The Canadian Federal Court of Appeal (FCA) has rendered its decision in the Attorney General’s appeal from an earlier Federal Court decision in favour of and its “1-Click” patent application. In a qualified ruling, the FCA ordered that Amazon’s patent application undergo further examination by the Canadian Patent Office (CIPO).

The “1-Click” application was initially refused by CIPO on several grounds relating to non-statutory subject matter. In an appeal to the Federal Court, Amazon was the clear victor. Virtually every aspect of CIPO’s refusal was criticized by Justice Phelan.

The three-judge panel of the Federal Court of Appeal was more circumspect in this week’s decision.

The panel found that the lower court decision was correct in respect of the law, and that its explanation of the test for patentable subject matter was correct. In particular, the FCA confirmed that patent claims are to be subjected to a “purposive construction.” As did the lower court, the FCA rejected the Commissioner’s argument for a determination of the “actual invention” independent of the invention as claimed. CIPO’s “technological” and “change in physical character or condition of a physical object” tests were similarly rejected.

However, the FCA ruled that the lower court had overreached in attempting to make its own purposive construction of the claims. In the Court’s view, there was insufficient evidence before it to determine whether the claims constitute patentable subject matter. Accordingly, the FCA replaced the lower court's judgment to allow Amazon’s patent application with one that allows Amazon's appeal, but directs CIPO to re-examine the 1-Click application on an expedited basis in accordance with the Court's reasons.

If CIPO re-examines the Amazon application, it will be interesting to see how the Amazon claims are analyzed under the “purposive construction” standard. In a bit of curious timing, CIPO recently released examiner guidelines for evaluating patentable subject matter which purport to comply with the decision of the lower court. However, the guidelines are seen by some as simply a cosmetic attempt by CIPO to remove certain words and phrases explicitly rejected by the Federal Court while leaving CIPO’s substantive approach to evaluating patentable subject matter unchanged.

It remains to be seen whether the Amazon application will be re-examined at all, as there are indications that a further appeal to the Supreme Court of Canada is likely.

The Court’s decision represents mixed news for those seeking patent protection for software and business methods. There are now two judicial decisions rejecting the strict “technological” tests advocated by the Commissioner and indicating that patent claims should be given a “purposive construction” according to existing law. But the actual boundaries of what constitutes patentable subject matter still remain uncertain.