Telstra Corporation Limited v Amazon.com, Inc [2011] APO 28 (9 May 2011)

The patents and patent applications directed to Amazon’s ‘1-click’1 online shopping concept have attracted substantial controversy around the world, in particular in the context of the patentability of business process and software patents. The ‘1-click’ concept allows customers to make online purchases with a single click, with the payment information needed to complete the purchase previously provided by the user.

The Australian Patent Office has rejected Amazon.com Inc’s patent application for its 1-click ordering system after a successful opposition by Telstra Corporation Limited.

Therefore, the decision gives Amazon a clear indication of how it can amend its patent application to overcome the rejection. This decision forms part of a long history of challenges around the world (most notably in the United States and Europe) to patent applications filed by Amazon for its 1-click ordering system which provides for a simplified process for purchasing goods online.

In Australia, the grant of Amazon’s application (AU 762175)2 was opposed by Telstra Corporation Limited (Telstra). The opposition was primarily on the grounds that the claimed invention was not novel and lacked an inventive step in light of a number of prior art documents, including one of Telstra’s own patents. The patent application claims a method for ordering an item in response to a single action performed to order the item.

Construction

Firstly, the construction of the term ‘a single action’ was considered, both with reference to the clarity of the claims and as being pivotal to the questions of novelty and inventive step. The opponent argued that the claimed ‘single action’ was unclear, and did not necessarily mean ‘only a single action’ (the wording used in corresponding US patent 5960411). The Delegate referred to the principles of construction as laid out in Décor Corp Pty Ltd v Dart Industries Inc [1988] 13 IPR 385, and with reference to the specification and dictionary definitions came to the conclusion that the claimed ‘single action’ does mean ‘only a single action’.

In this construction heavy reliance was placed on the description that ‘…the single action generally refers to a single event received by a client system that indicates to place the order.’ In light of this passage, the Delegate goes on to say that despite (semantically) being two actions, an action such as the double click of a mouse button would ‘clearly fall within the scope of ‘a single action’ as that term is to be understood in the claims’.

1-Click ordering is not new in light of Telstra’s “click-to-call” patent

Amazon’s patent application contained 141 claims. The Delegate of the Commissioner of Patents found that some of the claims (including the very broad first claim directed, quite generally, to a single action item ordering system) were not new in view of one of Telstra’s “click-to-call” patents, which Telstra filed before Amazon filed its patent application for the 1-click system.

Telstra’s patent describes a method of making a telephone call in which a person simply selects (clicks on) the telephone number they wish to dial in an electronic directory to place a call. Importantly, the method allowed the parties to the call to make prior billing arrangements, streamlining the calling process and allowing them to make a call in only one step. The Delegate considered the placing of a call to be the ordering of an item.

The Delegate referred to the ‘reverse infringement test’ for novelty, where infringement occurs when each and every essential feature of a claim is disclosed in the alleged anticipating document. Under the construction of the claims adopted, the Delegate found that 10 of the 141 claims did lack novelty in view of Telstra’s own patent.

Some claims not inventive in light of common general knowledge

The Delegate also found that claims 1, 2 and 4 – 61 were not inventive in light of the common general knowledge (“CGK”) known to persons skilled in the art at the priority date. Specifically, the Delegate accepted Telstra’s submission that:

• the display of order or item information for Internet ordering systems and the use of a web browser to access that display; and
• the use of, amongst other things, clicking a mouse button over a pre-defined area of displayed information to select information or send instructions,

formed part of the CGK.

The Delegate concluded that, in respect of claim 1, the “single action” was the only feature which was not already part of the CGK (“CGK”).

He found that, “as a matter of simple logic”, one way to ensure that customers could check-out more easily (a problem the invention was trying to address) was to reduce the number of steps involved in “checking-out”, ideally down to one step.

Interestingly, although the Delegate accepted Telstra’s submission that claim 1 permits there to be one or more additional actions prior to the “single action” claimed, in assessing whether the claimed system was new, the Delegate appeared to count the number of actions required to place the order. On that basis, he excluded a number of documents published before the filing date of Amazon’s patent application which included more than one action when assessing whether Amazon’s invention was “new”.

 

 

Inventive step

“Inventive step” was also considered.

Because the application was filed before 1 April 2002, combining two or more unrelated prior art documents or acts to establish lack of an inventive step was not possible. Consequently common general knowledge figured prominently in the case put forward by Telstra and evidence from experts in the field was extensive from both sides.

The Delegate referred to a number of approaches for determining whether the claims were obvious or not, advocating the problem–solution approach whilst being mindful of its limitations – particularly with respect to combination or simple inventions.3 Under this approach the Delegate found that the use of an identifier (such as a ‘cookie’) as defined by claims 3 and 62 to 141 was in fact inventive. This is despite the finding that cookies were, in their own right, common general knowledge at the priority date.

On this finding, 60 of the 141 claims which do not include the identifier feature were found to be invalid.

The future

As would be expected Amazon has been provided with an opportunity to propose amendments to the application to address the Delegate’s findings.

Perhaps what the outcome of this case emphasises is how important it is to bear in mind the common general knowledge and state of the art at the time a specification was filed. The widespread scepticism about how this kind of software implementation could possibly be patented is, arguably, based on the opinion that this solution must have been obvious given e-commerce, storing a computer’s details on a server, and the use of cookies were all known at the time.

Therefore, ultimately, although the Delegate found that a patent could not be granted for many of Amazon’s broader claims, Amazon concentrated its arguments on claims involving the use of cookies to enable 1-click ordering. The Delegate found that claims relating to the use of cookies were new and inventive when Amazon filed its patent application in 1997, and therefore deserving of patent protection. Subject to any appeal to the Federal Court of Australia lodged by Telstra or Amazon, Amazon can now amend its application and obtain a patent for claims relating to its use of cookie technology in the context of 1-click ordering.