IP lawyer: China clarifies eligibility requirements for business methods and software

On October 27 2016 China’s State Intellectual Property Office (SIPO) published draft amendments to the Guidelines for Patent Examination, for public comment. The draft sets out amendments to the patentability of business method and computer program-related inventions, with an emphasis which echoes the government’s policy of promoting new types of innovation, including in the internet, e-commerce and financial technology (fintech) sectors.

Over the last few years, China’s internet technology industry has been booming and has extended into various aspects of people’s daily lives, which in turn has led to the emergence of numerous new business models. China’s transformation into a leading economy in terms of innovative development is down to a number of factors, including substantial support from regulatory guidance, especially in the IP sphere. In the latter half of 2015, the central government promulgated Several Opinions of the State Council on Accelerating the Building of an Intellectual Property Power under the New Situation, which required stronger IP protection for R&D in new industries, improved IP protection for business models and new IP regulatory research for the Internet, e-commerce and big data. The opinions were issued in response to innovators which had spoken out about the need for stronger protection for their technical solutions and business innovations. SIPO wanted to incorporate the opinions into its current patent examination guidelines – which is why it has published the new draft amendments.

Patent eligibility of business methods

The draft affirms that business methods are patentable. If a claim directed at a commercial model comprises both business methodology and technical features, it shall not be excluded from eligibility under Article 25 of the Patent Law. Following significant developments in the fintech sector, new models of business operations such as finance, insurance, securities, leasing, investment, marketing and advertising are flourishing. Many of these have helped to increase the efficiency of resource allocation and circulation, leading to savings in social costs and national benefits. By confirming that such models are indeed patentable, SIPO may well be hoping to encourage more investment in these areas, which in turn will generate more business method patent grants.

Crucially, the draft does not green light business method patent applications all the way to grant. The definition of an ‘invention’ can still be a stumbling block under the Patent Law. That is, even once the draft comes into force, applicants will still need to be careful about whether a claim for invention presents a technical solution, as required under the the definition of an ‘invention’ in Article 2 of the Patent Law. Therefore, a patentable business method must still involve technical means.

Inventions relating to computer programs

Pursuant to Article 25 of the Patent Law and Chapter 1(II) of the Guidelines for Patent Examination, computer programs per se directed to rules and methods of mental activities are not eligible for patent protection. Some mistaken interpretations about protection for computer program-related inventions have arisen due to ambiguities in the guidelines’ wording (eg, they fail to state clearly the difference between ‘computer program’ and ‘computer program of itself’). The draft clarifies that only a ‘computer program per se’ is excluded from protection. However, a claim composed in the style of medium-plus-computer-program is allowable. Specifically, a claim set out as follows will be allowable:

A computer program product, which comprises non-transient and tangible a computer-readable medium (CRM), wherein the CRM further comprises a program, wherein the program is executed in a processor to perform a set of instructions for a method to obtain geographical address information, wherein the method comprises:

Step A;

Step B; and

Step C.

The draft further confirms that an apparatus claim can include a computer program as a component without the need for a detailed description about how each function of the program is achieved through which specific component. That is, an apparatus claim can recite both hardware and software, or recite a coordination or interaction between hardware and software. An apparatus claim for a software-related invention may thus enjoy more flexibility in terms of claim composition.

In the draft, the term ‘functional module’ has been replaced by the term ‘program module’. ‘Functional module’ is used in the guidelines to define each step for implementing the program flow as each corresponding component in an apparatus claim. This description is no longer required, as the term ‘program module’ can pinpoint the nature of a program component in an apparatus claim even more precisely.

Comment

The new guidelines introduce valuable clarity when it comes to the patentability of business method and software patents. However, these are only two of the many topics covered by the draft amendments. They also address important issues such as data supplementation during examination for chemical inventions and post-grant amendment relaxation, in response to demand from patent practitioners. Overall, the draft has been welcomed for introducing improvements which reflect rapid developments in the technology sector and the IP field. SIPO has announced that the amendments will come into force on April 1 2017.