PATENT ELIGIBILITY FOR SOFTWARE (AND OTHER GOOD THINGS) UNDER CHINA’S NEW PATENT EXAMINATION GUIDELINES

15.03.2017

By Lawrence Hoffman

The Economic Environment:

Despite its current economic downturn, and decreasing exports, China is the world’s second largest economy. An important factor in China’s emergence as an economic powerhouse is certainly its private enterprise friendly version of communism. It certainly isn’t what Karl Marx had in mind, and it may not even be proper to call it communism.

A recent New York Times article (here), reports that critics claim President Xi Jinping’s hasn’t kept his promises of economic liberalization. Despite all of this, CNBC reported last year (here) that China had 568 billionaires compared to 535 in the U.S. Of these, 162 were said to have accumulated their wealth in the manufacturing and technology sectors of the economy. Whether these numbers are accurate or not, it is undisputed that China’s consumers have money to spend, and so do its industries.

It is also undisputed that the government is focused on transforming the country into a world-class center of technological innovation. However, an article in The Christian Science Monitor on 8 March 2017 (here) notes that current official strategy seems to emphasize acquiring technology from advanced economies.

Given all these considerations, it is increasingly important for foreign companies to understand the IP climate in China and to utilize it to protect its markets.

China’s Increasingly IP Friendly Attitude:

China regards expanding protection of IP as an essential component of its drive toward innovative excellence, and it is rapidly becoming one of the more enlightened countries in its treatment of foreign as well as domestic IP owners.

Recent events confirm China’s continuing commitment to improving its patent system. In October 2016, the State Intellectual Property Office (SIPO) published a set of proposed revisions to the 2010 version of the Examination Guidelines. The proposed changes materially expanded patent eligibility for computer software and business methods, and addressed several other important issues as well.

On 1 March 2017, SIPO published the final version of the revised Guidelines, which will become effective 1 April 2017. If you agree that software related patents are a good thing, you will certainly like the result.

To help you understand the changes, keep in mind that the Chinese patent system is based on its Patent Law, a set of Implementing Regulations (‘Rules’) and the Examination Guidelines. Only the Guidelines have been amended. Thus, the amendments will only alter how the SIPO examiners interpret the law as it presently exists. Revisions to the Law are under consideration but have not yet been finalized.

The Guidelines have not been rewritten, but the changes could prove to be far-reaching. The most significant changes explicitly extend patent eligibility to business methods and other software related inventions. Indeed, the consensus of opinion, including that of this observer, is that these changes will make China more patent-friendly to software related inventions than the U.S.

In regard to chemical inventions, the amendments permit submission of post-filing experimental data during examination to overcome objections to the sufficiency of disclosure. Another change permits greater flexibility in amendment of claims during invalidation proceedings.

Several other changes, including greater public access to examination files, have also been made.

Business Methods: Article 25(2) of the Law explicitly excludes “rules and methods for intellectual activities”. Thus, despite enthusiastic commentary, business methods per se remain patent ineligible. Part II, Chapter 1, § 4.2 of the Guidelines explain: “Mental activities” refer to human’s thinking movements. They originate from human’s thinking, and produce abstract results through inference, analysis and judgment, or, via human’s thinking movement, produce results by indirectly acting on the nature. Rules and methods for mental activities are rules and methods governing people’s thinking, expression, judgment and memorization. Because they do not use technical means or apply the laws of nature, nor do they solve any technical problem or produce any technical effect, they do not constitute technical solutions…

Several examples of excluded subject matter are listed. Among there are “methods and systems of managing organization, production, commercial activities, or economy, etc… methods of presenting information; and computer programs per se.”

  • 4.2 concludes, however by stating:

Except the cases described above…if a claim in its whole contents contains not only matter of rule or method for mental activities but also technical features, then the claim, viewed as a whole, is not a rule or method for mental activities, and shall not be excluded from patentability under Article 25.

The foregoing has not changed. What is new, however, is the following example:

If a claim related to a business model involves not only content of business rules and methods but also a technical feature, it shall not excluded from the possibility of being granted a patent right according to Article 25 of the patent law.

Notice the emphasis on ‘technical features’. According to Part II, Chapter 1, § 2 of the Guidelines:

A technical solution is an aggregation of technical means applying the laws of nature to solve a technical problem. Usually, technical means are embodied as technical features. A solution which does not adopt technical means to solve a technical problem and thereby does not achieve any technical effect in compliance with the laws of nature does not constitute a [technical solution]…

In reality, business methods involving technical solutions were never categorically excluded, but practitioners point out that business method claims were treated as ineligible as a matter of practice. Nevertheless, it remains to be seen how examiners treat business method claims that purport to include technical solutions.

Computer Programs:  As noted above, computer programs per se are not patent eligible. However, patent eligibility for program-related inventions appears to have been significantly enlarged, at least in theory.

The guiding principle for examination of computer program related inventions remains unchanged as stated in Part II, Chapter 9, § 2: “Examination shall focus on solutions for which protection is sought, i.e., solutions defined by each claim”. That, of course means technical solutions.

