The premier weekly newspaper for the legal profession in Ontario
Issue link: https://digital.lawtimesnews.com/i/50202
Law Times • January 31, 2011 FOCUS PAGE 13 Will IP office revamp approach after Amazon? Revisions likely as Federal Court changes game on business-method patents BY JULIUS MELNITZER For Law Times I n March 2009, Canada's Patent Appeal Board shocked the intellectual property community with a definitive statement against the patentability of business-meth- od patents in Canada. The pronouncement came in a lengthy decision that re- jected Amazon.com Inc.'s pat- ent application for its so-called one-click shopping system. But in October 2010, Feder- al Court Justice Michael Phel- an allowed an appeal brought by Amazon's lawyers, John Morrissey, Steven Garland, and Colin Ingram, and overturned the appeal board's ruling. "The doors are now wide open for [business-method patents] in Canada," says Ed- ward Fan of Torys LLP. "The decision in Amazon.com Inc. versus the attorney general of Canada means that Canada's intellectual property regime now features what is probably the widest opening in the world for obtaining patents. Now is the time to get into it." The United States Patent and Trademark Office patented the one-click feature in 1998, but the Canadian Intellectual Property Office rejected its application in 2004. Amazon then challenged the decision at the appeal board. Despite finding that the one- click innovation was both new and non-obvious, the appeal board ruled the claims advanced weren't patentable under the Patent Act because they didn't define a technologi- cal advance that was either a physical object or an act performed "by some physi- cal agent upon some physical object and producing in such object some change either of character or condition." The decision was a double- edged sword. On the one hand, it meant the internal business systems of financial institutions, financial services firms, accounting firms, lo- gistics companies, and others weren't subject to attack by patent trolls. On the other hand, it meant companies couldn't protect their systems by patenting them. "The financial institutions are the ones with the most skin in the game," Fan says. As it turned out, the ap- as pure business methods. It also threatened the patent- ability of many innovations in the field of biomedical information technology that frequently use comput- ers and software to improve the quality of products and increase the productivity of systems; pharmacogenom- ics, which use computer techniques to organize and analyze biological data; and genetic testing, in which sci- entists use software to inter- pret data. But the Federal Court's de- cision has changed all of that. "The case encourages [re- 'The doors are now wide open' for business-method patents, says Edward Fan. peal board's ruling followed the U.S. Court of Appeals' Octo- ber 2008 decision in Bilski v. Doll that limited the patent- ability of business-method pat- ents. The appeal board cited Bilski for the proposition that a process was eligible for patent protection only if it was tied to a particular machine or it transformed a particular article into a different state. The appeal board's ruling, however, preceded the U.S. Su- preme Court's June 2010 deci- sion on the appeal in Bilski. The Supreme Court declined to exclude business methods or any other category of meth- ods from patent protection. Instead, it held the patent ap- plication to be ineligible on the narrow basis that it was an ab- stract idea. However that may be, the appeal board's decision ventured beyond not only the U.S. Court of Appeals' decision in Bilski but also Britain and the Euro- pean Union's conservative posi- tions on patentability. Indeed, the appeal board's reasons can be interpreted as holding that inventions must have a physi- cal form and that the machine must be at their heart. On this view, the ruling would have had an impact on the patentability of imple- mented technologies that af- fected business dealings as well NEWS • COMMENTARY • FOCUS SECTIONS • CASELAW When it comes to IP in Canada, We're Well Read Ridout & Maybee LLP: Editors of the Canadian Patent Reporter it all starts somewhere www.ridoutmaybee.com February 14 International/Cross-Border Law February 28 Labour & Employment Law March 7 March 14 March 21 March 28 April 4 Immigration Law Litigation Restructuring & Insolvency April 11 April 18 May 2 May 9 May 16 May 30 June 6 June 13 June 20 June 27 July 11 July 25 Energy Law/Environmental Law ADR/Mediation Class Actions IT/Telecommunications Personal Injury Law E-Discovery Running Your Practice Criminal Law Internet/E-Commerce Law Real Estate Law Family Law Municipal Planning Law Legal Specialists & Boutiques Forensics/Private Investigators • INFORMED • INTELLIGENT CONTENT • To advertise in an upcoming issue of Law Times, contact our sales team: Karen Lorimer karen.lorimer@thomsonreuters.com 905-713-4339 Kimberlee Pascoe kimberlee.pascoe@thomsonreuters.com 905-713-4342 Ridout_LT_Feb9-16_09.indd 1 www.lawtimesnews.com 2/5/09 10:52:55 AM search and development] spending to develop new products, services, and tech- niques," says Patrick Kierans of Ogilvy Renault LLP. As Phelan saw it, the appeal board's reasoning amounted to a "fundamental error in law." In his view, there had never been any categorical prohibition in Canada that excluded business- method patents. Rather, an in- vention was patentable as long as it was more than a disembod- ied idea, had a method of prac- tical application, was a new and inventive method of applying skill and knowledge, and had a commercially useful result. "The court confirmed that there was really no such thing as a [business-method patent] ex- clusion and that the regular test for patentability applied," says Kierans' partner Chris Hunter. Phelan also ruled the appeal board had erred in its conclu- sion that an invention had to be technological in order to be patentable and that it had to fall within one of the categories of patentable subject matter listed in s. 2 of the act. This interpre- tation, Phelan concluded, was overly restrictive in a way that defeated the flexibility pro- vided by the legislation, which must be applied "in ways that recognize changes in technol- ogy such as the move from the industrial age to the electronic one of today." As well, Amazon.com Inc. v. Canada (Attorney General) means that the intellectual property office, which for the last year or so has been deal- ing with applications related to business methods from the per- spective of the appeal board's decision, will likely have to rethink both its approach and guidelines. LT I t's what's inside that counts!