Amazon Memo Fact & Law 091119

THE ATTORNEY GENERAL OF CANADA, and THE COMMISSIONER OF PATENTS

Respondents

APPELLANT'S MEMORANDUM OF FACT AND LAW

SMART & BIGGAR Barristers & Solicitors 55 Metcalfe Street Suite 900

Ottawa, Ontario

KlP 5Y6

,-",,,,,,,, .... "VU Section

Bank of Canada Building

Tower, Room 1112 234 Wellington Street Ottawa, Ontario KIAOH8

F.B. (Rick) Woyiwada

Tel: (613) 941-2353 Fax: (613) 954-1920

Solicitors for the Respondents

OF CANADA

1-

n-

C.

A B.

(i) (ii) , Principles

(iii) Commissioner's Reliance on UK and European Autnormes

(iv) "process" 13

(v) "art" 13

(vi) "machine" 17

(vii) Non-statutory for "Business Methods" 17

(viii) of "Technological" Requirement for Patentability 22

D. Claims Construction

(i) The Commissioner's "Form and Substance" Claims Construction

(ii) Construction of the Claims as a Whole 26

Patentability ofthe Claims in

(i) Method (Claims

(ii) The System "",..,uu" ,-".«uu,;,

- 1 -

PART I - THE FACTS

A. Overview

L

This

are ever

economy.

2. Amazon.com, Inc., is a patent for an invention entitled "Method and System for Placing a Purchase Order Via a Communications Network", Canadian Patent Application No. 2,246,933 (the "'933 Application"). The '933 Application relates to a communications network based method and system for placing an order and, more particularly, to a method and system for purchasing and ordering items over the Internet.

3. In the decision appealed from, the Commissioner of Patents ("Commissioner") reversed the objection of the Examiner and held that the claims of the '933 Application displayed sufficient "ingenuity" and therefore were not obvious. It is not disputed that the '933 Application claims something that is "new" and unobvious over what had been done before.

4. However, the Commissioner found that the '933 Application does not claim an "invention" as she defined that term. The Commissioner decided that while what the Appellant had invented was new, unobvious, and useful, it was not the proper subject matter for a patent in Canada.

S. The Commissioner's decision to reject the '933 Application is wrong in-law. -The- -

Commissioner relies upon inapplicable foreign law, and misstates and misapplies the binding jurisprudence of the Canadian courts on point (including the Supreme Court). In doing so, the Commissioner creates a new legal framework, in an apparent attempt, as a matter of policy, to change approach of the Patent Office to issue of patentable subject matter and the

uetmrttorrut=tnventnm'': In-theresl11~the ee,mrnis!siorlerhas decided-that-inventi ons of the

at

no

- 2 -

7.

the

a new, unobvious

is entitled to

in

B. The '933 Application

8. was filed in Canada on September 11, 1998 is ",a',H'-'"

And Placing A Purchase Order Via A Communications Network". I

9.

The

Application relates to a communications network based

and

for

placing an order and, more particularly, to a method and system for ordering items over the Internet. Figure 2 of the '933 Application (reproduced below) shows a block diagram of the system. Figures 3-7 of the '933 Application show flow diagrams of the steps required to implement the various embodiments of the invention.

Server

Client

220

Client lDI Customer TaWe

212

Fig. 2

10. The "server" referred to in Figure 2 is a computer system used to operate a commercial

cu.,1tPf'n of a

customer.

11.

a

- 3 -

server

client enters his or JJWl vHUC",l-,'JJ'-vU"", account information), Ona

client

client then

vendor's

action (e.g., a mouse click on a

to the server the to order the item along

browse items, and "button" presented on a Web page)

with the client identifier. The server will receive the purchase request, automatically retrieve the purchaser-specific account information using the client identifier, and combine the retrieved account information to generate the order. The resulting effect is that a user can order an item through a single action (e.g., a mouse click) on the client computer, without having to provide additional input or information.

12. The '933 Application includes 75 claims. The current claims of the '933 Application were submitted to the Patent Office on November 27, 2002, and are attached as Schedule "A".2 Claims 1-43 and 51-75 claim a method. Claims 44-50 claim a system. For this Appeal, it is sufficient to consider independent method claim 1 and independent system claim 44:

CLAIM 1

1. A method in a client system for ordering an item, the method comprising: receiving from a server system a client identifier of the client system; persistently storing the client identifier at the client system;

when an item is to be ordered,

displaying information identifying the item and displaying an indication of a single action that is to be performed to order the identified item; and

-4-

server

to the server ""He',,,,", -~'-~'e""e previously supplied account

CLAIM 44

A client system for ordering an item, comprising:

a component that receives from a server system a client identifier of the client system and that stores the client identifier persistently;

a component orders an item by displaying information identifying the item

along with an indication of a single action that is to be performed to order the identified item and by sending to the server system a request to order the identified item along with the client identifier, the client identifier identifying account information previously supplied by a user wherein the user does not need to log in to the server system when ordering the item; and

a component that updates account information by coordinating the log in of the user to the server system, receiving updated account information from the user, and sending the updated account information to the server system.

13. The patent Examiner issued a Final Action on June 1, 2004 rejecting all of the claims

based on obviousness and non-statutory subject matter. 3

14. The matter was referred to the Commissioner for review in accordance with Rule 30(6) of the Patent Rules.4 Such review is conducted by a panel composed of three members of the Canadian Patent Office known as the "Patent Appeal Board". 5 An oral hearing was held

16, 2005 before a first panel of the Appeal Board comprised of Paul

- 5 -

15.

11,

the

wrote to

to

Couture and Paul Appeal Board panel rendered "''''1'',"''''' on March 4,2009.

8

C. The Commissioner's Decision

16. The Commissioner canvasses two questions which are identified in paragraph 20 of the

decision:

1. Are claims 1-75 obvious under Section 28.3 of the Patent Act?

2. Are claims 1 to 75 directed to non-statutory subject matter under Section 2 of the Patent Act? What is the approach to be followed?

