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Business Method Patents Abroad: Developments in Australia and Canada

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01.26.2011 | Advisory

In Invention Pathways, the Australian Patent Office denied the protection of business method claims because the use of a computer was considered merely incidental or peripheral. In this perfectly meta-aware scenario, the applicants attempted to claim a computer-aided process to ensure that all commercialization activities are completed within the time constraints during the lifecycle of a patent application, in accordance with various international treaties and legal jurisdictions. The specification disclosed one embodiment as a planning software package using a computer implemented checklist without any specific technical details.

In the decision, a Delegate of the Commissioner of Patents confirmed that a patentable method must produce “a concrete, tangible, physical, or observable effect.” The Delegate further required that the “concrete effect” must be one that is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way.  

The Delegate viewed the computer implemented checklist as one that provided “no substantive effect produced through the operation of the computer…and such an effect does not arise from a synergistic interaction in the operation of the method on the computer or other physical elements,” and so it was, therefore, not patentable subject matter.

In doing so, the Delegate has imported considerations which are normally reserved for novelty or inventive step into a threshold, patentable subject matter inquiry. The Delegate also concluded that “the authorities make it clear that in many circumstances a method including the processing of information and the production of a substantive effect in or through a computer or peripheral, if novel and not obvious, will result in patentable subject matter.”  

Therefore, what is “incidental” or “peripheral” and what is not, for the patentable subject matter inquiry, will have to be clarified in future Australian Patent Office decisions or by the Australian Federal Court.

In Canada’s Amazon, Inc. v. Canada, the Commissioner of Patents rejected Amazon’s one-click patent application—pejoratively calling the invention a “business method.” The Commissioner’s legal hook for rejection was that business methods do not fit within the legal definition of “invention” required by s. 2 of the Canadian Patent Act. The text of that provision was derived from United States law and closely follows the language of 35 U.S.C. § 101.

On October 15, 2010, the Federal Court of Canada reversed the Commissioner’s rejection and held that business methods “can be patented in appropriate circumstances.”

In particular, the Court held that Amazon’s one-click online purchase processing system qualified as patentable subject matter because the system claims require a machine as an essential element of the invention, the method claims result in a “physical effect” “through the use of cookies, computers, the internet and the customer’s own action,” which moved the one-click system beyond a “mere business scheme” or “disembodied idea” having no “practical embodiment.”

Instead of granting a patent outright, however, the Court remanded the decision for an “expedited re-examination.” Here, though the Court appears to have followed the U.S. Supreme Court’s recent decision in Bilski v. Kappos, it fails to clearly signal as to whether a shift from Canada’s long standing denial of business method patents is afoot.

This advisory was prepared by Nutter’s Intellectual Property practice. For more information, please contact your Nutter attorney at 617.439.2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.

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