Amazon.com Inc. v. Canada (Attorney General), (2010) 376 F.T.R. 288 (FC)

• Judge: Phelan, J.
• Court: Federal Court (Canada)
• Case Date: April 19, 2010
• Jurisdiction: Canada (Federal)
• Citations: (2010), 376 F.T.R. 288 (FC);2010 FC 1011

Amazon.com Inc. v. Can. (A.G.) (2010), 376 F.T.R. 288 (FC)

MLB headnote and full text

Temp. Cite: [2010] F.T.R. TBEd. OC.005

Amazon.com, Inc. (appellant) v. The Attorney General of Canada and the Commissioner of Patents (respondents)

(T-1476-09; 2010 FC 1011)

Indexed As: Amazon.com Inc. v. Canada (Attorney General)

Federal Court

Phelan, J.

October 14, 2010.

Summary:

Amazon.com Inc. sought a patent for an invention entitled "Method And System For Placing A Purchase Order Via A Communication Network". The claimed invention further enabled internet shopping, by a simplified "one-step" process in ordering. The Examiner rejected the patent on the basis of obviousness and non-patentable subject matter. The Patent Review Panel rejected the claims on the basis that they did not conform to s. 2 of the Patent Act and accordingly were non-patentable subject matter. The Commissioner accepted the finding of the Panel. Amazon appealed.

The Federal Court allowed the appeal with respect to the Commissioner's findings on statutory subject matter. The misapprehension of the Commissioner and the Examiner as to the patentability of the subject matter was a fundamental error of law. A "business method" could be patented in appropriate circumstances. The Commissioner's decision was quashed and sent back for expedited re-examination with the direction that the claims constituted patentable subject matter to be assessed in a manner consistent with the court's reasons.

Courts - Topic 101

Stare decisis - Authority of judicial decisions - English, American and foreign authorities - General - [See Patents of Invention - Topic 443 ].

Courts - Topic 102

Stare decisis - Authority of judicial decisions - English, American and foreign authorities - English decisions - [See third Patents of Invention - Topic 8163 ].

Patents of Invention - Topic 8

General - Invention defined - The Federal Court stated that "[o]ver the past ten years, the Supreme Court has made it clear that an invention is defined by the claims, and that these are to be interpreted in a 'purposive manner' ... In so doing they explicitly rejected the 'form and substance approach' from previous years ... The rationale given by the Court included not only a desire for consistency, but also recognition that the intention of the author of the patent - determined with a mind willing to understand - is integral to the operation of the patent regime. A subjective examination of the 'substance' of the claims leads to uncertainty" - See paragraph 38.

Patents of Invention - Topic 8

General - Invention defined - The Commissioner of Patents denied Amazon.com Inc.'s patent for its "one click" online ordering system, having found that it was not patentable subject matter under s. 2 of the Patent Act - On determining that the relevant categories listed in the Act were "art" and "process", the Commissioner considered the meaning of art - Her definition stressed the physical nature of inventions - She found no change in physical condition of the goods ordered, only in how the order was placed - Consequently, the claimed invention was rejected as not statutory subject matter - The Federal Court held that the Commissioner's articulation of the test for art was too restrictive in requiring that the knowledge in question be scientific or technological in nature - Further, her application of the test suggested that the goods themselves had to be changed in some way - Her interpretation of practical application did not take into account a wider definition of physical, "change in character or condition" or the concrete embodiment of an idea - See paragraphs 48 to 60.

Patents of Invention - Topic 8

General - Invention defined - Amazon.com Inc. sought a patent for an invention entitled "Method And System For Placing A Purchase Order Via A Communication Network" -The claimed invention further enabled internet shopping, by a simplified "one-step" process in ordering - The Commissioner of Patents denied the patent, having found that it was not patentable subject matter under s. 2 of the Patent Act - She assumed that in order to be patentable an invention had to be technological in nature - The Federal Court stated that the Commissioner's decision introduced an unnecessary requirement for patentability - There was no reference to a "technical" test in the Canadian jurisprudence, and it was not within the Commissioner's jurisdiction to introduce one - The Commissioner's reliance on the "technical contribution approach" as discussed in the UK did not correspond with the Act - Introducing a technological test into the Canadian patent system would render it overly restrictive - "Technology is in such a state of flux that to attempt to define it would serve to defeat the flexibility which is so crucial to the Act" - See paragraphs 69 to 71.

Patents of Invention - Topic 15

General - Commissioner of patents - Discretionary powers - [See Patents of Invention - Topic 443 ].

Patents of Invention - Topic 442

Registration - Statutory duties of commissioner - Discretion - [See Patents of Invention - Topic 443 ].

