Real issue with Amazon's 1-Click patent is business method patentability, not prior art

Kevin Osborne is a JD candidate at Osgoode Hall Law School and is taking the Patent Law course.

Earlier this month, the U.S. Patent and Trademark Office (PTO) confirmed’s controversial 1-Click patent (PDF) following a re-examination of newly-submitted prior art (via TechFlash).  This re-examination sheds light on the difference between the novelty and obviousness tests, and why the real issue lies with business method patentability.

Novelty vs. Obviousness
First, the PTO’s re-examination seems to be limited to analyzing the novelty — and not the obviousness — of the 1-Click patent.  The difference between novelty and obviousness is this: The novelty test asks whether the invention has been done before, whereas the obviousness test asks whether it actually required inventiveness.  The famous formulation is that failing the novelty test says that, “Your invention, although clever, was already known”, whereas failing the obviousness test says that, “Any fool could have done that.”

1-Click and Prior Art
As mentioned earlier, the PTO’s re-examination focused on novelty, and not obviousness.  In order to invalidate a patent for lack of novelty, you have to find a single document that describes all that is being claimed by the patent.

In Amazon’s case, their patent claim involved a number of features, including: (1) a single-action purchase system, (2) that uses pre-stored payment information, (3) to generate and fulfill an order.  Additionally, Amazon has since amended the patent to include a fourth criterion: (4) the aforementioned system exists with a traditional shopping cart system.  In order to invalidate Amazon’s patent, a challenger would have to produce a single document describing an invention with all four of these features.

I have summarized the PTO’s re-examination in the chart below.  As can be seen, none of the alleged prior art  describes all four features:

  Single Action Pre-Stored Payment Info Generate Order With Shopping Cart
Amazon 1-Click Yes Yes Yes Yes
DigiCash No No Yes No
Joseph ? ? ? No
Tackbary No No Yes Yes
Kirsch No Yes Yes ?
Franklin No Yes Yes Yes
Reisman No ? Yes Yes
Polnerow Yes ? No ?
Levergood ? ? ? No

For the novelty analysis it is irrelevant that, for example, Franklin and Polnerow might be “combined” to produce all four features: The test requires that all features be described in a single document.  Since the test was not met here, the patent was deemed novel.

1-Click and Obviousness
“Obviousness” is the other test that relates to “prior art.”  The obviousness of the 1-Click patent was not analysed in the re-examination, but it bears some consideration as it seems to be one of the main objections made online.

Obviousness speaks to the inventiveness of the alleged invention: the invention must be non-obvious in order to be patentable.  Unlike in the novelty analysis, the obviousness analysis does combine the elements of the “prior art” to determine the “state of the art.”  So the fact that Franklin and Polnerow, taken together, described many of the key features of the 1-Click patent might be relevant.  However, this is not the only factor considered.  If a particular combination of features was non-obvious at the time the patent was filed, the patent might still be granted.

In the American ruling that upheld the 1-Click patent, the judge held that the patent was valid because it marked a departure from “conventional wisdom”, maximized the number of completed transactions while minimizing consumer anxiety, and was hailed by industry analysts as “legendary” and “seductive innovation” (paras. 34, 35, 41).  Moreover, both sides’ technical experts acknowledged that they had never conceived of the invention (para. 36).  In other words, 1-Click was non-obvious because the business community recognized the 1-Click system as such.

It should be noted that the inventiveness in the 1-Click patent was not the technology per se.  That is, the inventiveness did not lie in the use of cookies to pass an identifier to a server that stored the shopper’s personal information.  Rather, the inventiveness lied in the method of doing business in that way in the first place.  Indeed, when assessing the 1-Click patent the Canadian Patent Appeal Board held that “the ‘single action ordering’ aspect of the inventive concept would not have been obvious”, even though “there is nothing inventive about the particular use of the cookie or identifier, as claimed” (para. 101).  However, the Board ultimately rejected the patent because business methods are generally considered unpatentable in Canada (para. 140).

The Real Issue: Business Method Patents
The real issue, then, lies with the patentability of business methods.  As mentioned, the 1-Click patent was rejected in Canada because business methods are generally not considered patentable subject matter.  U.S. decisions indicate that business methods are patentable, but that may change with the Supreme Court’s upcoming decision in Bilski.  The Canadian decision suggests that the technological aspect of the 1-Click patent is already obvious, while the business method aspect is not.  Thus, if the court in Bilski holds that business method patents are invalid, then the American 1-Click patent would likely be invalidated for obviousness.

One Comment
  1. The real issue with Amazon’s 1-Click patent is undoubtedly the patentability of business methods. One cannot fault the USPTO altogether for avoiding this issue however. The USPTO had few other courses of action available. Rejecting this patent on the basis of non-patentability of business methods when many others had already been granted by USPTO examiners would be viewed as unequal and inconsistent treatment. Even to comment on the patentability of business methods would have been difficult given the upcoming decision by the US Supreme Court in Re Bilski.

    It is questionable, however, the extent to which the US Supreme Court’s decision in Re Bilski will engage with the policy considerations of allowing business method patents. There seems to be a general attitude amongst the courts (particularly the UK’s and Canada’s) that this decision should be left to parliament. If, however, the US Supreme Court were to undertake a policy analysis, one hopes they would review the problem in the context of the theories underlying the rational for a patent system.

    A similar exercise may be undertaking in the present case.

    For example, Contract Theory would offer little support for patentability. The 1-Click method is revealed simply by visiting Amazon’s website. Anyone can easily see the business method in action. There is little need for specifications. This is no bargain for the state.

    Disclosure Theory would also offer little support. Query: Would Amazon still have introduced the 1-Click method to its online store if no patent protection were available? Amazon is not in the business of selling innovative ways for customers to buy things; they are in the business of selling tangible goods. Stores don’t implement poor, sale impeding physical layouts out of fear that their competition may copy them should they implement a good one. Malla Pollack commented in The Multiple Unconstitutionality of Business Method Patents, 28 Rutgers Computer & Tech. L.J. 61, 96 (2002) that:

    The absence of business method patents cannot be explained by an absence of entrepreneurial creativity in Great Britain during the century before the American Revolution. On the contrary, 1720 is widely hailed as the beginning of a new era in English public finance and the beginning of major innovations in business organization.

    Similarly little justification for patentability can be found in the Patent-Induced Theory. Amazon certainly would have made the effort to invent the 1-Click method absent patenting incentive. The incentive was the promise of profits to be made through attracting more customers to purchase more of their goods.

    Finally, it is no argument to say that a patent is needed in this case for assembling the risk capital required to exploit, develop and apply the contributions of the inventor. No large investment was required to implement this method. Existing servers could be used with modest modification to server-side code.

    To say that the above analysis would hold true for all business methods is to over-generalize. The Supreme Court may find indeed find more support in the facts of Re Bilski.

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