(I) Obviousness

17. The Commissioner held that that the Examiner erred in rejecting the '933 Application on

the basis of obviousness. In doing so, the Commissioner provided the following comments on the advance presented in the '933 Application over the prior art:

[ 94 ] There is no suggestion in the prior art to modify a subscription-based shopping model such that with one-click, an identifier (cookie) is sent in conjunction with the product ordering information, thus retrieving purchaser-specific account information, so that the

order is instantly placed. ~

[ 95 ] The advantages of such a streamlined ordering process pointed to by the Applicant are indicative of some ingenuity (or inventive step). '"

1

-6-

(ii) Subject Matter

19. to

1.

(non-statutory) subject matter; and Non-technological subject matter is not statutory.

As discussed in more detail below, there is no basis in Canadian law for the approach adopted by

iii.

the Commissioner.

20. With respect to the form and substance of the claims, the Commissioner held that method claims 1 to 43 and 51 to 75 "are directed at a method for the purchase of goods, and as such, are claiming a method of doing business"."

21. With respect to claims 44 to 50, the Commissioner held that the claims "are directed to a client system which is a physical object (a machine). Therefore, claims 44 to 50, in form, fit into the category of machine under Section 2 of the Patent Act". 10 However, the Commissioner goes on to consider what she views as the "substance" or "essence" of the claims, which she finds to be limited to streamlining the traditional online ordering method, and the benefits and advantages that flow from it. In this regard, the Commissioner states: 11

In other words, the essence of the claimed invention is the particular rules for carrying out an online order. Whereas previously, particular checkout steps including a checkout page were provided, claimed invention provides a client with the option of "single-

action ordering" for instant checkout. The widely accepted shopping rule or practice of

cnecxmz-cur by providing a page is eliminated.

the same as

of

-7-

or

'1"\1""\""""" to qualify as a IJU\,,-,H\,<tUJ,,", 12

2,

applies the

14

act or series of acts by some physical upon some physical object and

nrocucma in such object some change either of character or of condition".

24. The Commissioner finds that the "substance" of the claimed invention does not meet this test: 15

[175] ... products or goods are offered for sale in the claimed invention, and what is added to human knowledge is a change to the character or condition of how the order for a product is actually placed and processed. The products or goods are not changed. That is, there is no change either of character or of condition to any physical object itself by the act of ordering the product in one way or another.

[176] Consequently, the substance (what has been added to human knowledge) of claims 1 to 75 is not an art and these claims cannot fit under Section 2 of the Patent Act.

25. The Commissioner goes on to find that the "substance" of the claimed invention is also excluded from patentability because it amounts to a "method of doing business" which the Commissioner finds is unpatentable per se. 16

26. In reaching her conclusions, the Commissioner also finds that the "substance" of the

-

claimed invention is not technological in nature, which the Commissioner finds is a further

requirement for patentability.!"

27. As discussed in Part III, below, the approach and findings of the Commissioner include numerous errors of law and principle which lead to the erroneous conclusion that '933

- 8 -

PART II - POINTS IN ISSUE

on

(a) in construing the definition "invention" in QPPIr1F\T\

1. in concluding that the terms in of

"invention" are limited to "an act or of acts performed by some

physical agent upon some physical object to produce in object some change of either character or condition";

11. in finding that business methods do not fall within the definition of "invention" and are therefore unpatentable per se in Canada; and

111, in finding that claimed subject matter must be "technological" in order to come within the definition of "invention" so as to be patentable in Canada;

(b) in construing the claims of the '933 Application, including:

i. in purporting to consider the "form" and "substance" of the claims of the '933 Application, and thereby failing to apply the proper principles of patent claims construction; and

11. in failing to consider the claims of the '933 Application as a whole when assessing whether the subject matter of the '933 Application falls within the definition of "invention" in section 2 of the Patent Act, including by considering only whether the elements of the claims identified as being new and non-obvious fall within the definition of "invention"; and

(c) in concluding that the subject matter of claims 1 through 75 of the '933 Application was not a "machine", "process" or "art" within the definition of "invention".

29. As set out below, the Appellant submits that when the '933 Application is properly construed in the context of the applicable Canadian jurisprudence on claim construction and patentable subject matter, it is clear that the '933 Application should be allowed and a patent in the alternative, even applying the test for invention adopted by the ~jJjJ'H"':LU"'U should

- 9-

PART III -SUBMISSIONS

A. The Standard of Review

is

of

patentable is correctness.

meamng of the terms is a question of law upon which the

4 S.C.R. 2002 SCC 76 at paras. 148-150

31. A subsidiary issue is whether the Commissioner has properly construed the claims of the

'933 Application. This too is a question of law for which the standard of review is correctness.

Whirlpool Corp. v. Cameo Inc., [2000] 2 S.C.R. 1067,2000 SCC 67 at para. 76 ("Whirlpoof') [91; Halford v. Seed Hawk Inc. (2007), 54 C.P.R. (4th) 130,2006 FCA 275 at para. 10 (10].

B. The Commissioner Must be Satisfied that the Appellant is not "By Law" Entitled to a Patent

32. In accordance with section 40 of the Patent Act, the Commissioner shall refuse a patent application if she is satisfied that the applicant is not by law entitled to be granted a patent. The Commissioner has no discretion in rendering her decision and, in particular, the Commissioner has no discretion to refuse a patent on the basis of public policy considerations independent of any express provision in the Patent Act.

Section 40, Patent Act RS.C. 1985 c. P-4 (,'Patent Act") [1]; Harvard, supra at para. J 1 (per Binnie J., __ dissenting) and at paras. 144 & 152 (per Bastarache J.) (8); Monsanto Co. v. Canada (Commissioner of Patents), [1979] 2 S.C.R 1108 at 1119-1120 [11).

C. Patentable Subject Matter and the Meaning of "Invention" in the Canadian Patent Act

must

- 10-

matter

IS

27(8)

case.

no

claims of the

at para. 145

Bastarache 18); section

supra 11].

35. question for this Court is therefore whether the '933 Application falls within one of

the which form the definition of "invention" in section 2 of the Patent Act when that

section is properly construed.

(ii) Principles of Statutory Interpretation

36. The Supreme Court has consistently held that "the words of an Act are to be read in their

entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament".

Harvard, supra at para. 11 (per Binnie J., dissenting) and para. 154 (per Bastarache J.) [8]; Bell Expressl/u Limited Partnership v. Rex, [2002] 2 S.C.R. 559 at paras. 26-27 [12J.

