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Amazon filed a patent application in 1998 for its business method for fulfilling and paying for orders. (Thinkstock/Thinkstock)
Amazon filed a patent application in 1998 for its business method for fulfilling and paying for orders. (Thinkstock/Thinkstock)

Commentary

Patent rules change thanks to growth of e-commerce Add to ...

The Canadian Intellectual Property Office on its website explains that a patent is a government grant that gives inventors exclusive rights to their innovations.

In Canada, patent protection lasts for 20 years from the date of filing. Patents are granted for products or processes that are novel, useful, and inventive – in other words: new, workable, and ingenious – and they are essentially a 20-year monopoly granted to reward ingenuity, and then they end.

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But there’s a lot of buzz these days about Business Method Patents (BMPs), and a Lexpert program on the subject is being offered in Toronto on Nov. 21. BMPs are not things you’d expect to be patentable, such as drugs or new tools or a new microchip. You might say they are novel, useful and inventive ways of doing business, and they have become important thanks to the proliferation of e-commerce. They’ve been a grey area in Canada for some time.

Vancouver patent lawyer Jennifer Lee says until recently, the Canadian Patent Office routinely rejected business method patent applications as unpatentable, though they had been granted in the United States. The Patent Act explicitly states that no patent shall be granted for any mere scientific principle or abstract theorem. Traditionally it’s been accepted that mathematical formulae, natural phenomena and laws of nature cannot be patented, nor can some methods of medical treatment, schemes, plans, rules, mental processes and business methods. BMPs were deemed to be in this category.

Things changed in 2011. Amazon.com has a “one-click” Internet checkout system. Amazon filed its patent application in 1998 for its business method for fulfilling and paying for orders, and in doing so, it disclosed what it believed to be a novel business method for online shopping: the ability to complete a purchase with a single click of a mouse. The application wound its way through the patent examination process and subsequent appeals before landing before the Federal Court in 2011.

Ms. Lee says that in Amazon.com v. Commissioner of Patents, the Federal Court decided that the company’s BMP could be patentable subject matter, and it indicated there was no valid historical or legal basis for rejecting business method patent applications. The Commissioner of Patents decided not to appeal the decision to the Supreme Court of Canada and it subsequently allowed the Amazon patent to be issued in 2012.

The Federal Court decision is encouraging because it now recognizes a broadening of what can be patentable in Canada. This could include business methods involving data processing systems, business forecasting systems, and other methods used in e-commerce and in the banking and insurance sectors.

But there are some practical considerations with respect to BMPs that prospective applicants should consider.

  • As business method patents are relatively new to the Canadian Patent Office, there is very little information to guide people as to how applications will work their way through the system.
  • As the Patent Branch has only begun issuing BMPs, it is difficult to predict how patent examiners will approach them, or what hoops must be jumped through for applications to be approved.
  • Not all countries recognize BMPs, particularly those in the European Union.
  • It may be difficult to predict how enforceable BMPs will be. Getting one issued is one thing, enforcing it against a potential infringer is another. Some methods of doing business may not be as apparent as a “one-click” process for buying products online from Amazon, and as a result, there will be practical difficulties catching infringers using certain types of BMPs. For example, how can you tell if I’m using your patented business method for “sorting files” behind closed doors at my office?

So while they’re now available in Canada, practically speaking, applicants will have to consider the real value of BMPs and whether it’s worth the trouble.

 
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