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Are Business Methods Patentable in Canada?

An update on the continuing saga of Canadian patent application No. 2,246,933

Although maybe less known than its related patents and applications around the world, this Canadian counterpart to Amazon.com’s “One-Click Patent” (US Patent No. 5,960,411) has been reshaping the boundaries of what sort of subject matter is eligible for patent protection in Canada.  More than 13 years after it was filed, the patent-eligibility of the ‘933 application is about to be determined by the Federal Court of Appeal.

[Editor’s note: As of press time, the FCA decision in Amazon.com was not available, but was just released on 24 November 2011.  Check the news section of our website for further updates shortly.]

In Canada, patent-eligible or “statutory” subject matter is governed by the definition of invention in section 2 of the Patent Act, but the definitions of the terms used in that definition (namely, “art, process, machine, manufacture or composition of matter”) have been an ongoing subject of debate.  Until recently, the leading case in which a Canadian court decided the patent-eligibility of a computer-related invention was from 1982 (Schlumberger Canada Ltd. v. Commissioner of Patents, [1982] 1 F.C. 845 (C.A.)).

After spending over a decade pending at the Canadian Intellectual Property Office (CIPO), including two hearings at the Patent Appeal Board (PAB) the ‘933 application was rejected by the CIPO in Commissioner’s Decision (CD) No. 1290.   Upon recommendation of the PAB, CD 1290 reversed the Examiner’s obviousness rejection, but upheld the statutory subject matter rejection based on section 2.  In doing so, the PAB’s analysis indicated a shift in policy for determining patentability in Canada, including a number of new approaches to examination and tests for statutory subject matter.  Among the new criteria for patentability introduced by the PAB was an alleged “business method exclusion” to statutory subject matter

When Amazon.com got its day in court, the Federal Court of Canada held (in 2010 FC 1011) that the PAB’s reasoning in rejecting the ‘933 application was unsupported by Canadian law, and ordered expedited reexamination with a direction that the subject matter was patent eligible.  In particular, with respect to business methods the Federal Court stated that “[t]here is no exclusion for “business methods” which are otherwise patentable”.

The Federal Court thus overruled much of the reasoning upon which CD No. 1290 was based.  Unfortunately, before that decision CIPO had issued new guidelines to its examiners in a revised version of Chapter 12 of the Manual of Patent Office Practice, which included much of the overruled reasoning.

The Federal Court’s decision in Amazon.com has been appealed by CIPO to the Federal Court of Appeal.  While awaiting a decision on this appeal, CIPO released revised guidelines to examiners, but interestingly these guidelines fail to discuss the business method exclusion.  What this means for applicants is that although the law as it currently stands would allow new, inventive and useful business methods to be patented, if your application is considered to be a business method you should not expect much progress on the examination of your application until the appeal decision is released.


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