With the amended Guidelines for Patent Examination coming into effect on 20 January 2024, computer program products have been formally included as patentable subject matter in claims, marking a major step forward in the protection of software patents. Previously, software often sought patent protection through claims directed to systems, methods, or computer-readable storage media. Now, computer program products have become the direct object of patent protection, which is more conducive to enabling software innovators to obtain patent protection.
Against this backdrop, focusing on key issues such as the applicability of trade secret strategies in software patents, overseas filing of software patents, and protection of business models, Lusheng Law Firm has selected the following three popular Q&As from Chapter 11, “Software Patent Protection under the New Patent Law”, of the Practical Q&A Handbook on Cutting-edge Issues in Intellectual Property, jointly compiled with Wolters Kluwer China and its strategic partner Rouse International, to share with you.
Selected Practical Q&As
Q1
[Protection Strategy] Is software more suitable for protection as a trade secret rather than by patent?
Protection strategies for software intellectual property usually involve two legal tools: trade secrets and patents, each with its own unique advantages and limitations. The choice of an appropriate protection method requires consideration of the characteristics of the software, the enterprise’s business strategy, the competitive environment, and the expected protection effect.
Trade secrets provide a form of intellectual property protection that does not require official examination, covering business and technical information that is not known to the public. Technical secrets are a type of trade secret. The key to trade secret protection lies in taking reasonable confidentiality measures to prevent information leakage. The advantage of trade secrets is that there is no fixed term of protection; as long as the secret is not disclosed, protection continues to exist. However, trade secret protection has limitations. For example, it cannot prevent competitors from independently discovering or independently developing the same technology, nor can it prevent obtaining technical information through lawful reverse engineering. The Anti-Unfair Competition Law provides that reverse engineering refers to obtaining technical information by disassembling, mapping, analyzing, etc. products obtained through public channels by technical means, but acts of illegally obtaining technical secrets do not constitute reverse engineering.
Unlike trade secrets, patent protection provides an officially recognized exclusive right for software technical solutions. Obtaining a patent requires going through procedures of filing, examination, and publication, and the technical solution must possess novelty, inventiveness, and practical applicability. For the same invention-creation, the patent will be granted to the person who first files the patent application. The core advantage of patents lies in providing a clear scope of protection and legal exclusivity, which facilitates sharing technology with others through licensing and other means without losing the corresponding intellectual property rights. The term of patent protection is generally 20 years from the filing date. Determination of patent infringement usually involves comparing the scope of protection of the claims with the features of the accused product or method, applying the all-elements rule and the doctrine of equivalents.
In certain circumstances, software may be more suitable for protection as a trade secret. For example, if the algorithms or technologies embodied in the software are difficult to discover through reverse engineering, or the enterprise has a sound trade secret management system and supporting legal arrangements and technical tools such that the mobility of core R&D personnel will not lead to the loss of technical secrets, trade secrets may be a more appropriate choice. In addition, if protection is sought for more than 20 years, trade secrets may better meet the enterprise’s needs.
However, for software technologies that are easy to discover through reverse engineering, or in scenarios where software developers frequently move between employers and it is difficult to prove ownership of trade secrets or technical secrets, patent protection may be a better choice. Patents can provide enterprises with clear proof of ownership of intellectual property rights, and even if R&D personnel move to other employers, this will not lead to the loss of intellectual property rights, and patents provide legal recourse in the event of infringement.
In a dispute over infringement of technical secrets between Zhejiang J某 Holding Group Co., Ltd. and W某 Automotive Technology Group Co., Ltd.[1], the judgment rendered by the Supreme People’s Court revealed the importance of technical secrets and patent protection. Zhejiang J某 Holding Group Co., Ltd. alleged that W某 Automotive Technology Group Co., Ltd. illegally obtained and used its technical secrets, involving 40 employees changing jobs and applying for 12 patents based on the technical secrets. The Supreme People’s Court ultimately ordered W某 Automotive Technology Group Co., Ltd. to pay damages of approximately RMB 640 million and required it to take explicit measures to cease the infringement. This case not only highlights the value of protecting technical secrets, but also demonstrates the critical role of patent protection in preventing the loss of intellectual property, especially in situations involving employee mobility.