Intention of Parliament

37. Parliament has defined "invention" in the Patent Act using broad language. Because the Act was designed in part to promote innovation, the definition of invention is broad to encompass unforeseen and unanticipated future technology. Broad, open-textured statutory language such as that used in the definition of "invention" is to receive a dynamic and flexible 'interpretation.'

Harvard, supra at paras. 43 & 59 (per Binnie 1, dissenting) and para. 158 (per Bastarache 1) [8J; Perka v. R., [1984] 2 S.C.R 232 at 265 (13].

The Object of the Patent Act

It is

to

- 11 -

The Scheme of the Patent Act

must

the

or

(if) The Commissioner's Reliance on UK and European Authorities

40.

Throughout

reasons, the Commissioner

on

and i:!.Ulrop'ean

in support of her approach to considering whether the

Application claims

statutory subject matter, and with respect to

proper interpretation of the meaning of

"invention" in the Canadian Patent Act. The Commissioner's reliance upon authority in this manner is an error in law.

and European

41. The definition of "invention" found in the Canadian Patent Act, has no equivalent in the relevant legislation of the UK and Europe. The Canadian definition of "invention" is derived not from a UK statute, but from the American patent statutes. In fact, the definition of "invention" in the Canadian Patent Act continues to be, in essence, identical to that found in the United States Patent Act of 1793, drafted by Thomas Jefferson.

Harvard, supra at para. 3 (per Binnie 1., dissenting) [8]; Ridout, 1. G., The Patent Law of the Dominion of Canada (Toronto: Rowsell & Hutchison, 1894) at 3 (33); Biggar, O.M., Canadian Patent Law and Practice (Toronto: Burroughs & Co., 1927) at 1-2 [341; Fox, H.G., The Canadian Law and Practice relating to Letters Patent for Inventions, 4th ed, (Toronto: Carswell, 1969) at 5 [351; United States Patent Act. 35 U.S.C. § 101 (1952) [31; Diamond, Commissioner of Patents and Trademarks v. Chakrabarty (1980), 447 U.S. 303 at 308 (15).

42. In Europe (including the UK), the governing legislation does not define "invention" per

se. Rather, the European Patent Convention ("EPC") provides a series

exclusions from

or

43. current UK Patents Act, 1977, which is required by treaty to conform with the EPC, is similarly worded. The UK courts have recognized that the statutory exclusions are policy based. There is no such statutory prohibition against business methods in Canada.

Section 1, Patents Act, 1977 (c. 37) (5); CFPH LLC's Application, [2005J EWHC 1589 at para. 21 (Pat.) ("CFPH") 1161.

44. Prior versions of the UK statute did define invention. But, they did so in language which

is fundamentally different from the language ofthe Canadian Patent Act:

"invention" means any manner of new manufacture the subject of letters patent and grant of privilege within section six of the Statute of Monopolies of Monopolies and any new method or process of testing applicable to the improvement or control of manufacture, and includes an alleged invention [emphasis added].

Section 101, Patent and Designs Act, 1949(12, 13 & 14 Geo. 6c.62) [6J.

45.

The historical differences between the Canadian and UK statutes has ledthe _C<:!n<:!diftn~ _

Supreme Court to repeatedly reject UK authorities on the question of patentable subject matter in Canada.

appellants heavily on the decision of the Queen's Bench Division

"FLlfUFlW'S Application following the decision of the Court of New

Company's and that of the Court of Australia on the

S.eR.

- 13 -

as

(which in an approach to patentable ""h,,,,,..t

IS also

to

the <u,""""u"up,

scneme of llnl'P'l'YlP Court Canada,

, in a manner which is and

and courts including the

(iv) "process"

47. As set out above, claims 1-43 and 51-75 are directed to a method. The Commissioner states that to be patentable, the claims of the '933 Application'f must fall within the categories of "art" or "process" in the definition of "invention". However, in her analysis, the Commissioner considers only whether the claims pertain to a patentable art, and ignores the fact that the method claims of the '933 Application are directed to a patentable process. 19

48. The methods claimed in the '933 Application pertain to the operation of computer systems and the use of a communications network in a manner which is admitted to be new and unobvious. A "process" has been defined by the Supreme Court as "the application of a method to a material or materials". Claims 1-43 and 51-75 clearly fall within this definition and are therefore directed to patentable processes in the absence of any exception to patentability founded in Canadian law. In this regard, as discussed below, the Commissioner's creation of a

broad exception to patentability for inventions, which may be characterized as business methods, is unfounded.

Commissioner of Patents v, Ciba Ltd., [1959] S.C.R. 378 at 383 ("etban) [191.

manner

an

definition

Shell Oil

51.

"art" as

term is used in the definition of invention.

case, Wilson J. was called upon to consider a

patent directed to a new use for a known substance. In particular, the invention pertained to the discovery that certain known compounds could be used as plant growth regulators.

Shell Oil Co. v. Commissioner of Patents, [1982J 2 S,C.R. 536 at 537·538 and 547-548 ("Shell Oil") [201.

52. Wilson J. defines the meaning and scope of a patentable "art" as follows:

What then is the "invention" under s. 2? I believe it is the application of this new knowledge to effect a desired result which has an undisputed commercial value and that it falls within the words "any new and useful art". I think the word "art" in the context of the definition must be given its general connotation of "learning" or "knowledge" as commonly used in expressions such as ''the state of the art" or "the prior art". The appellant's discovery in this case has added to the cumulative wisdom on the subject of these compounds by a recognition of their hitherto unrecognized properties and it has established the method whereby these properties may be realized through practical application. In my view, this constitutes a "new and useful art" and the compositions are the practical embodiment of the new knowledge. [emphasis added]

Shell Oil, supra at 549 [20].

The Court [in Tennessee Eastman], however, affirmed that "art" was a word of very wide connotation and was not to be confined to new processes or products or manufacturing techniques but ~~~u!!U~L.gu!~...A!ML!illl~1!.!.U!!L!m(illQ~..Q!.JYm.£a.DJumL2I

[emphasis added]

Shell Oil. supra at 554 [20].

to

matter

- 15 -

Lawson

mrmssioner did not Oil.

as provided the

creates a new. more definition by

Lawson

to narrow or limit Commissioner adopts a UvLUU"VU of art from

v,

of

the of acts

performed by some physical agent on some change either in character or of condition".

