By: Alan Macek
A version of this article was published by LexisNexis in The Lawyers Weekly, 1 October 2010
Recent developments in both Canada and the United States have patent lawyers debating the patentability of business method patents. In Canada, practitioners are awaiting the decision from the Federal Court on the Amazon.com “one-click” patent application and dealing with the Canadian Patent Office’s new guidelines on computer implemented inventions. In the United States, the courts and the United States Patent Office are incorporating the Supreme Court’s ruling in Bilski v. Kappos that was released in June.
The courts and patent offices have struggled to provide an exact definition business method patents but they are generally understood to refer to patents that relate to methods of conducting business. The Canadian Patent Office has described business method patents as patents relating to commercial or human interactions or behaviours.
The U.S. Supreme Court in Bilski v. Kappos approved the “machine-or-transformation” test as a useful tool, although not an exclusive test, for determining whether an invention was patentable. The court split on a variety of issues with only a minority of the judges rejecting the patentability of business method patents altogether. The court unanimously rejected the specific invention at issue, a claim to a method of hedging risks for commodities in the energy market, as being an abstract idea.
Since the June decision of the U.S. Supreme Court, several lower courts have considered or will soon consider Bilski v. Kappos in their rulings on the patentability of business methods and other process patent applications. The United States Patent Office has issued guidelines to patent office examiners on how to apply the Supreme Court’s reasoning to pending applications.
In Canada, the Patent Appeal Board, an appeals panel within the Canadian Intellectual Property Office, rejected Amazon.com’s “one-click” patent application in April 2009, providing a lengthy decision that stated, “[a] claimed invention which in form or in substance amounts to a business method is excluded from patentability.” In the decision, Re: Amazon.com, No. 1290, the panel looked to the substance of the invention to determine whether the invention was technological in nature. The panel held that Amazon.com’s claim to performing online purchases with a single mouse click was “limited to streamlining the traditional online ordering method” and therefore not patentable.
To many practitioners, the reasoning and Patent Appeal Board’s position on business methods was a shift from the Canadian patent office’s previous position and the law on patentable subject matter from prior court rulings.
Amazon.com has since appealed the decision to Canada’s Federal Court and oral arguments were heard before Justice Michael Phelan in April of this year. A number of insurance companies and banks unsuccessfully sought to intervene in the appeal opposing the expansion of business method patents. As of the writing of this article, the decision on the appeal has yet to be released.
In parallel with the Amazon.com decision of the Patent Appeal Board, the Canadian Intellectual Property Office has amended the chapters on patentable subject matter and computer implemented inventions from its Manual of Patent Office Practice, its internal guidelines for patent examiners. The revised chapter on patentable subject matter makes reference to the Patent Appeal Board decision in Amazon.com and the “business method” exclusion. Some of the proposed interveners in the Amazon.com appeal had also provided submissions to the Patent Office during the consultations on the revised chapters.
During the consultation period on computer implemented inventions, the Canadian Patent Office received comments from IPIC, a professional association representing many of the patent agents in Canada, and FICPI, an international association of intellectual property lawyers. The organizations suggested that there was “no compelling reason” for changes to the guidelines and the proposed changes had “no proper basis in Canadian law”.
The Patent Appeal Board has released a further decision expanding on its earlier ruling in Re: Amazon.com on business methods. In Re: U-Haul International, No. 1298, released in January of this year, the Patent Appeal Board re-iterated that the substance of an invention must be technological in nature to be patentable in Canada. The panel also sought to ‘clarify’ its position on business methods stating that “In Amazon.com, the Commissioner stated that business methods are excluded from patentability. That is, when a claimed invention in form or in substance amounts to a scheme, plan or rules for the conduct of business, it is unpatentable. However, the mere fact that a process or machine is intended for use in some branch of business does not necessarily disentitle it to patent protection.”
As it currently stands, Canadian patent practitioners and inventors are waiting for the Federal Court to issue its judgment on the Amazon.com appeal. In the United States, the lower courts have issued several decisions referring to Bilski v. Kappos although it is still unclear if the Supreme Court’s ruling has expanded or narrowed the scope of patentability of business methods in the United States.