Patents of Invention - Topic 443

Registration - Statutory duties of commissioner - Refusal of patents - The Commissioner of Patents denied Amazon.com Inc.'s patent for a "business method", having found that it was not patentable subject matter under s. 2 of the Patent Act - The Commissioner relied heavily on foreign jurisprudence, particularly on that of the United Kingdom, Europe and the United States - Amazon appealed - The Federal Court stated that the appeal "highlights the challenges in looking to international legal principles to interpret the Canadian patent regime" - The Commissioner ignored fundamental differences between the foreign and the domestic regimes, or ignored Canadian legal principles altogether - The Commissioner was bound by the Canadian patent regime and its interpretation by the courts: "On this she has no discretion" - International jurisprudence was not determinative, but at most a potential guide - Many of the Commissioner's errors stemmed from her adoption of a policy role and the importation of policies not concordant with Canadian law - See paragraphs 32 to 37.

Patents of Invention - Topic 702

Application for grant - General - Items patentable - [See fourth and fifth Patents of Invention - Topic 8163 ].

Patents of Invention - Topic 883

Application for grant - Appeals or judicial review - Scope of appeal or standard of review - [See first Patents of Invention - Topic 8163 ].

Patents of Invention - Topic 8163

Practice - Appeals - Questions of law, fact or mixed fact and law (incl. applicable standard of review) - The Commissioner of Patents denied Amazon.com Inc.'s patent for its online "one-click" ordering system, having found that it was not patentable subject matter under s. 2 of the Patent Act - On appeal, the issues went to the scope and definition of "art" and "method", as well as judicially interpreted excluded subject matter - The Federal Court stated that the interpretation of s. 2, as well as the method used by the Commissioner to assess the claims and the invention, were questions of law which attracted a correctness standard - If the relevant legal tests were applied and the Commissioner was correct in determining business methods and non-technological inventions were not patentable, the application of the tests and the question of whether the invention was a business method would be subject to a reasonableness standard - Finally, in the event there was a fundamental error of law which prevented the Commissioner from coming to the right decision, it was within the court's discretion to decide the issue de novo - See paragraphs 28 to 31.

Patents of Invention - Topic 8163

Practice - Appeals - Questions of law, fact or mixed fact and law (incl. applicable standard of review) - Amazon.com Inc. sought a patent for its invention entitled "Method And System For Placing A Purchase Order Via A Communication Network" - The claimed invention further enabled internet shopping by a simplified "one-step" process in ordering - The Commissioner of Patents denied the patent - Having found no change in physical condition of the goods ordered, only in how the order was placed, she concluded that the claimed invention was not statutory subject matter - The conclusion was based on a "four step" approach, starting with analysis of both the form and the substance of the claims, and requiring an analysis of the patentability of what was new, apart from the invention as a whole - The Federal Court held that the Commissioner had adopted a novel legal test that was not supported by recent Canadian jurisprudence or the Patent Act - "This is an error of law and far outside the Commissioner's jurisdiction" - See paragraphs 38 to 47.

Patents of Invention - Topic 8163

Practice - Appeals - Questions of law, fact or mixed fact and law (incl. applicable standard of review) - The Commissioner of Patents denied Amazon.com Inc.'s patent for a "business method", having found that it was not patentable subject matter under s. 2 of the Patent Act - Amazon appealed - The Federal Court determined that the Commissioner fundamentally erred in the legal principles used to determine patentability - There was no basis for the Commissioner's assumption that there was a "tradition" of excluding business methods from patentability in Canada - The Commissioner's reliance on the UK jurisprudence was misguided - "There is not, nor has there ever been, a statutory exclusion for business methods in Canada as there is in the UK ... The implicit suggestion that the American jurisprudence supports this exclusion is not sustainable ... Contrary to what the Commissioner suggests, to implement a business method exception would be a 'radical departure' from the current regime requiring parliamentary intervention" - See paragraphs 63 to 68.

Patents of Invention - Topic 8163

Practice - Appeals - Questions of law, fact or mixed fact and law (incl. applicable standard of review) - The Commissioner of Patents denied Amazon.com Inc.'s patent for its "one-click" ordering system - The Federal Court, having determined that the Commissioner fundamentally erred in the legal principles used to determine patentability, examined the claims de novo - The court found that a purposive construction of the "system claims" clearly disclosed a machine which was used to implement the ordering system - The described components (e.g. a computer) were essential elements in implementing an online ordering process - A machine was patentable under s. 2 of the Patent Act - The Commissioner herself found that "in form" the claims disclosed such an invention; it was only when she took a second step to subjectively consider the "substance" that she found otherwise - This was unsupported in law - See paragraphs 72 and 73.

Patents of Invention - Topic 8163

Practice - Appeals - Questions of law, fact or mixed fact and law (incl. applicable standard of review) - The Commissioner of Patents denied Amazon.com Inc.'s patent for its online "one-click" ordering system - The Federal Court, having determined that the Commissioner fundamentally erred in the legal principles used to determine patentability, examined the claims de novo - "When viewed as a whole it is clear that the claimed invention is a process which uses stored information and 'cookies' to enable customers to order items over the internet simply by 'clicking on them'. It is accepted that the 'one-click' method is novel ... It matters not that the 'goods' ordered are not physically changed" - The process claims were patentable as an art and process - There was no exclusion for "business methods" which were otherwise patentable, nor was there a "technological" test in Canadian jurisprudence - Even if there was some technological requirement, in this case the claims, when viewed as a whole, certainly disclosed a technological invention - See paragraphs 74 to 77.

