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PAGE 8 NEW An online resource tool 1.800.263.3269 Bestcase earlug.indd 1 3/26/08 11:52:01 AM Focus On INTELLECTUAL PROPERTY/TRADEMARK LAW Amazon appeals adverse ruling Lawyers shocked as patent board makes definitive statement BY JULIUS MELNITZER For Law Times n March 2009, the Patent Appeal Board shocked the intellectual property commu- nity with a definitive statement against the patentability of busi- ness method patents in Canada. The pronouncement came in a lengthy decision that rejected a patent application by Amazon. com, Inc. for a "one-click" shop- ping system, a ruling the com- pany is now appealing. "This is the first time we have a Canadian decision categorical- ly stating that [business method patents] are not patentable in Canada," says Chris Van Barr of Gowling Lafleur Henderson LLP. "As well, the board states that previous decisions allowing [them] are wrong." But Peter Wells of Lang Mi- chener LLP says the board may have taken such a categorical ap- proach with an appeal in mind. "I believe the board antici- pated that this case would go to the Federal Court, which has never ruled on [business method patents], and therefore decided to put the issue squarely I in its reasons," he says. The case arose after a U.S. patent for the one-click feature was issued in 1998. Still, the Canadian Intellectual Property Office rejected the application in 2004. Amazon then ap- pealed to the board. Despite finding that the one- click innovation was both new and non-obvious, the board ruled the claims advanced were not patentable under the Patent Act because they did not define a technological ad- vance that was either a physi- cal object or an act performed "by some physical agent upon some physical object and pro- ducing in such object some change either of character or condition." From all appearances, the U.S. Court of Appeals' October 2008 decision in Bilski v. Doll, which limited the patentability of busi- ness method patents, made a sig- nificant impression on the board. The board cited Bilski for the proposition that a process was eli- gible for patent protection only if it was tied to a particular machine or if it transformed a particular article into a different state. Peter Wells believes the board may have had an appeal in mind in making its ruling. Arguably, however, the board ventured not only beyond Bil- ski but also beyond the United Kingdom and the European Union's conservative positions on patentability. "The [appeal board's] reasons can be interpreted not only as holding that inventions must have a physical form but also that the machine must be at the heart of the invention," says Edward Fan of Torys LLP. "That would take out not just pure [business method patents] but also imple- mented technologies that affect business dealings." In the Amazon case, for ex- ample, the board acknowledged that the company's novel use of cookies to facilitate the one- click system was a technological claim. The claim failed, how- ever, because it was directed to business method patents, which the board regarded as "non-pat- entable subject matter" under the Patent Act. "What the board is saying, then, is that a new use for an old invention, which is tradition- ally patentable, is not patentable when the new use is a business method use," Van Barr explains. The ruling represents a signifi- cant departure for Canadian law. "In the past, we've always danced between the extremes of U.S. law, which favoured [busi- ness method patents], and Euro- pean Union and U.K. law, which prohibited them," Van Barr says. While the appeal board's Good enough is never good enough That's the attitude we bring to every matter – because the difference between winning and losing is oſten as simple as which side went the extra mile. Our winning track record and reputation as one of Canada's ip litigation "go-to" firms is based on this dedication to detail. That's why in our experience, when you want results, "good enough" is never good enough. decision binds only the appli- cation in question, it may very well signal a shift in the intel- lectual property office's posi- tion on business method pat- ents. Previously, they had been making headway in Canada, although authorities had been treating them more restrictive- ly than the United States had before Bilski. The current version of the in- tellectual property office's Manu- al of Patent Office Practice makes it clear that business method patents are not automatically excluded as patentable subject matter. But a new version, pres- ently being circulated for com- ment, does not mention them at all regarding patentability. "Instead, the new version talks vaguely about computers and software inventions," says Brian Gray of Ogilvy Renault LLP. Practitioners are hopeful that Dimock Stratton llp experience. results. Untitled-2 1 20 Queen W. 32nd fl, Toronto | 416.971.7202 | dimock.com www.lawtimesnews.com 9/15/09 9:28:31 AM greater clarity about both the Canadian and U.S. positions will emerge soon. The U.S. Supreme Court, for example, has granted certiorari in Bilski. "The real question is whether the technological component test is too restrictive," Wells says. "Many of the amicus briefs filed in Bilski take the approach that some restrictions are necessary, but care must be had not to make the law too restrictive." Although the wording in Can- ada's Patent Act on what is patent- able is similar to that of American legislation, the U.S. high court has been more expansive in its in- terpretation of patentability than its Canadian counterpart. For example, Canada's Su- preme Court famously refused patents on higher life forms in its 2002 decision in Harvard College v. Canada (Commissioner of Patents). The ruling came de- spite the fact that the patent in question, for Harvard Univer- sity's Oncomouse, had received approval in the United States, Europe, Japan, and Australia. "Just as patenting higher life forms would involve a radical de- parture from the traditional pat- ent regime, the patenting of busi- ness methods would also involve a radical departure and a highly contentious matter that raises a number of extremely complex is- sues," Gray says. But Fan says there's an impor- tant difference. "The ethical questions are very different when you're talk- ing higher life forms than when you're talking about more eco- nomical methods of working," he says. Still, Alexandra Daoud of Ogilvy Renault cautions that the Amazon case may indeed have a direct impact on other types of patents. Writing in a recent firm bulletin, Daoud focuses on the board's interpre- tation of what amounts to "ex- cluded subject matter" under the Patent Act. "The interpretation of 'ex- cluded subject matter' may have an impact on Bio-IT patents in Canada," she wrote. "With the development of new approaches and modern techniques, new ho- rizons are opening up for biotech- nology industries. Many of the innovations in the field of Bio-IT, while relating to more traditional aspects of science such as genet- ics, microbiology, and molecular biology, involve computers and software to improve the quality of products and increase the pro- ductivity of systems." Daoud posits that bioinfor- matics, which uses computer techniques to organize and analyze biological data, is at risk of "being classified as excluded subject matter." A similar fate may await phar- macogenomics, which uses com- puters to study the impact of ge- netics on responses to drugs; and genetic testing where scientists use software to interpret data. "In each of these fields, it will be important to thoroughly dis- close and claim tangible machine aspects of innovations," Daoud wrote. "For example, input, out- put, and control functions per- formed by processors should be emphasized and claimed." LT September 21, 2009 • Law timeS

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