iPatents

Cdn. Federal Court of Appeal releases tentative Amazon decision

Amazon’s 1-click patent application survives to fight another day. In a 35-page decision (PDF via ippractice.ca) penned by Justice Sharlow, three members of the appeals court yesterday largely affirmed the trial judge’s legal analysis on patentable subject matter (but not his construction of the patent for want of expert evidence), and ordered that the 1-click application be sent back to the patent office for re-evaluation.

On first blush, this is a big win for Amazon and an endorsement of the lower court’s judgment on the matter. However, it would appear that the appeals court has muddied the waters somewhat by sending the application back to the same agency that rejected it previously and by stating that patentability remains an “open question” and that the Commissioner’s rejection was not necessarily “wrong in the result”.

An appeal to the Supreme Court of Canada is very likely given that Amazon and the Patent Office continue to have very different ideas about the appropriate analysis for patentable subject matter. 

On the question of patentable subject matter, the appeals court said:

- if a patent claim as “purposively” construed describes something that is outside the enumerated categories of “invention” in the Patent Act, then it must be refused;

- solely determining the “inventive concept” is not the correct analysis (but the court later mused that the only “inventive aspect” in an old computerized method case was an unpatentable algorithm);

- with regard to the categories of “art” and “process”, the subject matter need not be “technological” or “scientific” as these tag words are not grounded in the Patent Act;

- on a purposive construction, a novel business method may be an essential element of a valid patent claim;

- patentable subject matter must be something with physical existence, or something that manifests a discernible effect or change; and

- a mere “practical application” of an invention is not sufficient: it is axiomatic that a business method has practical application.

As noted above, the appeals court remanded the patent application back to the Patent Office for expedited re-examination, presumably starting with a new purposive construction.

It will be interesting to see whether the Patent Office will deny the patent and therefore, in all likelihood, push the litigation into a further appeal. Many practitioners watching this case would welcome a final resolution to this case and to the continued uncertainty regarding business method patents in Canada.

Update: on December 23, 2011, Amazon received an early Christmas present from the Canadian Patent Office. The 1-click application was allowed, with the final fee paid on December 28, 2011. The patent is expected to be issued on or about January 17, 2012. With an appeal to the Supreme Court now moot, the Federal Court of Appeal’s decision is now the final say on business method patentability in Canada.

The state of copyright law in Canada

This is a brief run down of some recent developments in the area of copyright law. These developments, particularly the first two, are set to change our Canadian copyright system fundamentally. They are:

• New copyright bill. Late last month, the government introduced a new copyright bill, Bill C-11, in an attempt to modernize the legislation and deal with the new issues in relation to digital copying. Personal non-commercial infringement is to be capped at $5,000 per individual. Copyright owners’ rights are set to expand with new making-available rights, distribution rights, moral rights for performers, presumptive ownership for photographers, support for digital locks, and tools to pursue online pirate sites.
• Pentalogy of cases before the Supreme Court of Canada. Five appeals from the Copyright Board are set to be heard by the highest court on December 6 and 7, 2011. The Copyright Board cases deal with 1) whether listening to a music preview is just “research”; 2) whether downloading a video game with background music is a communication to the public; 3) whether downloading a song is a communication to the public; 4) whether k-12 schools can make free copies for the purpose of instruction; and 5) whether film and tv soundtracks are subject to sound recording tariffs. The Court is expected to re-shape the common law defence of “fair dealing” and may provide its own stamp on the pending legislation discussed above.
• John Does in “The Hurt Locker”. Mr. Justice Shore of the Federal Court recently ordered that three Internet Service Providers (Bell, Cogeco and Videotron) must turn over the identities of a handful of account holders suspected of illegally downloading, copying and distributing the Oscar-winning film “The Hurt Locker” using a torrent sharing program. The decision is available here: Voltage Pictures LLC c. Untel, 2011 CF 1024 (English via machine translation). Led by Greg Moore, the well-regarded IP firm of Goudreau Gage Dubuc is acting for Voltage, the copyright owner. According to the Court file, Voltage is to file a timetable for the next steps in the proceeding by November 4, 2011.

The state of copyright law in Canada will be reshaped following these developments noted above. It will be interesting to note the dialogue between Parliament and the Supreme Court as the digital copying marketplace continues to grow and evolve.