In summary, there is no uniform answer as to whether software is more suitable for protection as a trade secret or by patent. Enterprises need to decide based on their specific circumstances and strategic objectives. Trade secrets and patents are overlapping and complementary. In practice, many enterprises adopt a “three-dimensional protection” strategy, i.e., using both trade secrets and patents to protect their software products, thereby fully leveraging the advantages of both protection methods. For example, an enterprise may protect the core algorithms of software as trade secrets, while separately filing patent applications for key processes, modules, interfaces, and user interfaces of the software. In this way, the enterprise can protect its technical secrets while also ensuring exclusive rights over various aspects of the software.
Reference note: [1] (2023) Supreme People’s Court Civil Final No. 1590 (IP Division)
Q2
[Protection Strategy] What factors should be considered for overseas filing of software patents?
In a globalized business environment, international protection of software patents is becoming increasingly important. When considering an overseas filing strategy for their patents, software enterprises should carefully consider multiple key factors to ensure that their intellectual property is effectively protected worldwide. The following are several core elements that need to be considered in the international protection of software patents:
1. Eligibility
Eligibility is the primary condition for patent protection. In China, for inventions involving computer programs, if they can solve a technical problem and produce a technical effect, they are generally considered eligible. However, in jurisdictions such as the United States, under Section 101 of the U.S. Patent Act, patent applications may face more challenges if the claimed subject matter is deemed an abstract idea. Therefore, the claims of software patents must be carefully drafted to ensure their eligibility in the target countries.
2. Accuracy of language
The accuracy of the language used in patent application documents is crucial to ensuring clarity and effectiveness of the scope of patent protection. In the United States, under Section 112 of the U.S. Patent Act, there are strict requirements regarding the sufficiency of disclosure in the specification and the definiteness of the claims. In Europe, the requirements for clarity in patent examination are even more stringent. In overseas applications claiming priority from a Chinese application, issues in Chinese expressions such as numerical limitations and referential relationships of terms often lead to lack of clarity in overseas applications, and may even affect the scope of protection of the claims. Therefore, international applications for software patents must ensure that the language of the specification and claims is precise and error-free to meet the requirements of different jurisdictions.
3. Examination rules
Different countries and regions have different patent examination rules, which directly affect the drafting and filing strategies for software patents. For example, the Chinese Guidelines for Patent Examination explicitly support claims directed to virtual devices, but under U.S. examination rules, such virtual device claims may be characterized as means-plus-function limitations, which may result in issues such as lack of support in the specification during examination and a narrow scope of protection in subsequent enforcement. Therefore, when filing overseas patent applications, enterprises need to adjust their patent application documents according to the examination rules of the target countries to increase the likelihood of patent grant.
In practice, when filing overseas patent applications, software enterprises should consider the following strategies:
• Drafting strategies for overseas software patents: Enterprises should formulate corresponding patent drafting strategies based on the patent laws and examination practices of different countries. This may include restructuring the claims and adjusting the content of the specification to ensure compliance with the patent law requirements of the target countries.
• Chinese-style drafting: In China, drafting of patent application documents focuses more on the practical application of the technical solution of the software invention. When preparing patent application documents, enterprises should ensure that they fully describe the technical features of the invention and its practical application scenarios.
• U.S.-style drafting: In the United States, drafting of patent application documents requires particular attention to the description of specific embodiments of various aspects of the software invention, so as to avoid falling into the category of abstract ideas and issues of insufficient disclosure in the specification. In addition, the claims should clearly define the scope of protection of the invention to avoid eligibility issues under Section 101.
• European-style drafting: In Europe, the requirements for drafting patent application documents are more stringent. Enterprises need to ensure that their specifications provide sufficient detail to demonstrate the enablement of the invention and meet the examination standards of the European Patent Office.
In conclusion, when filing overseas patent applications, software enterprises must comprehensively consider the eligibility requirements, language accuracy, and examination rules of the target countries to ensure that their patents receive effective protection worldwide. By carefully designing patent filing strategies and documents, enterprises can enhance the competitiveness and strength of protection of their software patents in the international market.
Q3
[Protection Strategy] How can business models be protected through software patents?
