Business method as essential element of valid patent claim: Amazon one-click decision, a Canadian prosecution perspective

25 November 2011

On November 24, 2011, the Canadian Federal Court of Appeal released a vital decision quashing the Commissioner of Patents’ stated “tradition” of excluding business methods from patentability. In the appeal of Commissioner of Patents v. Amazon.com Inc., the Court kept the door open to the patentability of business method patents in Canada, but refrained from ruling on whether the “one-click” patent at issue was patentable.  The Court sent the matter back to the Commissioner to expedite further examination of Amazon’s patent application based on the Court’s reasoning.

The Court confirmed there is no conclusive Canadian jurisprudence dictating that a business method cannot be patentable subject matter. The Court also ruled that identification of the actual invention must be grounded in a purposive construction of the patent claims, in accordance with Free World Trust and Whirlpool cases, and therefore the Commissioner’s adoption of a separate “form” and “substance” analysis of the invention represented an impermissible attempt to follow a discredited analytical approach.

Given that the door to Canadian business method patents is open, companies need to proactively consider the role business methods play in their technology in order to take advantage of this decision. However, careful attention must be paid to the form and content of how technology related to business methods is described and claimed in Canadian patent applications.

The Court’s reasoning provides guidance on what aspects of a business method may be emphasized in a patent application in order to best position the methodology as patentable subject matter. For example, a business method runs the risk of being deemed an abstract idea or theorem, and therefore non-patentable, in the absence of proper practical application. In particular, it is inadvisable to rely solely upon the presence of a computer program to implement the methodology, however useful, in order to provide the necessary practical application. Instead, one may consider the methodology “not as a disembodied idea but [having] a method of practical application” and therefore “not the whole invention but only one of a number of essential elements in a novel combination.” Accordingly, aspects on how the methodology affects or otherwise interacts with its environment need to be considered as well, including leveraging of methodology advantages though implementation. 

The Court also reasoned that in order for a methodology to be deemed patentable subject matter, the practical application needs to be accompanied by something with “physical existence” or otherwise “manifests a discernable effect or change.” The Court stated that this physical existence may not be satisfied by the mere presence of a computer as an essential element of the patent claims. In particular, consideration needs to be given to operation of the computer in conjunction with the methodology and “the manner in which computers are used to put an abstract idea to use.”

Another consideration for business methods is that a Canadian patent application seeking protection for a deemed professional skill (e.g., those personal skills reflecting learned behaviour that can be improved with practice and refinement through personal experience), business method or not, runs a significant risk of being rejected by the patent office. The professional skill distinction can provide important ramifications on the patentability of a company’s business method, including third-party patent applications. In seeking patent protection for a business method in Canada, careful attention must also be paid to the form and content of the patent application in order to avoid it being deemed a professional skill. Further, where a company is investigating the relevancy of a competitor’s patent application, consideration can be given to professional skill as part of a valid defence strategy.

While the final outcome of the Amazon patent application remains undecided, it is recognized that examination of pending patent applications will be affected by this decision and companies need to revise their patent strategy accordingly.


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