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Amazon.com

Justin Sullivan

Amazon.com should be able to patent its "one-click" Internet shopping system, a Federal Court judge has ruled, in a decision that intellectual property experts say clarifies the ability of businesses to patent "business methods."

The online retailer has been locked in a 12-year battle for a Canadian patent on its Web sales system, which allows consumers to make a purchase with only one click. Last year, the Commissioner of Patents upheld a previous decision to deny the patent, which the retailer had been granted in the U.S.

In a strongly worded decision released on Thursday, Mr. Justice Michael Phelan of the Federal Court of Canada rebuked the commissioner and sided with Amazon.com, saying the rejection of the patent was based on "a fundamental error of law."

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Judge Phelan declared that Amazon.com's system is indeed patentable and ordered patent officials to reconsider the application, noting that previous patents on business-methods patents had been allowed.

At issue was whether the online retailer's system fell into the legal definition of invention that is eligible for patents: "any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter." Mathematical theories, schemes or plans are generally not patentable.

It is a hard line to define, especially when applying patent law concepts developed in the 19th-century world of machines made from iron and steel to the 21st-century world of information technology.

Richard Owens, an intellectual property lawyer with Stikeman Elliott LLP in Toronto, hailed the ruling as positive for companies looking to protect their innovations. He said it was one of the most important in Canadian patent law since the Supreme Court of Canada battles over Harvard University's genetically modified mouse and Monsanto's biotech crops.

"In my view its the most important patent case in the last 10 years. It really is foundational for the way the patent system is going to work," Mr. Owens said, adding that business-method patents are often sought for new software, for example.

Michael Geist, an intellectual property law expert with the University of Ottawa, said the decision would further embolden businesses seeking patents for abstract processes or methods they develop.

He said the case could be appealed, perhaps end up going all the way to the Supreme Court of Canada. However, he said he thought new legislation was required to settle the question of what could be patented and what could not.

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The number of business-methods patents in the U.S. has grown over the past 10 years, as has litigation over what Prof. Geist described as sometimes "frivolous patents" on business methods.

The U.S. Supreme Court recently wrestled with the issue. In June, it denied a patent for a mathematical model meant to help commodity traders hedge weather risks. But it also ruled that other business methods could be eligible for patents.

The Canadian Intellectual Property Office says it is reviewing the decision, and the Commissioner of Patents has 30 days to decide whether to appeal the decision before the Federal Court of Appeal.





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