23 October 2010

Status of Amazon's Controversial "One-Click" Patent in Canada, the US, and Europe

According to Amazon's well-known and controversally discussed "1-click" invention entitled "method and system for placing a purchase order via a communication network", easy internet shopping is enabled in that a customer visits a website, enters address and payment information and is given an identifier stored in a "cookie" in his client computer. A server is able to recognize the client by the cookie and to recall the purchasing information which is now stored in the vendor’s computer system. The customer can thus purchase an item with a "single click" – the order is made without the need to 'check out' or enter any more information.

Below I briefly sketch the legal situation of Amazon's 1-click patents in Canada, the US, and Europe, all of which went through at least a second review, e.g. reexamination in the US or opposition proceedings in Europe. As Amazon is propably not unhappy with the situation in Canada and the US, where a patent with reasonable scope may still be obtained (Canada) or has been upheld (US), they will certainly not be satisfied about Europe.

One reason might be the rather pragmatic European approach towards business methods and computer-implemented inventions, according to which a claim has technical character (and thus represents patentable subject-matter purusant Art. 52 EPC) as soon as a computer or network is mentioned, whereas non-technical (e.g. purely business-related or organisational) features must not be considered for assessing inventive step (cf. T 641/00 "COMVIK"). Thus, a claim whose innovative contribution exclusively relates to business issues can immediately be rejeced per definitionem. On the other hand, business method claims with one or two novel technical features regularly turn out to be obvious, since their non-technical (business-related) features, that almost always provide the problem and solution of the "invention", are publicly known per legal definition, so that the skilled artisan would be directed towards the novel (and mostly trivial) technical features by considering the known non-technical feature.

In the end, however, the patent-eligibility requirements of "technical features" (Europe), "practical embodiment" (Canada), "machine or transformation / no abstract idea" (USA) or "physical effect" (Australia) all relate to same core issue of an eligible subject-matter, namely to its tangible technical implementation

Canada: On October 14, 2010, the Federal Court of Canada issued its (third-instance) Amazon.com vs. Canada appeal decision and ruled that Amazon's so called "1-click" e-commerce patent comprises patentable subject-matter. The Commissioner of Patents' (second-instnace) decision on appeal of 2009 was thus reveresed and the case was remanded to the Patent Office for "expedited re-examination" (see also here, here, here, and here).

In opposition to the Commissioner's grounds for rejection, the Court not only held that there was no basis in Canadian law to exclude business methods from patentability but also critisised the Commissioner for extending into policy-making:
The absolute lack of authority in Canada for a “business method exclusion” and the questionable interpretation of legal authorities in support of the Commissioner’s approach to assessing subject matters underline the policy driven nature of her decision. It appears as if this was a “test case” by which to assess this policy, rather than an application of the law to the patent at issue (cf. § 78 of the decision).
The Court indicated that a "mere business scheme" or "disembodied idea" is not patentable because of the lack of an "practical embodiment" but held that "a business method can be patented in appropriate circumstances", i.e. if a practical embodiment is defined by the claims.  In this respect, Amazon's invention qualifies for "art" under the Canadian Patent Act because
  1. the system claims require a machine as an essential element of the invention and 
  2. the method claims are "put into action through the use of cookies, computers, the internet and the customer’s own action" and result in a "physical effect" on those elements.
Alltogether, the Federal Court of Canada took a fairly liberal approach towwards patenting of business methods. Interestingly, this approach was (also) substantiated by referring to the recent Bilski v. Kappos opinion of the US Supreme Court and motivated by historic parallels between the present "Information Age" and the previous "Industrial Age":
Jurisdictions with patent regimes similar to our own have also struggled to pin down what is required to bring an idea or a discovery beyond simply that. As mentioned above, the US Supreme Court delivered the decision in Bilski/USSC quite recently, squarely addressing patentable processes. While the decision does not answer all questions of US patentability of business processes, it appears that the US Supreme Court rejected the “machine or transformation” test as in violation of the expansive interpretation which should be given to §101 (the equivalent to our s. 2) – they saw nothing in the statute or in the plain meaning of language which would require “process” to be tied to a machine or an article. In essence, they rejected the type of physicality advocated by the Commissioner. The majority called it “a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101” (slip op. At 8). Four of the justices went on to discuss the changing nature of technology and the limitations posed by this type of thinking (cf. § 55 of the decision):