Protecting innovation in business models is an important legal issue in the modern business environment, especially against the backdrop of rapid development of software and Internet technologies. According to the Guidelines for Patent Examination and relevant cases, the following are several key points for protecting business models through software patents:
1. Identify technical anchors: Business models themselves are usually regarded as pure business methods, whereas patent law protects technical solutions. Therefore, combining business models with technical features is the key to obtaining patent protection. For example, if the implementation of business rules and methods in a business model uses computer programs involving technical adjustments or improvements, the relevant technical means can be used as technical features in the patent application.
2. Include algorithmic features: In patent applications that include algorithmic features and business rule/method features, the application should describe in detail how the algorithmic features and business rule/method features are combined with technical features, what technical problems are solved, and what technical effects are produced. In addition, it should be considered that the distinguishing features of the technical solution in a software patent application cannot be merely algorithmic features or business rule/method features; in such circumstances, the patent application may be considered as making no technical contribution over the prior art and thus lacking inventiveness.
3. Combine with specific technical fields: Patent applications for business models should demonstrate their application in specific technical fields, such as artificial intelligence, big data, blockchain, etc. The technical characteristics of these fields can provide opportunities for business models to obtain patent protection.
4. Sufficient disclosure: In the patent specification, the technical implementation of the business model needs to be described in detail, including system architecture, workflows, data processing methods, etc., in order to meet the requirement of sufficient disclosure.
5. Drafting of claims: The claims should precisely define the scope of protection, including both business rules and methods and the technical features that implement these rules and methods. The claims should clearly express the interaction between the technical features and the business methods.
6. Non-essential technical features: In some cases, even if certain technical features are not indispensable for implementing the business model, as long as they are closely integrated with the implementation of the business model and solve specific technical problems, they can also be included within the scope of patent protection.
7. Responding to office actions: During patent examination, questions may arise as to whether the patent application complies with the requirements of patent law. At that time, the patent applicant needs to prepare sufficient arguments and evidence to demonstrate the technical features of its business model and how these features meet the requirements of patent law.
Taking QR code payment as an example, by combining QR codes with payment, a new type of payment method has been achieved commercially. Although QR code payment itself cannot directly constitute a technical solution, the underlying systems and methods, such as acquisition and analysis of multi-field QR codes, and technologies related to transaction processing and user account security, can all be objects of patent protection.
In summary, to protect business models through software patents, the key lies in identifying and emphasizing the technical features in the implementation of the business model and how these features are combined with business methods to solve technical problems and produce technical effects. This requires precise and detailed description in the patent application documents and effective advocacy during patent examination. In this way, even innovations in business models can obtain protection under patent law.
Other excellent Q&As covered in this chapter:
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[Protectable Subject Matter] What types of software can obtain patent protection?
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[Patentability Requirements] What conditions must be satisfied for a software patent to be granted?
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[Patent Drafting] What should be noted in drafting software patents?
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[Protection Strategy] For a given software, how many patent applications are appropriate?
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[Graphical User Interface] How can software graphical user interfaces be protected by patents?
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[Patent Enforcement] Given the difficulties in collecting evidence of software patent infringement, is it still worthwhile to file patent applications?
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[Infringement Risks] How can one avoid having one’s own software products infringe others’ patent rights?
Authors of this Chapter
Li Mi Head of Patent Practice
Lusheng Law Firm Beijing
Email: mli@lushenglawyers.com
Li Hai Patent Attorney
Lusheng Law Firm Shanghai
Email: jli2@lushenglawyers.com
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About the Report:
The Practical Q&A Handbook on Cutting-edge Issues in Intellectual Property is jointly and meticulously authored by Wolters Kluwer China, Lusheng Law Firm, and its strategic partner Rouse International, and was officially released online in November 2024. The handbook is compiled by more than 30 senior intellectual property experts and selects 108 IP questions, divided into 11 major chapters, comprising 100,000 words of detailed analysis. It focuses on the most cutting-edge issues currently of greatest concern in the industry, comprehensively covering key areas such as patents, trademarks, copyright, trade secrets, unfair competition on the Internet, capital contribution with intellectual property, and punitive damages for intellectual property, and distills the hot topics of concern to IP practitioners in a “Q&A” format, providing readers with the latest legal interpretations, case analyses, and practical guidance.
Upon its release, the report attracted widespread attention and high praise in the industry. In order to better share its excellent content, we will continue to select and publish part of the essence Q&As from each chapter in the form of a series of articles.
