The Amazon 1-Click case has been a rallying point in the debate over the patentability of software and business method patents in the United States for years. Litigation between, Inc. and its rival resulted in a settlement in 2002, and an ex parte reexamination lasted four years before the U.S. patent was finally upheld in 2010. The 1-Click case has recently raised a similar debate in Canada that has pitted the Patent Office against the Federal Court in a fight with the potential to radically reshape the landscape on patentable subject matter.

The 1-Click patent application (the ‘933 Application) describes purchasing items over the Internet using a single-action (e.g. clicking a mouse button) by transmitting a client identifier associated with information about the buyer, and which may be stored in a “cookie.” It initially appeared that the ‘933 Application would be allowed since, as of 2005, the relevant chapters of the Manual of Patent Office Practice (MOPOP) related to patentable subject matter were open to the patentability of software and business methods.

However, despite favourable language in the MOPOP, the ‘933 Application was rejected by the patent Examiner as being directed to unpatentable subject matter. This rejection was appealed to the Patent Appeal Board (PAB), which finally released its decision in 2009.

The PAB agreed with the Examiner and upheld the rejection that the claims of the ‘933 Application were directed to non-statutory subject matter. The PAB took a very hard line and stated matter-of-factly that business methods are not patentable in Canada. The PAB also concluded that all claims of the ‘933 Application were rules for carrying out an online order, and were therefore unpatentable since they did not change the character or condition of any physical object. According to the Board, the invention claimed in the ‘933 Application was nothing more than a “method of doing business,” and moreover was not technological, and therefore was unpatentable.

The PAB decision conflicted greatly with the 2005 version of the MOPOP. This inconsistency was addressed by radically rewriting MOPOP, and by the end of 2009, new chapters on patentable subject matter and examination were in force. These revised chapters incorporated the language of the PAB 1-Click decision and completely flip-flopped on the question of the patentability of software and business methods. A narrow definition of “computer-implemented invention” was also added, making it clear that, according to the Patent Office, a “technological solution to a technological problem” was required in order for a computerized invention to be patentable.

Amazon appealed and in October 2010, the Federal Court released a harshly worded decision overturning the PAB and chastising virtually every one of its holdings. The Court made it very clear that software and business methods could be patentable subject matter in Canada using a tone that was unbelievably strong: “the Commissioner’s conclusions [on the question of ‘form and substance’] are not supported by Canadian law.” The Court also stated that a “technological requirement” is not a part of Canadian patent law, and moreover that the Commissioner had absolutely no authority to introduce such a requirement.

The Commissioner of Patents appealed. Recently, the Canadian Life and Health Insurance Association Inc. (CLHIA) and the Canadian Bankers Association (CBA) – two organizations that have been actively lobbying against business methods – have been granted leave to intervene in the appeal, which will be heard in Toronto on June 21, 2011.

In an interesting twist, the current Commissioner of Patents, Mary Carman, was replaced on April 15, 2011, by Sylvain Laporte. Some speculate this may signal a shift in Patent Office policy (including the Office’s approach to patentable subject matter), but only time will tell.

In the meantime, patent applications continue to be filed and prosecuted and Canadian patent agents work and develop new strategies and techniques for obtaining broad patent protection. While challenging, progress continues to be made and sophisticated applicants should consider speaking with experienced Canadian patent agents to seek advice on how to successfully obtain protection for their software and business method innovations in Canada.