The Canadian Patent Appeal Board recently rejected Amazon.com Inc.’s patent application relating to its “one-click” online order-processing method. The decision provides guidance as to how the Patent Office views the scope of the term “invention” as provided in Section 2 of the Patent Act.

To provide some history: Amazon filed a Canadian patent application in 1998 for its single-action orderprocessing method. The application described a method and system that allows customers to complete an order over the Internet with only one click of their mouse. A unique identifier is stored on the customer’s computer, which is associated with customer-specific account information already stored on the vendor’s servers from a previous visit. When the customer clicks on the button to purchase an item, the vendor’s servers receive the request, retrieve the customer’s account information using the identifier, and combine the retrieved information to generate the order. This way, the customer avoids having to re-enter information for additional orders and can skip some of the usual steps in the checkout process.

In completing the prosecution phase, in 2004, the Patent Office Examiner rejected all claims of the application for being obvious and for not falling within the requirements of an “invention” as defined in Section 2 of the Patent Act.

On appeal of the Examiner’s final rejection to the Patent Appeal Board, the Board found that the claims were not obvious, but affirmed that the claims did not fall within the definition of an “invention.” As such, the Board determined that the order-processing system could not be patented.

A key point in the Board’s analysis was the tests it applied to assess whether the claims of an application are an “invention.” The Board considered the form and substance of the claims and applied three legal conditions:

  1. The subject matter of the claim needs to fit the definition of “invention” of Section 2 (namely it must fall within one of the defined categories of invention: art, process, machine, manufacture or composition of matter).  
  2. The subject matter could not be excluded subject matter.  
  3. The subject matter must be “technological.”  

Regarding form, the Board found that some claims of Amazon’s application were business method claims, while the others were machine claims. The Board considered Canadian and foreign jurisprudence and found that “business method” claims do not fall within the subject matter of an “invention” ? so are not patentable in Canada. As such, the Board determined that the application’s business method claims were not an “invention,” while the machine claims passed this first condition.  

However, when considering the substance of the claims, the Board found none of the claims were an “invention.” In its lengthy analysis, the Board found that all claims were the same in substance, namely a set of rules for executing an online order. In assessing the substance of the claims, the Board indicated that a claim could not be an “invention” if it did not provide any technological innovation. The Board found that the claims did not present any technological innovation, and affirmed the Examiner’s rejection of the claims on that basis.  

As such, all claims of Amazon’s “one-click” patent are currently rejected. The decision of the Board may be appealed to the Federal Court.

McCarthy Tétrault Notes:

This decision is noteworthy because the Board’s stance on business method patents is likely a reflection of current internal views of the Patent Office on such patent applications.

The reasoning appears to regress from statements in the current CIPO Manual of Patent Office Practice. The Manual currently states 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 based on their inclusion in this category.” The Canadian Intellectual Property Office (CIPO) may be revising this section in an updated Manual.

It has been generally regarded that Canadian jurisprudence does not expressly exclude business methods from being an “invention.” Notably, the decisions in Shell Oil, Progressive Games and Calgon Carbon appear to provide a broad interpretation on the statutory term “art,” which arguably capture new and useful business methods so long as they have a practical application and are commercially useful.

The decision establishes a new and lower watermark for how business method patents will likely be treated by the Patent Office in Canada. If the Board’s decision is appealed to the Federal Court, judicial guidance as to the correctness and boundaries of this decision will likely be provided.