2012 Patent Agent Exam Dates Set

According to yesterday’s issue of the Canadian Patent Office Record, the next patent agent exams have been set for April 24-27, 2012. The deadline to apply (and it is a firm deadline) is November 30, 2011.

Passing these grueling exams, held once a year in April, is a must to be able to act on behalf of inventors before the Canadian Patent Office.

As I have blogged before, the exams are notoriously difficult. Plus, the pass rates have been declining, according to the Chair of the Patent Agent Examining Board, Agnès Lajoie, as stated in her 2010 report. She observed that most successful candidates pass in their first or second sitting, while other candidates are unlikely to pass after 4 attempts. The data tell the story:

Total candidates 2003-2010: 236 255 207 217 237 231 284 259

Total passes 2003-2010: 73 79 34 25 66 40 31 27

Total passes on first try 2003-2010: 20 24 7 5 12 10 10 5

Here are the details of the 2012 exam dates as published in the Canadian Patent Office Record:

Under the provisions of subsection (2) of section 14 of the Patent Rules, notice is hereby given that the 2012 examination will be held on April 24, 25, 26 and 27, 2012.

A person who proposes to sit for the examination must notify the Commissioner of Patents in writing, file an affidavit or statutory declaration referred to in subsection 2 of section 12 of the Patent Rules and pay the prescribed fee.

The deadline to apply, submit the affidavit or statutory declaration and pay the fee is November 30, 2011. When applying, it is essential to indicate which paper(s) will be written.

For more information please visit the How to become a registered patent agent web page.

Developments in Canadian IP law this summer

There have been a number of interesting developments in Canadian IP law during the summer of 2011.

Patents

On the patent side, these developments include:

1. The Amazon 1-click appeal was heard in June. Afterwards, lawyers for the government and Amazon were granted permission to submit additional written arguments about newly released decisions from the European and New Zealand patent offices related to the corresponding patents in those countries. A decision on the government’s appeal regarding the patentability of the 1-click invention is expected shortly.

2. While the Amazon appeal decision was under reserve, the Canadian Patent Office released patentable subject matter guidance interpreting the lower court’s judgment. Some practitioners have criticized the timing of this guidance, as the appeal decision could make this guidance obsolete. A review of the guidance would suggest that the Patent Office’s “form and substance” approach, largely discredited by the lower Court, has been resurrected in the guise of an “actual invention” approach.

3. In July, the Federal Court of Appeal released reasons in a significant patent appeal related to mechanical seals used in the oil and gas industry: Corlac Inc. v. Weatherford Canada Inc., 2011 FCA 228. The Court gave the inventor a wide berth to share prototypes with industry partners and did not consider such disclosures to be novelty-destroying “public disclosures”. But, in the most important part of the reasons, the Court said that misrepresentations to the Patent Office during patent prosecution do not give rise to an invalidity ground under s. 73(1)(a) of the Patent Act after the patent has issued. In the words of the Court (at para. 150):

“To be clear, the concept of abandonment in paragraph 73(1)(a) operates during the prosecution of the application for a patent. Its operation is extinguished once the patent issues.” [emphasis added]

It should be noted that s. 53(1) of the Act does give a challenger the opportunity to expunge the patent, provided the inventor/applicant made a material allegation in the petition that was intentionally misleading. However, the Court said that on the specific facts of the case, the failure to name certain individuals as inventors was not a “material” allegation or omission.

Trademarks

The profession is still digesting the consequences of the Supreme Court of Canada’s Masterpiece decision released earlier this spring (which decision reinforces that the “degree of similarity” between two trademarks is the most important factor in assessing confusion). Meanwhile, the Federal Court released an interlocutory decision in Target Brands, Inc. v. Fairweather Ltd., 2011 FC 758, continuing its long-standing practice of denying pre-trial injunctions in trademark cases.

Domain Names

A few developments to note with respect to domain names:

1. The registrar responsible for .xxx top-level domain names, targeted toward the adult online entertainment industry, has released the details of its sunrise program for trademark owners, adult-oriented or not, to register or block domain names incorporating their marks. Many big brands are complaining of a “shake down” in having to pay fees to defend their brands in the .xxx land rush.

