iPatents

Federal Court harshly rejects Patent Office guidance

The amazon.com 1-click patent appeal has finally been decided, in amazon’s favour. The invention, a business method which facilitates instantaneous online purchasing, was found to be eligible for a Canadian patent. After the application - which was filed in 1998 - was finally rejected by the Patent Appeal Board, the case was then further appealed to the Federal Court (as discussed previously). The hearing took place in April, 2010 in Ottawa.

Justice Phelan’s decision released today was quite critical of the Canadian Patent Office. The decision accuses the Office of being “misguided”, making “assumptions” and many “fundamental errors” in relation to the law on patentable subject matter, for exceeding its jurisdiction in rejecting business method patents, and for “ignoring” the distinctions between Canadian and foreign laws on these topics.

The judgment is a tour de force, crossing the landscape of Canadian, European and American decisions. In a de novo review of the Patent Office’s rejection of the patent application, the Court made the following key rulings.

1. Canadian law governs. “The Commissioner is bound by Canadian patent regime and its interpretation by the Courts. On this she has no discretion. International jurisprudence, and certainly the policies advocated therein, is not determinative, but at most a potential guide when applied correctly and mindfully. As becomes evident, many of the Commissioner’s errors stem from her adoption of a policy role and the importation of policies not concordant with Canadian law.”
2. Impermissible to analyse “substance” and “form” of the patent claims. “Over 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”… Instead of relying on these, now basic, principles of claim construction, the Commissioner returns to language such as “form and substance” and “what has been discovered” as articulated in earlier case law. Although the Commissioner attempts to confine this analysis to patentable subject matter, a return to ‘form and substance’ language, no matter what the context, is confusing and unnecessary. Further, it represents a departure from the clear direction of the Supreme Court to apply purposive construction universally.”
3. An “art” under the statute is to be given an expansive reading. ”The Commissioner’s articulation of the test for art is too restrictive in requiring, as discussed in greater detail below, that the knowledge in question be scientific or technological in nature. Further, her application of the test suggests that the goods themselves must be changed in some way. Her interpretation of practical application does not take into account a wider definition of physical, “change in character or condition” or the concrete embodiment of an idea.”
4. A general exclusion of business methods is improper. ”The approach in the USA, Australia, and as it ought to be in Canada, makes an eminent amount of sense given the nature of our legislation. It allows business methods to be assessed pursuant to the general categories in s. 2 of the Patent Act, preserving the rarity of exceptions. It also avoids the difficulties encountered in the UK and Europe in attempting to define a “business method”. There is no need to resort to such attempts at categorization here. Contrary to what the Commissioner suggests, to implement a business method exception would be a “radical departure” from the current regime requiring parliamentary intervention.”
5. No “technological” requirement. ”Even if patents generally concern the protection of advances in technology broadly defined, it is difficult to see how introducing this sort of technological test into the Canadian patent system would do anything but render it overly restrictive and confusing. It would be highly subjective and provide little predictability. 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.”

After applying the correct legal principles to the case, the Court was reluctant to order the issuance of the patent, as it was not equipped to assess the other validity issues (novelty, obviousness, utility). The Court ordered the decision below to be quashed and sent the case back for expedited re-examination with the direction that the claims constitute patentable subject matter.

A further appeal to the Federal Court of Appeal is possible.

If no appeal is taken, then, in view of the Court’s decision in Belzberg, which rejects a practice of endless examination, expect to see amazon.com’s patent issue sooner rather than later.

Also, if no appeal is taken, expect to see the Patent Office scrap its recent guidance on computer-implemented inventions, as well as its guidance on patent eligible subject matter. As predicted, this decision, unless reversed, makes the Office’s guidance obsolete.

The Office finalized some of this guidance in full knowledge that the amazon.com case was under reserve. To some, this suggests that the Office may dig in and pursue an appeal, but this will be a challenge given the tone and language of today’s Court decision.