Lawson v. Commissioner of Patents (1970), 62 C.P.R. 101 (Ex.Ct.) ("Lawson") [21J.

object and producing in such object some

55. The Commissioner's adoption of the language used in Lawson to narrow the definition of "art" provided by the Supreme Court in Shell Oil is an error of law. The claims in Lawson were directed to a new method for subdividing land, with the lot lines delineated in the configuration of a champagne glass. One of the claims purported to claim the land itself (albeit subdivided in the manner described).

Lawson, supra at 104-106 [21].

56. While Cattanach J. did provide a definition of patentable "art" relied upon by the Commissioner, in applying that definition he concludes that the claimed invention was not a patentable "art" as it was directed to professional skill:

It seems to me that a method of describing and laying out parcels-of-land-in a-plan-of - subdivision of a greater tract of land in the skill of a solicitor and conveyancer and that of a planning consultant and surveyor. It is an art which belongs to the professional field and is not a manual art or skill.

I, therefore, conclude that the method devised by the applicant herein for subdividing

land within the meaning of that word in s. d). added]

1.

- 16-

10:

or

It is concrete in that it in

physical objects and is then apparent to the senses tangible object or instrument

In the earlier development of patent law, it was considered that an invention must be a vendible substance and that unless a new mode of created a new substance the invention was not entitled to a patent, but if a new operation created a new substance the patentable invention was the substance and not the operation by which it was produced. This was the confusion of the idea of the end with that of means. However, it is now accepted that if the invention is the means and not the end, the inventor is entitled to a patent on the means.

There is no question as to the practical utility of the appellant's discovery. It is no more a disembodied idea than the applicant's discovery of a method of equalization of thread consumption in Hickton '8 Patent. It is a newly discovered means of regulating the growth of plants and is accordingly a "new and useful art" having economic value in the field of trade, industry and commerce. I find no obstacle in s. 36 or any other provision of the Act to the grant ofa patent to the appellant on these compositions [emphasis added].

Shell Oil, supra at 555 [20].

58. As is apparent from the passage above, Wilson J. disagreed with Cattanach L's conclusion in Lawson and held that the claimed invention in that case was a patentable "art"

within the meaning of the definition of "invention". Rather, Wilson J. found that that application in Lawson was unpatentable on the basis that it related to professional skills rather than to trade, industry or commerce.

in Shell Oil is broader than

provided by the the

],

a

more

Conclnsions - "art"

to

meets

0) it is not a (ii) but

(iii) it must

inventiveobviousness); and

or

is commercially useful.

Shell supra 120].

See also: Inc. No. 596,848 (Re) (1999),3 C.P.R. (4th) 517 (F.C.T.D.),

aff'd (2000), 9 C.P.R. (4th) 479 (F.C.A.) 122]; Eli Lilly and v, Inc. 2009 FC 991 at paras. 377-

378 [23].

61. The Commissioner applied a different, narrower definition, of patentable art, and erred in

law.

(vi) "machine"

62. Claims 44-50 claim a system. The Commissioner accepts that these claims are, on their face, directed to a machine and fit within the category of "machine" in the definition of invention in the Patent Act.20 The Commissioner does not discuss the meaning of "machine", and there does not appear to be any issue that in accordance with its ordinary meaning, the system claimed in claims 44-50 comes within the definition of "machine and lherefore-theclaims-shoruahave been allowed. Rather, the Commissioner goes on to construe the claims as being "in substance" something other than a machine, which she finds does not fit within the definition of "art". The errors law by the Commissioner in the claims are discussed below at paragraphs

(vii) Non-statutory Exclusion for "Business Methods"

se

not

- 18 -

No Authority to "Create" Exclusion

64.

set out

and

the

refuse an

entitled to a

the

no provision

and no

other

an

Moreover,

Commissioner

not have the discretion to create such an exclusion.

No Valid Legal Authority for Exclusion

65. The only Canadian authority which the Commissioner purports to rely upon in support of

the

Schmeiser in which she stated."

Subject matters that are specifically precluded by statute from patent protection are natural phenomena, laws of nature, and scientific principles: s. 27(8). Other subject matter has been excluded by judicial interpretation of s. 2 definitions of "invention" and "process" and s. 27(8). For example, the following have been excluded: ... business systems and methods and professional skills and methods (State Street Bank & Trust Co. v, Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998) ... [emphasis added]

Monsanto Canada Inc. v, Schmeiser, [2004] I S.C.R. 902, 2004 see 34 at para. 133 {"Schmeiser"} [241.

66. After quoting this passage, the Commissioner states:22

Notwithstanding the reference to State Street Bank above, the Board accepts the statement in dissent by the Supreme Court of Canada that business-methods-are-excluded sabjeet mattee, -

67. With respect, the Commissioner's position disregards the principles of stare decisis. An obiter comment (the patentability of business methods was clearly before the Court in

Schmeiser

modified canola plant

and

ma

se

IS an error. In

that

for

149 F.3d 1368 at 1375 (Fed. Cir. 1998)

State Street Bank & Trust CO. V. ocxnuiure

[25].

69. It is of interest that the Commissioner at paragraph 145 cites the more recent decision of the CAFC in Bilski in apparent support of her view that business methods are not patentable per se.23 Again, such a view is incorrect, as the majority in Bilski concluded:

We further reject calls for categorical exclusions beyond those for fundamental principles already identified by the Supreme Court. We rejected just such an exclusion in State Street, noting that the so-called "business method exception" was unlawful and that business method claims (and indeed all process claims) are "subject to the same legal requirements for patentability as applied to any other process or method." .... We reaffirm this conclusion [emphasis added].

In re Bilski, 88 USPQ 2d 1385 at 1395 (Fed. cs. 2008) ("Bilskt') [261.24

70. In summary, in the United States, where there is an identical definition of "invention", the CAFC has found that there is no per se prohibition against the patenting of business methods.