2. In early August, the Ontario Court of Appeal decided Tucows.Com Co. v. Lojas Renner S.A., 2011 ONCA 548, and allowed Tucows’ appeal from the motions judge. The result is that the Ontario Court has jurisdiction to entertain the dispute between Renner, a Brazilian retailer, and Tucows, a registrar that owns a portfolio of domain names including renner.com. The appeal court concluded that the domain name <renner.com> is personal property in Ontario within the meaning of rule 17.02(a), and that the summary UDRP proceeding commenced by Renner does not preclude an Ontario action to determine rights to the domain name.

3. CIRA, the organization responsible for dot-ca domain names, will implement its new CDRP dispute resolution policy (version 1.3) to be effective starting August 22, 2011. Following the results of two rounds of consultations (discussed previously), CIRA have now decided to split the filing and panellist fees so the cost to commence a proceeding is only $1000, with additional panellist fees due later if the case is not settled.

Toronto firm i4i prevails in patent infringement suit against Microsoft Word

As has been widely covered in the traditional media and on technology blogs, last month, the Supreme Court of the United States released a unanimous opinion holding that Microsoft had infringed i4i’s valid patent.

The i4i patent claims an improved method for editing computer documents, which stores a document’s content separately from the metacodes associated with the document’s structure. In 2007, i4i sued Microsoft for willful infringement, claiming that Microsoft’s manufacture and sale of certain Microsoft Word products infringed i4i’s patent.

Microsoft had claimed that the on-sale bar of §102(b) rendered the patent invalid, pointing to i4i’s prior sale of a software program known as S4. 

The burden to invalidate a patent

Microsoft argued the jury should not have been instructed to look for “clear and convincing” evidence of the prior sale of the S4 program. At trial, the jury heard that the S4 source code had been destroyed years before the commencement of this litigation, and therefore the factual dispute turned largely on trial testimony by S4’s two inventors—also the named inventors on the i4i patent—both of whom testified that S4 did not practice the key invention disclosed in the patent.

Microsoft argued that a lower standard of proof should have applied to invalidate the i4i patent, based on a mere “preponderance of the evidence”. Microsoft also argued that this lower standard of proof should apply where the alleged prior art was not presented to the Patent Office during the pre-grant examination process (as was the case with the S4 program).

SCOTUS opinion strengthens patents

Section 282 of the Patent Act states that a patent is “presumed valid” and the “burden of establishing invalidity… rests on the party asserting such invalidity”. 

Justice Sotomayor, writing for a majority of the Court, held that Congress had enacted this section using language that had a settled meaning at common law, namely, that “there is a presumption of [patent] validity [that is] not to be overthrown except by clear and cogent evidence” (Radio Corp. of America v. Radio Engineering Laboratories, Inc., 293 U. S. 1 (RCA)). She analyzed other interpretive theories advanced by Microsoft, all of which were not persuasive and dismissed.

As to the issue of the prior art not being before the factfinder during the patent examination process, Justice Sotomayor held that a “fluctuating” standard of proof was not appropriate, rehearsing the same statutory interpretation analysis based on section 282 and RCA.

In the end, the Court decided that the jury instruction was correct, and that the i4i patent enjoys a presumption of validity that could only be displaced by “clear and convincing” evidence. Justice Sotomayor concluded the majority opinion by stating, “any recalibration of the standard of proof remains in Congress’ hands”.

Microsoft has exhausted all appeals, and will now have to pay the jury’s $290M damages award to Toronto-based i4i.

The case is Microsoft Corp. v. i4i Limited Partnership et al., 564 U.S. ___ (2011), Decided June 9, 2011.

A link to all the court documents is maintained by i4i here.

Sandisk asks Supreme Court of Canada to re-instate patent application

M-Systems Flash Disk Pioneers, owned by Sandisk, has filed an application with the Supreme Court of Canada seeking leave to appeal the Federal Court of Appeal decision (previously discussed on this blog). That decision confirmed that M-System’s patent application was dead due to the applicant failing to respond in full to an Examiner’s requisition.

The appeal on behalf of M-Systems was filed by Ron Dimock of Dimock Stratton. The case below was argued by Francois Grenier of Robic.

The case is M-Systems Flash Disk Pioneers Ltd. v. The Commissioner of Patents (Attorney General of Canada), SCC Docket #34275

Update: the Supreme Court of Canada denied with costs Sandisk’s leave to appeal. Having exhausted all appeals, the patent is now irretrievably dead.