The only changes in § 2 are the addition of the phrase “per se” in two places in subsection (1) According to the first change, the amended text now reads “If a claim merely relates to… computer programs per se recorded in mediums…[it is not patent-eligible]”. Thus machine readable media containing programs are patent eligible if the recorded program provides a technical solution to a technical problem.

The second addition of “per se” results in text that reads “For example, computer-readable storage medium or a product of [a] computer program that is merely defined by [a] recorded program per se…[is not patent-eligible]. Again, the examiner’s focus in on what the program does, i.e., a technical solution achieved by its use.

Subsection (3) includes examples of eligible and non-eligible software inventions. The 2010 version included nine examples. In the revision, the last example has been deleted. The remaining eight examples are paraphrased in the Table below.

Ex. No. Subject Matter Eligibility Reason
1 A method to solve the ratio of the circumference of a circle to its diameter No A pure mathematical computing method or rule executed by a computer
2 A method of automatically computing the coefficient of kinetic friction based on customarily used physical parameters No Does not improve on method of determining the parameters but just uses a computer to facilitate calculation with these parameters
3 unified translation method for any language using a language character input method which is the same as the Esperanto auxiliary language notation method, and Esperanto and Esperanto auxiliary language No Not a new method of machine translation or an improvement on such a method.
4 A method for controlling a die forming process of rubber by controlling vulcanization time

of the rubber in the forming process, thus can rectify the defects of over- and under-vulcanization.

Yes This is a physical process

controlled by a computer program. It utilizes technical means in conformity with the laws of nature resulting in a technical effect.

5 A method for enlarging storage capacity of mobile computing devices by providing interaction between the mobile device and a remote data storage server. Yes The method solves a technical problem, i.e., how to increase effective storage capacity of mobile computing devices and therefore improves the

operating performance of the devices are improved through execution of a program. It thus utilizes technical

means in conformity with the laws of nature and achieves a technical effect.

6 A method of removing image noise using a statistical method by which pixels having grey scale values meeting certain criteria are treated as noise and are discarded. Yes This invention solves a technical problem, i.e., how to remove image noise without introducing image blurring of conventional methods. The computer program executes the improved method thus achieving a technical effect.
7 A method of measuring liquid viscosity using a computer program-controlled mechanical device of a conventional nature and performing calculations based on data provided by the device. Yes The invention solves the technical problem of how to improve the speed and accuracy of liquid viscosity measurement.
8 A computer game that combines the concept of programmed learning through a question-answer scheme and approach, with an adult

type role-playing  game. The program provides a game interface that displays questions according to game progress and responds to the

answers to determine further game parameters.

No The result is not technical effects but merely management and control of combining the two types of game concepts.

 

 

 

The now-deleted ninth example was a system for learning a foreign language with active selection of learning contents by users according to their individual language proficiencies. The example claim is:

A system for learning foreign language with active selection of learning contents characterized in that it includes:

learning machine, into which a user input selected learning materials;

file receiving module, receiving language files input by the user;

file dividing module, dividing the said language file into at least one independent sentence;

sentence dividing module, dividing the said independent sentences into multiple divided units;

sentence-making language learning module, outputting the said divided units to the user, receiving reordered sentences from the user, comparing the said independent sentences with reordered sentences input by the user, scoring based on preset scoring criteria, and outputting the score to the user.

The claim was declared not to be patent eligible because its objective was control over a learning process using “well-known electronic equipment”, and therefore not a technical solution to a technical problem. It “neither improve[s] the internal performance of the learning machine, nor cause[s] any technical change to the composition or function of the learning machine” without reliance on the laws of nature.

The reason for removal of this example is suggested by changes to § 5.2, relating to drafting of claims. The relevant part (showing the changes) now reads:

The claims…may be drafted as process claim or product claim, e.g., the apparatus for executing the process…the claim shall…represent the technical solution of the invention in its entirety and outline the essential technical features for resolving the technical problems, and not…[just] describe the functions [and effects] of the computer program…If it is drafted as an apparatus claim, the various component parts and the connections among them shall be specified, wherein the component parts may comprise not only hardware but also programs.

If an apparatus claim is drafted on the basis of computer program flow…or according to …[a] process claim reflecting the said computer program flow, i.e., each component in the apparatus claim completely corresponds to each step in the said computer program flow or each step in the said process claim, then each component in the apparatus claim shall be regarded as program modules which are required to be built to realize each step in the said computer program flow or each step in the said method. The apparatus claim defined by such a group of   program modules shall be regarded as the program module architecture to realize the said solution mainly through the computer program described in the description rather than entity devices to realize the said solution mainly through hardware.

Does this mean that any computing device architecture defined by program modules is patent eligible even if the program does not itself achieve a technical solution to a technical problem? Examiners will probably resist such a broad interpretation, but perhaps that is what the drafters had in mind. Available commentary suggests that practitioners are taking a wait and see attitude.

Post-Filing Experimental Data:

The changes here concern responding to a rejection for insufficiency of disclosure in chemical cases. Can you support your original disclosure with additional data? According to the 2010 Guidelines, the answer seemed to be no. Part II, Chapter 10, Subsection 3.4 (2) specifically stated, “experimental data submitted after the date of filing shall not be taken into consideration.”