71. The Commissioner then goes on to reference the UK decision In the Matter of Cooper's Application for a Patent, [1901] 19 R.P.C. 53 ("Cooper's Application") [27}, and a passage from Harold G. 1957 text, Digest of Canadian Patent (Toronto: Carswell, 1957) (361.

rp"npj~t to 's upon as Sir

Robert Finlay A.G. an application for a in which a space or were left

across to enable a person reading it to fold it without with the printed matter

patentable. Although Sir Robert negatively commented in passing as to the

patentability of a scheme or plan a plan for becoming rich; a plan for the better

government of a State; a plan for the efficient conduct of business", he cited no authorities for such exclusions. Moreover, and significantly, in his closing remarks, Sir Robert Finlay expressly states that he does not think that the case "decides any question of principle". Thus, any comments in Cooper's Application relating to patentability of "business plans" were mere obiter dicta. In any event, the Coooper's decision is over 100 years old, and cannot be taken as having considered the implications of computers and the Internet in respect of the issue of patentability.

73. As for CFPH, as discussed above, the UK Patents Act, 1977 and the EPC contain an express exclusion for methods for doing business as such, which has no equivalent in the Canadian Patent Act. The passage from CFPH quoted in the Commissioner's reasons is a discussion of this statutory exclusion. Interestingly, nowhere in her reasons does the Commissioner acknowledge that the exclusions in the UK and Europe are created by statute. Nor does the Commissioner quote the relevant statutory provisions under which those decisions have been rendered, or explain why those decisions should be binding in Canada notwithstanding the significant differences in the underlying legislation. Moreover, it is worth observing that the quote from CFPH acknowledges that the business method exclusion is based on policy, a factor

that the is prohibited from considering.

our

No "Tradition" that Business Methods are Unpatentable

is a .. tr<ul1t,nn

are not

legislation" required

... "",1-1",,.. is unfounded in fact and law.

76.

is no statutory or jurisprudential basis for the existence of such an exclusion in

characterized as a business method, if it falls within the statutory definition of a patentable art.

77. In fact, the Commissioner's conclusion on a per se business method prohibition is contrary to the practice of the Patent Office, such that there has been no "tradition" of excluding the patentability of business methods.

78. Notably, the Commissioner's own Manual of Patent Office Practice28 states (correctly, the Appellant submits) that the patentability of an invention which may be characterized as a business method is to be assessed in accordance with the usual jurisprudence:

The expression "business methods" refers to a broad category of subject matter which often relates to financial, marketing and other commercial activities. These methods are not automatically excluded from patentability, since there is no authority in the Patent Act or Rules or in the jurisprudence to sanction or preclude patentability based on-their inclusion-in ~ ~ this category. Patentability is established from criteria provided by the Patent Act and Rules

and from Jurisprudence as for other inventions [emphasis added].

MOPOP, s. 12.04.04 (32).

law.

Commissioner'S Decision at paras. AB, Vol 1, Tab

The Mannal of Patent Office Practice sets out the procedure

Canadian and includes the view Patent Office with to substantive

fi ~~_~b~~~

pul:)Iisliled for comment

[281; Re

I.ihan'IJ""'" Canadian Patent No. "Electronic Bill 1999

Patent No. "Portfolio

;:)CCIUeJrlCes", issued 21, 2003 138]; Canadian Patent No.

System and Method", issued August 5, 2003 (39]; Canadian Patent No. computer readable medium for website account and e-commerce management from a central location", issued February 21, 2006 [40); Canadian Patent No. 2,349,306, "Method of an apparatus for executing automated transactions", issued October 10,2006 (41J.

Conclusions on the Commissioner's Non-statutory Exclusion/or "Business Methods"

80. In attempting to create a per se exclusion from patentability for business methods, the Commissioner clearly erred in law and exceeded the authority granted to her by the Patent Act by effectively deciding as a matter of "policy" that such subject matter should now be excluded from patentability in Canada. As set out above, there is no authority in Canadian law for an exclusion and such an exclusion is contrary to existing practice at the Patent Office. In the Appellant's submission, the correct approach to assessing patentable subject matter' for any claimed invention, including an invention that may be characterized by some as a "business method", is to determine whether the claimed invention falls within one of the categories within the definition of invention in the Patent Act.

(viii) Creation of "Technological" Requirement for Patentability

81. Commissioner introduces an additional non-statutory limitation on patentability by

requiring that the claimed invention

"technological". For example, at paragraph 194, the

subject

matter is an error of

it

found to be limited

to matter is "technological". the Appellant are aware no

authority. Moreover, given that Parliament has defined the categories of patentable invention in section 2, the Commissioner may not introduce further limitations.i"

84. As authority for her position, the Commissioner again relies upon caselaw from the UK and Europe. As noted, the relevant statutes in those jurisdictions are very different and do not define invention.

85. In the U.S., where the statute includes the same definition of invention as the Canadian Patent Act, the Court in Bilski considered and rejected a "technical arts" test, which would have imposed a limit on patentability not unlike what is now introduced by the Commissioner. As stated by the Court in Bilski, the ambiguous and ever-changing meanings of "technological" and "technology" would lead to a limitation which would be, at best, unclear.

Bilski. supra at 1395 (26].

86. Even in the UK CFPH case, relied upon by the Commissioner in her creatIon of- a business method prohibition, the Court warned of the dangers of using the term "technology" in discussing patentability, noting that it is a "terribly imprecise concept".

supra at paras. 11-13 and 53 [161.

- 24-

own

such

A method of playing a board or a

patentable matter game board or

can occur if the board or cards bear a new arrangement inventive functional use.

MOPOP, s, 12.04.06132J.

88. Consistent with this approach, and simply by way of an example of the ill-founded nature of the Commissioner's position, the board game "Monopoly" was patented in this country (the patent has long expired), an invention which can hardly be considered to be "technological". The Commissioner's decision in the present case would re-write our law to render that subject matter unpatentable, and would do so in the absence of any amendment to the definition of invention in the Patent Act.

Canadian Patent No. 362,124, "Board Game Apparatus", issued November 24, 19361451. See also the following more recent examples:

Canadian Patent No. 1,009,675, "Guessing Game with Hidden Area", issued May 3,1977 [461; Canadian Patent No. 1,127,306, "Microcomputer Controlled Game", issued July 6, 1982 [47J; Canadian Patent No. 1,175,457, "Board Game for Three Players", issued October 2,19841481; and Canadian Patent No. 1,230,585, "Cribbage Board", issued December 22, 1987 [49}.

