SIPO Brings New Life to the Protection of Business Models

View: 2175     Date: 2017-04-28 09:36

The newly revised Guidelines for Patent Examination (the “Guidelines”), which came into effect as from April 1, 2017, specify that a patent application involving the combination of business models and technology shall not be rejected as the rules or methods for mental activities which belong to the subject matters excluded from patent protection under Article 25 of the Patent Law. This new rule is undoubtedly great news for the business model innovators like the recently emerging Mobike. 

I. History Prior to the Revision

1. The standard of examining the business model might vary from examiner to examiner

According to the Patent Law, the rules or methods for mental activities under Article 25 are out of the scope of technical solution applying the laws of nature to solve a technical problem. That is to say, the items listed under Article 25 are particular cases of non-compliance with Article 2.2 which limits the subject matter of protection to the technical solution. As a result, the examiner may use either Article 25 or Article 2.2 as a basis for rejecting a filing involving the combination of business model and technology.

We did a simple search on the official website of the Patent Examination Board (the “PRB”) with “business” as the search keyword and then made analysis on the resulted rejection decisions, in particular the legal basis of these decisions, finding that rejection on the basis of Article 25 (concerning the rules or methods for mental activities) only accounts for 20%, of Article 22.3 (concerning the inventiveness) 10%, of Article 2.2 (concerning the technical solution) 70%. It is obvious that most of the examiners would reject such kind of applications with the business models falling beyond the scope of technical solutions as their legal ground, and only a very few would give green light on the business models.

2. The applicants wore technical mask on their business models in consequence

In order to save the business models from the above-mentioned minefields, the applicants had to meditate on the application drafting, using as far as possible technical and nonobjective terms to describe the subject matter. Let’s see the following patent application for example. It is a typical case representing the product of the electronic business era: 

Patent application No.: 201610069926 .5

Title: Method and system for events triggering and goods return processing

Abstract (extract): “The invention discloses a method and a system for events triggering and goods return processing. The method includes the following steps: recording second data related to a second event; in accordance with second data, inquiring first data related to a first event; in accordance with second data and first data, acquiring relevant data between the first event and the second event; in accordance with the relevant data, triggering a third event…”

In the current e-commerce era, consumers can return goods unconditionally within seven days after the purchase. It is found that goods return due to the price reduction after purchase is frequent, which would incur massive wasting of logistics resources. If related information can be timely acquired for further analysis, consumers can be prompted with a better alternative to goods return.

If we match the “first event” with “purchase order”, “first data” with “actual price at the purchase”, “second event” with “request of goods return”, “second data” with “actual price at the time of returning the goods”, “third event” with “refunding the difference”, and “relevant data” with “the result of judging whether or not price reduction happens”, then we may translate such description full of obscurities as follows: This is a method of processing goods return, which is characterized by the following process: acquiring the price fluctuation information of the goods that the user wants to return after purchase; according to the price fluctuation information, judging whether such return intention is incurred by that fluctuation; when judging that the return is due to the price fluctuation, prompting the user that they can apply for the difference refund; when receiving the user’s confirmation on the application for refund, refunding in accordance with the difference between the price at the time of prior purchase and the current price.

After this revision of the Guidelines, we may expect that the applicants can be relieved from such taxing packaging.

II. Background and Influence

With the concept of “Internet Plus” brought up and the activity of “Innovation and Entrepreneurship” launched, the new industry modes such as the Internet of Things, cloud computing and big data have emerged having significant influence on the transformation of the traditional industry in China. It was clearly proposed in the Several Opinions of the State Council on Building a Strong Intellectual Property Nation under the New Trends (Guo Fa [2015] No. 71) issued on 18 December 2015 (the “Opinions”) that China shall reinforce the IP protection of the results of innovation and entrepreneurship, especially from the angle of improving the IP system for business models, and of researching the IP protection rules in the fields related to the internet, e-commerce and big data.

With a view to implementing the Opinions, the SIPO with its special research team made a draft revision to the Guidelines, made it public to seek for opinions on October 27, 2016 and then finalized the revision after full consultation. The revision led to an important change that the claims involving business models that contain not only matter of business rules and methods but also technical features, shall not be excluded from the possibilities of obtaining patent rights by Article 25 of the Patent Law.

The new Guidelines confirm the exclusion of the claims featuring business models and technical features from the scope of rules or methods for mental activities, which benefits the unifying of the examining standard. While the new revisions did not touch the cases related to Article 2.2, considering that the rules or methods for mental activities are special cases of violating Article 2.2, we may expect that for most business model related patent applications, it is not that convenient any more for the examiner to directly reject them under Article 2.2.

III. Blank Area

1. Similar technical means that business models utilize vs. the examination of inventive steps

On one hand, the inventive degree of technical features shall be considered during the examination of inventive steps. The innovation of new business models is closely associated with the utilization of information-related technologies, such as the computer technology, network technology, communication technology, big data and artificial intelligence technology. As the development of hardware technologies has entered into a very steady path, their influence on people’s daily work and life can be negligible, while the improvement of software technologies is moving towards universalization and modularization, and with the rise of cloud service and open source movement, the software technologies are becoming the universal supporting technologies. Today, the innovation, verification and improvement of business models are highly treasured by the investors, therefore the hardware and software technologies utilized by the business models are mostly quite mature, where the technologies behind the similar model innovation may only differ slightly in the programming language or in the methodology selection. Therefore, whether the technologies that the business model innovation depends on are sufficient for the inventive steps is still in doubt.

On the other hand, the inventive degree of business features shall also be considered during the examination of inventive steps. The closer integration of “Internet Plus” with the traditional industry brings online transformation of the traditional business methods. Thus, whether the business features representing these business method innovations can reach the height of the required inventiveness, and especially whether the economic and social effectiveness benefiting from those business features will be considered as the same as the technical effectiveness of the technical features during the assessment of the inventive steps, are still to be observed.

2. Rapid iteration of the business models vs. time-consuming examination process

During the research on the IP protection for the results of new business models, many entrepreneurs pose the question that the success or failure of the new business model can be seen mostly by the six months of its launch and it often takes about a half year for each iteration of business model, while the examination and prosecution of the invention patent application can be of two years in most cases, constituting an obvious consequent contradiction that the patent grant speed cannot satisfy the update acceleration of the business models. To this end, the research team once posed a solution by applying the patent system for utility models to the business models, yet which had to be shelved due to the strict limitation of protectable subject matter by such system. Therefore, we can only expect the further shortening of the examination period for the business models in the future. However, the good news is that the SIPO is seeking for opinions regarding The Administrative Measures on Prioritized Examination of Patent Applications, which involves the patent application “in the internet, big data and cloud computing related fields and with technology or products fast updated”, which may greatly improve the practicality of business models.