The 2017 Amendments reflect a much more flexible approach. The exclusion of such data has been removed, and replaced by language in a new Subsection 3.5 which states:

The examiner shall examine experimental data supplemented after the filing date. The technical effect to be proved by the supplemented experimental data shall be one which can be derived by a person skilled in the art from the disclosure of the patent application.

`        While the revision clearly obligates the Examiner to consider post filing data, It can’t demonstrate anything that a person of ordinary skill in the art could not already find in the application. It can only provide confirmation.

To this observer, this change valuable, but down the scale from the changes related to software. Careful drafting will generally avoid the problem, but that isn’t always possible, and the ability to support the original disclosure with additional data may be helpful in such cases.

Amendments During Invalidation Proceedings:

Under Chinese law, infringement issues are determined in court proceedings, while validity is determined in an Invalidation Proceeding before the Patent Reexamination Board, a part of SIPO. Germany has a similar system. Current U.S. law also provides for testing patent validity in the U.S. Patent and Trademark Office (by Covered Business Method Review, and in Post-Grant Review, and Inter Partes Review before the Patent Trial and Appeal Board) but validity issues can also be raised as a defense in infringement litigation. In China, the courts only have an appellate function relative to validity issues.

The amended Guidelines pertain to two aspects of the invalidation process, claim amendments and submission of responsive new grounds for invalidity. Claim amendments are addressed in Part IV, Chapter 3, Sections 4.6.1-4.6.3. The general principles stated in § 4.6.1 are unchanged. Amendments to the Title and the description are not permitted, nor can the claims be amended to add new matter or technical features not covered by the granted claims.

Subject to these general limitations, the kinds of amendments have been significantly enlarged. Under the 2010 Guidelines, amendments were limited to “deletion of a claim, combination of claims, and deletion of a technical solution”. The amended version removes reference to combination of claims and adds the options of “further limitation to a claim and correction of an obvious error”.

Adding a ‘further limitation’ is defined as “ [incorporating], in the claim, one or more technical feature recited in another claims to narrow down the scope of protection.” That clearly forbids adding a limitation not already claimed even if supported by the disclosure. This change may prove to be important in protecting the overall validity of a patent, but it, like the allowance of post-filing data, is less dramatic than the changes related to software.

With respect to amendment of the grounds for invalidation, Part IV, Chapter 3, § 4.2(1) of the 2010 Guidelines permitted amendments within one month of filing of the petition, but generally, not later. As amended, according to § 4.2(2), later submission of grounds for invalidation directed to the amendment to the claims is permitted.

Access to Prosecution History:

Another less dramatic change extends the scope of public access to materials in application files. After publication of an application still under examination, office actions, search reports and decision issued by SIPO, and the response made by the applicant during preliminary examination were not available to the public. These materials will now become available. Even for issued patents, SIPO search reports were not publicly accessible. That, too, will be changed.

Conclusion:

Overall, the revisions, in principle, could be significantly beneficial to applicants, both foreign as well as domestic. In principle, the expanded possibility for software patents, could be far-reaching, and as suggested above, make China significantly more friendly to software-related inventions than other countries, including the U.S. The requirement for the claims to recite a technical solution to a technical problem together with the clear definition of ‘technical solution’ seems, to this observer, to be especially helpful. Determination of patent eligibility for software inventions is exasperatingly difficult under U.S. law as the U.S. Patent and Trademark Office and the courts grapple with the two part  test mandated by the U.S. Supreme Court in Alice Bank v. CLS International.

Application of the Alice test requires, first, a determination if a claim is directed solely to an abstract idea, and if so, whether it also includes an ‘inventive’ something additional. Apart from the fact that the Supreme Court has given no definition of ‘abstract idea’ (and seemingly, ideas are by definition, abstract), the lower courts the Patent Office have helplessly been left to define the scope of the required ‘something more’. To most observers, including this one, the result has been a nightmare.

Admittedly, it is too early to tell how Chinese examiners will apply the technical feature requirement, but to this observer, the requirement is enormously better than  the Alice test. The concept of a technical solution already exists in current U.S. patent law, e.g., as part of the definition of a covered business method patent, but it has not explicitly been applied to the Alice problem by the courts. Perhaps China’s forward-looking approach will be a wake-up call to the U.S. Congress.

Finally, as to expanded prosecution history access, this may result in greater focus in the grounds asserted for invalidation. This may simplify proceedings before the Patent Reexamination Board to the benefit of both petitioners and patent owners.

About the author: Larry Hoffman has a B.S. in Electrical Engineering and Comp. Sci. from Massachusetts. Institute of Technology and a J.D. from the George Washington University School of Law. He has been a lawyer since 1965 specializing in IP law and product liability defense. He is registered to practice before the U.S. PTO, the U.S. Court of Appeals for the Federal Circuit and the state and federal courts in New York, Maryland, and the District of Columbia. His work has included preparation and prosecution of patents in countries throughout the world, and counseling on IP and product safety matters. He has been involved in the trial of close to 100 lawsuits of various kinds. You can reach him at Lawrence@ipatent.co.il.

 

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