D. Claims Construction

(i) The Commissioner's "Form and Substance" Claims Construction

89. The Commissioner purports to consider the "form" of the claims and "substance" or

of the claimed invention

the '933 Application when

whether the

application

patentable subject marter.32 This two-step approach to claims construction

ill

[46] In the two-step approach, the Court construes the claims and determines whether the device accused of infringement has literally taken the invention. If not, the Court proceeds to the second step of asking itself whether "in substance" the invention was wrongfully appropriated. On occasion, treatment of the second step in specific cases has attracted criticism as being subjective and unduly discretionary. Once the inquiry is no longer anchored in the language of the claims, the Court may be heading into unknown waters without a chart. The one-step approach has to build flexibility and common sense into the initial.claimsconstruction because there is no second step.

[50] I do not suggest that the two-stage approach necessarily ends at a different destination than the one-stage approach, or that the two-stage approach has resulted in abuse. I think we

nor do Commissioner

a

decision.

Oi) Construction of the Claims as a Whole

Another error

by the

in

of the

of the

and to consider only those features

as

the

unobvious.

selected features are then considered in

isolation from the

as a whole to assess whether the substance of the invention is statutory

subject matter. This approach is again unsupported in Canadian law.

92. provisions of the Canadian Patent Act refer to the subject matter "defined by a claim", and do not divide out, for any purpose, a subset of claim elements which are new and unobvious,

27 .... (4) The specification must end with a claim or claims defining distinctly and in explicit terms the subject-matter of the invention for which an exclusive privilege or property is claimed.

28.2 (1) The subject-matter defined by a claim in an application for a patent in Canada (the "pending application") must not have been disclosed ...

28.3 The subject-matter defined by a claim in an application for a patent in Canada must be subject-matter that would not have been obvious on the claim date to a person skilled in the art or science to which it pertains, having regard to '" [emphasis added]

Sections 27(4), 28.2 and 28.3, Patent Act, supra [11.

93. Moreover, the Commissioner's approach clearly contravenes the principle of Canadian claims construction that the claims are to be construed before considering issues of infringement or validity and without regard to the prior art.

supra at paras. 43,

and (9].

94.

IS

1,

IS

is

on

a

is a

error on

E. Patentability of the Claims in Issue

(I) The Method Claims (Claims 1-43 and 51-75)

and

methods claimed in use of a communications

set out above,

Internet in a manner which is admitted to be new and unobvious. This is clearly "the application of a method to a material or materials" and therefore the claims are directed to a patentable "process" as that term has been defined by the Supreme Court.

supra (19].

96. The Appellant further submits that the claims are also directed to a patentable art. The only question which should have been considered by the Commissioner in relation to method claims 1-43 and 51-75 is whether the test stated in Shell Oil was met by the claims, properly construed. Therefore, claims 1-43 and 51-75 of the '933 Application are directed to a patentable art if they satisfy the following conditions:

(i) it is not a disembodied idea but has a method of practical application;

(ii) it is a method of applying skill or knowledge (it must also be new and inventivebut these characteristics are properly considered as part of novelty and obviousness); and

(iii) it must have a result or effect that is commercially useful.

The Invention Claimed is Not a Disembodied Idea, But Has a Method of Practical Application 97. It is readily apparent that the '933 Application is directed to a real-world problem and

solution, which is implemented in a tangible and concrete

and is not simply a

use

commerce

means a

to

commerce

The Invention Claimed Leads to a Result or Effect that is Commercially Useful

seems to little is commerctau

as much at paragraph of her reasons:

One

and consumer ,..,.., ... Ir •• h instant gratification of ownership through a '"Sl1:UH~e·a4:.mcm

(ii) The System Claims (Claims 44-50)

101. Commissioner's approach to the <:!U(l,rl"n'l claims ignores the fact that the system

claims are directed to a machine (and claim patentable subject matter), The

Commissioner does so instead considering what she finds to be the substance the claims.

As set out above, the Commissioner's approach is improper, and

properly construed are on their clearly patentable,

(iii) Conclusions

correct

105.

IS an

a post

opposition pursuant to which the

was

mstance on the basis that certain elements of

(which

Via"u,,> of the '933 Application) lack support in the specification. However,

EPO found that patent did claim patentable subject matter notwithstanding the statutory

exclusion in EPC. 36

G. Even Applying the Commissioner's Incorrect Approach and Test, the '933 Application Should Still be Granted

UK and European Approach to Patentable Subject Matter

106. Even applying the Commissioner's flawed analysis, it is submitted that the claims of the '933 Application should still be granted.

107. In this regard, while the Commissioner borrows glosses from the UK and European caselaw, she fails to consider the analysis actually performed in those jurisdictions.

108. It is instructive to note that in Aerotel, the UK Court of Appeal considered a patent pertaining to a method and system for making pre-paid telephone calls. The claims are quoted at

-

paragraph 50 of the reasons. In reversing the trial judge, and finding that the patent in issue

claimed patentable subject matter, the Court of Appeal finds as follows:

53. The important point to note is that the system as a whole is new. And it is new in itself, not merely because it is to be used for the business of selling phone calls. So,

on to step the contribution is a new It is true that it could be

supra at paras. 53-54 (30).

'933 Application in

case.

The Commissioner's Narrow Definition of "Art"

110. With respect to the narrow test for patentable "art", applied by the Commissioner, the practice of the methods claimed in the '933 Application clearly result in a change in the character or condition in numerous physical objects, namely the client and server computer systems required to implement the method.

Ill. In the result, even on the basis of the Commissioner's analysis which included numerous legal errors, the '933 Application should be granted.

PART IV-ORDERSOUGHT

112. For the reasons set out above, the Appellant requests that this Honourable Court grant this Appeal, and issue an order directing the Commissioner to allow claims 1 through 75 of the '933 Application, and to grant to the Appellant a patent in respect of the '933 Application pursuant to the provisions of the Patent Act.

ALL OF WHICH IS RESPECTFULLY SUBMITTED this

day of November, 2009.

the

- 31 -

PART V - LIST OF AUTHORITIES TO BE REFERRED TO Statutes and Regulations

1 2 3 4 5 6 7

40.

6 c.62), s. 101.

