightest idea on how claims read in this patent and how such claims would be interpreted if they were held valid? What really differentiate the instant claims from a "usual" method claim?

The answer to this title is: NO, you don't know what you are talking about...
June 18, 2009

An American in BC said:

Yay Canada!
Once again, look to Canada and the rest of the world to do the right thing.
June 18, 2009

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