The machine-or-transformation test may well provide a sufficient basis for evaluating processes similar to those in the Industrial Age – for example, inventions grounded in a physical or other tangible form. But there are reasons to doubt whether the test should be the sole criterion for determining the patentability of inventions in the Information Age. 
The Court went on to argue that the majority of the US Supreme Court affirmed in Bilski to not exclude business methods from patentability (cf. § 64 of the decision): 
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 methods 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" (cf. Bilski v. Kappos, § 1396).
United States: Amazon's 1-click patent US 5,960,411 has survived a reexamination essentially unscathed, since, according to the reexamination certificate dated March 2, 2010, the USPTO confirmed the patentability of original independent apparatus claims 6 (client system for ordering an item) and 9 (server system for generating an order) and amended independent method claims 1 (method of placing an order for an item) and 11 (method for ordering an item using a client system), whereas the independent method claims were limited so that the one-click system operates as part of a "shopping cart model" (see also here, here, and here).

After the reexamination, Missouri Law Professor Dennis Crouch, editor of the famous Patently-O blog, added that "the modified patent is still quite broad — especially since the leading retail ecommerce model still uses shopping carts. [...] To infringe the new version of the patent, an eCommerce retailer must use a shopping cart model (presumably non-1-click) alongside of the 1-click version. Because most retail e-commerce sites still use the shopping cart model, the added limitation appears to have no practical impact on the patent scope. [...] This case may be a public relations boon for supporters of patent reform that have been calling for an overhaul of the reexamination system."

In the past, Amazon has used the 1-Click patent to sue competitor Barnes & Noble and license the technology to Apple. The US patent will expire in 2017.

Europe: During the 'hot phase' of the debate on patentability of computer-implemented inventions in Europe, Amazon's European Patent EP 0 927 945 has been revoked by the EPO Opposition Division due to new matter (Art. 123(2) EPC 1973) and lack of inventive step (Art. 56 EPC 1973). The three oppositions were filed by Fleurop Interflora AG and, for mainly political reasons, by the German Computer Society (Gesellschaft für Informatik e.V.) and the anti-patent activist group FFII.

Amazon then lodged an appeal in which the Board of Appeal set aside the appealed decision and remitted the case back to first instance Opposition Division for examining the claims of the third auxiliary request (T 1616/08). The original claims were rejected by the Board of Appeal because of lack of inventive step:
The Board agrees that the subject-matter of claim 1 is obvious [, since] [t]echnical is [...] only the computer system itself and the means for communicating with the recipient, namely e-mail. But these technical means were well known at the priority date, and the invention simply uses them in a straightforward, conventional manner. The Board does not deny that, as the appellant has pointed out, the claimed system is new (over the notorious prior art) and involves technical considerations. This is however not enough. Novelty is not denied and technical considerations do not necessarily have inventive quality. The only relevant criterion for inventive step is the one stated in Art. 56 EPC 1973, namely whether the invention is obvious to a person skilled in the art. Since in accordance with established jurisprudence this 'art' cannot be a field of business or administration, only elements of the solution falling within the competence of a technically skilled person [...] can be taken into account.
The independent claim of the third auxiliary request to be examined by the Opposition Division is much more detailed and its scope is, thus, quite narrow. Further details can be found on IPJur.

Meanwhile, divisional application EP 1 134 680 has been rejected by the Examining Division and has been appealed as well. Oral proceedings are scheduled on January 27, 2011.

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