Intellectual Property Rights, arts. 7 &

Case Law

8 Harvard College v. Canada (Commissioner of Patents), [2002] 4 S.CR. 45, 2002 SCC 76.

9 Whirlpool Corp. v. Cameo Inc., [2000] 2 S.C.R. 1067,2000 SCC 67.

10 James Halford v. Seed Hawk (2007),54 C.P.R. (4th) 130,2006 FCA 275.

11 Monsanto Co. v. Canada (Commissioner of Patents), [1979] 2 S.c.R. 1108.

12 Bell Expressl/u Limited Partnership v. Rex, [2002] 2 S.C.R. 559.

13 Perka v. R., [1984] 2 S.c.R. 232.

14 Free World Trust v. Electro Sante, [2000] 2 S.C.R 1024.

15 Diamond, Commissioner of Patents and Trademarks v. Chakrabarty (1980), 447 U.S. 303.

16 CFPH LLC's Application, [2005] EWHC 1589 (Pat.).

17 Tennessee Eastman Co. v. Commissioner of Patents, [1974] S.CR. 111.

18 Electric Fireproofing Co. of Canada v, The Electric Fireproofing Co. (1910),43 S.c.R.

182.

19 Commissioner of Patents v, Ciba Ltd., [1959] S.C.R. 378.

20 Shell Oil Co. v. Commissioner of Patents, [1982] 2 S.C.R. 536.

21 Lawson v. Commissioner of Patents (1970), 62 c.P.R. 101 (Ex. Ct.).

22 Progressive Games, Inc. Patent Application No. 596,848 (Re) (l999), 3 C.P.R. {4th)5L7 - -

(F.C.T.D.), affd (2000), 9 c.P.R. (4th) 479 (F.C.A.).

23 Eli Lilly and Company v. Apotex Inc. 2009 FC 991.

24 Monsanto Canada Inc. v. Schmeiser, [2004] 1 S.C.R. 902, 2004 SCC 34.

25 State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998).

In re Bilski, In the

(P.A.B.).

38

&

39 Canadian Patent August 5,2003.

40 Canadian Patent No. 2,410746, "Method, system and computer readable medium for website account and e-commerce management from a central location", issued February 21, 2006.

41 Canadian Patent No. 2,349,306, "Method of an apparatus for executing automated transactions", issued October 10,2006.

42 Manual of Patent Office Practice Chapter 12: Subject Matter and Utility (Draft for public consultation dated April 2, 2008) (online: !ill]rdL~~~~:.@~~L§.!!~!llQ;b]llims~

eng.pdflSfile/chapterl2May7 2009-chapitre12_7Mai2009-eng.pdf)

43 Submissions of the Federation Intemationale des Conseils en Propriete Industrielle concerning draft amended MOPOP Chapters 12 and 13, dated September 16,2009 (online: http://www.cipo.ic.gc.ca/eic/site/cipointernet-

internetopic.nsflvwaJ2j/commentaires 16092009-3-comments 16092009-3- eng.pdfl$FILE/commentaires 16092009-3-comments 16092009-3-eng.pdf)

44 Submissions of the Intellectual Property Institute of Canada concerning draft amended MOPOP Chapters 12 and 13, dated September 11,2009 (online: http://www.cipo.ic.gc.ca/eic/site/cipointenlet-

45 Patent No. 362,124, "Board Game Apparatus", issued November 24, 1936.

46 Canadian Patent No. 1,009,675, "Guessing Game with Hidden Area", issued May 3, 1977.

47 Canadian Patent No.1, 127,306, "Microcomputer Controlled Game", issued July 6, 1982.

48 Canadian Patent No. 1,175,457, "Board Game for Three ,issued October 2, 1984.

49 Canadian Patent No. 1,230,585, "Cribbage Board", issued December 22, 1987.

50 U.S. Patent No. 5,960,411, "Method and for a purchase order a

28, 1999.

SCHEDULE "A"

28

L

A method in II client

an

for

the method

r(';c(';,v',nn from a server system a client identifier of the client system; the client identifier at the client system;

an item is to be ordered,

displaying information identitying the item and displaying an indication of a action that is to be performed to order the identified item; and

in response to the single action being performed, sending to the server system a request to un'!el the ideutified ilt;;1II ululIg with the client ideutifler , the elit::Hl iUt::lILifit:l

10 identifying account information previously supplied by II user of the client system wherein the

5

15

user does nor need to log in to the server system when ordering the item; and

when account information is to be changed,

coordinating the log in of the user to the server system; receiving updated account information; and

sending the updated account information to the server system

whereby the user does nor need to log in to the server system when ordering the item, but needs to log in to the server system when changing previously supplied account information.

20

2

The method of claim I wherein the account information includes hilling information.

3. The method of any of claims 1-2 wherein the account information includes shipping

information.

25

4

l-J wherein the client system and server

The method the Internet.

Ihe

406

401

The method

a mouse button

5

7.

information "",11,,,,11.,,,

the server

as to an

8,

The

10 9, The 1·8 wherein the includes
server
10, The 1-9 wherein the item may be ordered

a cart
15
II. The method of claims 1·10 the server system combines

a order,
are combined when sent within a certain

20
13, The method I J wherein are when sent within 90 minutes.

The method claims t·1 after the server system receives the 17.

The method of

of

1·16

an indication that the order for action can be cancelled within

the item that is a time

5

18.

The method of claim 17 wherein the time

is 90 minutes

19.

A method in a diem system for

receiving from a server system a client identifier of the client system; persistently storing the client identifier at the client system, and

for each of a plurality of items

displaying information identifying the item and displaying an indication of II single action that is to be performed to order the identified item; and

in response to the single action being performed, sending to the server system a request to order the identified item and the client identifier, the client identifier identifying

15 account information of a user

10

wherein the server computer automatically combines orders into a single order.

20. The method of claim 19 wherein the requested orders are combined when sent within

a certain time interval.

20

21,

The method of claim 19 wherein the requested orders are combined when requested

within 90 minutes.

The method of any of claims 19-21 wherein the items have similar HV""""·HllI

25

22. the

The method

3

25.

The method

of claims 19·24 wherein the

system and server

communicate via the Internet

26.