Patents of Invention - Topic 8163

Practice - Appeals - Questions of law, fact or mixed fact and law (incl. applicable standard of review) - Amazon.com Inc. sought a patent for an invention entitled "Method And System For Placing A Purchase Order Via A Communication Network" - The Examiner rejected the patent on the basis of obviousness and non-patentable subject matter - The Patent Review Panel rejected the claims on the basis that they did not conform to s. 2 of the Patent Act and accordingly were non-patentable subject matter - The Commissioner accepted the finding of the Panel - The Federal Court allowed the appeal - In examining the claims de novo, the court stated that the obviousness analysis should not occur at the "patentable subject matter" stage of the analysis - The misapprehension of the Commissioner and the Examiner as to the patentability of the subject matter was a fundamental error of law - See paragraphs 78 to 81.

Cases Noticed:

Lawson v. Commissioner of Patents (1970), 62 C.P.R. 101 (Ex. Ct.), refd to. [para. 13].

Shell Oil Co. v. Commissioner of Patents, [1982] 2 S.C.R. 536; 44 N.R. 541, refd to. [para. 13].

Tennessee Eastman Co. et al. v. Commissioner of Patents, [1974] S.C.R. 111, refd to. [para. 13].

Schlumberger Canada Ltd. v. Commissioner of Patents, [1982] 1 F.C. 845; 38 N.R. 299 (F.C.A.), refd to. [para. 13].

Aerotel Ltd. v. Telco Holdings Ltd. et al., [2006] EWCA Civ. 1371, refd to. [para. 13].

Monsanto Canada Inc. et al. v. Schmeiser et al. (2004), 320 N.R. 201; 2004 SCC 34, consd. [para. 18].

State Street Bank & Trust Co. v. Signature Financial Group Inc. (1998), 149 F.3d 1368 (Fed. Cir.), refd to. [para. 18].

CFPH LLC's Application, [2005] EWHC 1589 (Pat.), refd to. [para. 19].

Bilski v. Kappos (2008), 88 U.S.P.Q.2d 1385 (U.S. Ct. App.), affd. (2010), 130 U.S. 3218 (Sup. Ct.), consd. [para. 20].

Harvard College v. Commissioner of Patents (2002), 296 N.R. 1, 2002 SCC 76, refd to. [para. 21].

CertainTeed Corp. v. Canada (Attorney General) et al. (2006), 289 F.T.R. 312; 2006 FC 436, refd to. [para. 31].

Canada Packers Inc. v. Canada (Minister of Agriculture) et al., [1989] 1 F.C. 47; 87 N.R. 81; 26 C.P.R.(3d) 407 (F.C.A.), refd to. [para. 31].

Free World Trust v. Electro Santé Inc. et al., [2000] 2 S.C.R. 1024; 263 N.R. 150, refd to. [para. 38].

Whirlpool Corp. et al. v. Camco Inc. et al., [2000] 2 S.C.R. 1067; 263 N.R. 88, appld. [para. 38].

Calgon Carbon Corp. v. North Bay (City) et al. (2005), 344 N.R. 224; 2005 FCA 410, refd to. [para. 40].

Progressive Games Inc. v. Commissioner of Patents (1999), 177 F.T.R. 241 (T.D.), affd. (2000), 265 N.R. 392; 9 C.P.R.(4th) 479 (F.C.A.), refd to. [para. 44].

Refrigerating Equipment Ltd. v. Drummond & Waltham System Inc., [1930] 4 D.L.R. 926, refd to. [para. 48].

CCOM Pty Ltd. v. Jiejing Pty Ltd. (1994), 28 I.P.R. 481, consd. [para. 57].

Grant v. Commissioner of Patents, [2006] F.C.A.F.C. 120, consd. [para. 57].

Statutes Noticed:

European Patent Convention, art. 52 [para. 33].

Patent Act, R.S.C. 1985, c. P-4, sect. 2 [para. 10].

Authors and Works Noticed:

Biggar, O.M., Canadian Patent Law and Practice (1927), p. 2 [para. 34].

Fox, Harold G., Digest of Canadian Patent Law (1957), generally [para. 19].

Counsel:

John R. Morrissey, Steven B. Garland and Colin B. Ingram, for the appellant;

Frederick B. Woyiwada and Sharon Johnston, for the respondents.

Solicitors of Record:

Smart & Biggar, Ottawa, Ontario, for the appellant;

Myles J. Kirvan, Deputy Attorney General of Canada, Ottawa, Ontario, for the respondents.

This appeal was heard on April 19, 2010, at Ottawa, Ontario, before Phelan, J., of the Federal Court, who delivered the following reasons for judgment and judgment, dated October 14, 2010.