The method

of claims 19~ 25 wherein the

action is clicking a mouse

5

button when a cursor is positioned over a

area of the displayed information,

27, The method of any of claims 19·26 wherein the displaying includes displaying partial

information supplied by the server system as to the identity of the user of the

system,

10

28

The method of any of claims 19·27 wherein the displaying includes displaying partial

shipping information supplied by the server system,

29 The method of any of claims 19~28 wherein the displaying includes displaying partial

payment information supplied by the server system,

15

30, The method of any of claims 19-29 wherein the item may alternatively be ordered using a shopping cart model.

31. The method of any of claims 19-30 including displaying an indication that the order

20 for the item that is requested in response to performing the single action can~ be cancelled within a time period.

32,

The method of claim 31

the time period is 90 minutes.

a client identifier of the client

that

410

32

in response to the action

to order the identified item with the client

account information of a user; and

an indication that the order for the item that is

5 within a time interval.

fhe server a

the client identifier

34. The method of claim 33 wherein the time interval is 90 minutes.

35. The method of any of claims 33·34 wherein the client system and server system

10 communicate via the Internet.

36. The method of any of claims 33·J5 wherein the single action is clicking a mouse

button when a cursor is positioned over a predefined area of the displayed information,

15

37.

The method of any of claims 33-36 wherein the displaying includes displaying partial

information supplied by the server system as to the identity of the user of the client system.

38. The method of any of claims 33-37 wherein the displaying includes displaying partial

shipping information supplied by the server system.

20

39. The method of any of claims 3)-38 wherein the displaying includes displaying partial

payment information supplied the server system.

40.

The method of any of claims )}·)9 wherein the item may "h".nnlnO cart

25

The method order

41

order

42, The

interval.

411

33

43. The method of any of claims 33-42 wherein after the server receives the

it includes the an order with another item with similar avanamutv.

44.

s

a component that receives from a server and that stores the diem identifier F,,,:n~'''fj.''y,

a component that orders an item information the item along

with an indication of a action that is to be performed to order the identified item and by

a client identifier of the

sending to the server system a to order the identified item with the client

10 identifier, the client identifier identifying account information previously supplied by a USer wherein the user docs not need to log in to the server system when ordering the item; and

a component that updates account information by coordinating the log in of the user to the server system, receiving updated account information from the user, and sending the updated account information to the server system.

15

45. The computer system of claim 44 wherein the account information includes billing

information

46. The computer system of any of claims 44-45 wherein the account information

20 includes shipping information.

47.

The computer system of any of claims 44-46 wherein the single action is

a

orders the item

44-47

25

49.

44-48 wherein the server

combines

412

50. The computer system

the order for the item that is requesreo cancelled within 11 time

of claims 44-49

an indication that action can be

response to

the

5

A method in a providing to a client

51.

system for AU'M."n the method comprising:

a client '''''''nt'''''''Y for the client system, the client

being associated with account information of 11 user and tor persistent storage at the client system;

10

for each of one or more items,

providing to the client system a display page identifyirrg an item, the display page including an indication of a single action that is 10 be performed to order the identified item; and

15

receiving from the client system a request to order the identified item, the request including the client identifier; and

automatically generating a single order lor the identified items of the one or more received requests for items wherein the USer does not need to specify that the identified items are to combined into a single order

52. The method of claim 51 wherein the requested orders are combined into a single order

20

when

within a certain time interval

53. The method of claim 51 wherein the requested orders are combined into a single order

when received within 90 minutes.

25

are combined into a

54.

order when the

S5

The method

as short-term

56. The method of claim 54 wherein the

57.

The method

a mouse isntaveu information

of claims 51-56 wherein the

5

button when a cursor is positioned over a

5S. The method of any of claims 51-56 wherein an item may alternatively be ordered

using a shopping cart model

10

59.

The method of claim 58 wherein the single action is clicking a mouse button when a

cursor is positioned over a predefined area of the displayed information.

60. A method in a computer system for ordering an item, the method comprising: providing to a client system 1I client identifier for the client system, the client identifier

J 5 being associated 'with account information of a user and for persistent storage at the client system;

providing to the client system a display page identifying an item, the display page including an indication of a single action that is to be performed to order the identified item and an indication that the order for the item can be cancelled within a time interval;

20 rromthe-dielll sYstem an indication thanhe liserpelio(med dre single R'CtiOiT ~

along with the client identifier; and

generating an order for the identified item with the received client identifier

the account information associated

60 wherein the time interval is 90 minutes.

The method

of

wherein the

and server system

~13

414

36

The method any of claims

the user

wherein (he

page includes information

65.

The method of any of claims 60-64 wherein the

page includes

5 information

66. The method of any of claims 60-65 wherein the display page includes partial payment

information

10

67.

The method of any of claims 60-66 wherein the item may alternatively be ordered

using a shopping cart model.

68. A method in a computer for ordering an item, the method comprising:

providing to a client system a client identifier for the client system, the client identifier

15 being associated with account information of a user and for persistent storage at the client system;

when an item is to be ordered,

providing to the client system a display page identifting all item, the display page including an indication of a single action that is to be performed to order the identified

20 item;

receiving from the client

an indication that the user performed the

action along with the client identifier; and

'T".r''''r;~tif·'O an order for the identified item using the account information associated with the received client identifier wherein the user does not need to log in to the

25 c.o.mputersystemJ:o

when account information is to be cnanzeo,

to

and

415

37

69.

The method of claim 68 wherein the account information includes

information

70.

The method

of claims 68·69 wherein the account informauon includes

information

71

The method of any of claims 68· 70 wherein the client

and server system

communicate via the Internet.

72. The method of any of claims 68- 71 wherein the single action is clicking a mouse

]0 button when a cursor is positioned over a predefined area of the displayed information.

73, The method of any of claims 68-72 wherein the display page includes partial shipping

information supplied

15

74,

The method of any of claims 68-73 wherein the display page includes partial payment

information supplied

75, The method of any of claims 68-74 wherein the item may alternatively be ordered

using a shopping cart model.

20

Court File No. T-1476-09

FEDERAL COURT

BETWEEN:

AMAZON.COM, INC.

Appellant

~ and-

THE ATTORNEY GENERAL and THE COMMISSIONER OF PATENTS

Respondents

APPELLANT'S MEMORANDUM OF FACT AND LAW

SMART & BIGGAR Barristers & Solicitors 55.Metcalfe

Suite 900

Ottawa, Ontario

KIP 5Y6

John R. Morrissey

B. Garland Colin B.

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