Feature

Big Changes in International IP Laws

Business Methods and Computer Programs in China and Copyright Protection for Digital Technologies in Europe

By Clark A.D. Wilson, Kamal Arvind, and Jeffrey Klenc

©2018. Published in Landslide, Vol. 10, No. 5, May/June 2018, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

Intellectual property (IP) continues to evolve around the world as new technologies and businesses develop. Established IP regimes refine nuances to fit new understandings of previous laws. In addition, growing IP regimes continue to confront internal inefficiencies in order to keep pace with the rest of the world. In a first example, the Chinese Patent Office (SIPO) has adopted amendments to its Guidelines for Patent Examination (Guidelines) that may have a beneficial effect on business method and computer program applicants. A second example offers a glimpse into a still-formulating directive on European copyright law as it relates to digital technologies.

Amended Patent Examination Guidelines in China: Business Methods and Computer Programs

As SIPO has experienced exponential growth in patent applications received, questions and confusion remain from many applicants regarding standards and consistency during patent examination. This has been particularly true in the field of computer programs and business methods, which have experienced their own discussion in many jurisdictions over the past few years.1 In order to address the concerns expressed, SIPO proposed some amendments to its Guidelines followed by patent examiners, which are equivalent to the U.S. Patent and Trademark Office (USPTO) Manual of Patent Examining Procedure. These amendments to the Guidelines went into effect on April 1, 2017.

A first amendment addressed the patent subject matter eligibility of business methods. Specifically, article 25 of the Patent Law of the People’s Republic of China2 provides six categories of inventions that are not eligible for patent protection. These six categories include:

  1. Scientific discoveries;
  2. Rules and methods for intellectual activities;
  3. Methods for the diagnosis or treatment of diseases;
  4. Animal or plant varieties;
  5. Substances obtained by means of nuclear transformation; and
  6. Designs that are mainly used for marking the pattern, color, or combination of the two of prints.3

Part II, chapter 1, section 4.2 of the Guidelines, entitled “Rules and Methods for Mental Activities,” explains that “mental activities” refer to inventions that “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.”4 These Guidelines further explain that because such mental activities do not use technical means and do not solve any technical problem or produce any technical effect, they do not constitute technical solutions, which is required for patentability under article 2.5 Accordingly, Chinese patent examiners have been instructed that rules and methods without technical solutions cannot be granted patent rights.6 These Guidelines then make clear to examiners which type of patent applications should be considered unpatentable mental activities, specifically:

  • Methods of examining patent applications;
  • Methods and systems of managing organizations, production, commercial activities, or the economy;
  • Traffic rules, schedules, and competition rules;
  • Methods of deduction, inference, or operations;
  • Rules for classifying books, methods of editing dictionaries, methods of searching for information, and methods for classifying patents;
  • Rules and methods of editing calendars;
  • Operating instructions for an instrument or an apparatus;
  • Grammar of various languages and rules of coding Chinese characters;
  • Computer languages and computing rules;
  • Short-cut arithmetic methods and relevant formulae;
  • Mathematical theories and methods of conversion;
  • Methods of psychological tests;
  • Methods of teaching, lecturing, training, and beast training;
  • Rules and methods of various games or entertainment;
  • Methods of statistics, accounting, or bookkeeping;
  • Music books, food recipes, or chess manuals;
  • Methods of keeping fitness;
  • Methods of disease survey and methods of population census;
  • Methods of presenting information; and
  • Computer programs per se.7

The Guidelines, however, do further explain that claims for rules or methods for mental activities that also include “technical features” “shall not be excluded from patentability under Article 25.”8 However, it became apparent to SIPO, perhaps through pressure from industry, that examiners were too often relying exclusively on the language in article 25 to reject computer-implemented business method patent applications, even those including technical solutions, as being unpatentable rules and methods for mental activities without conducting any further review.

In order to address this perceived shortcoming, on February 28, 2017, SIPO added an amendment to chapter 1, section 4.2 of the Guidelines. The amended paragraph now instructs examiners that a claim related to a business model that involves not only content of business rules but also a “technical feature” shall not be excluded from the possibility of being granted a patent right according to article 25 of the patent law. Thus, pure business methods without any technical features remain patent-ineligible subject matter. However, SIPO has now seemingly set a more lenient standard than the “something more” rule that the USPTO set after Alice, in that as long as the claim has some form of technical solution, business methods are considered patentable subject matter, worthy of more substantive examination.

SIPO additionally introduced amendments concerning patent applications for computer-related inventions. Specifically, chapter 9, section 2 of the Guidelines has been amended to distinguish computer programs per se from inventions relating to computer programs. According to SIPO, this change was intended to distinguish a sequence of machine-readable code (i.e., a computer program), which should be protected by copyright, from a technical solution (i.e., a computer program per se) based wholly or partially on process flow of computer programs. Before this amendment, claims for software inventions had to be drafted as “a method comprising steps of” or as “an apparatus comprising modules for” performing steps. One facially inherent drawback of such limitations was that a patent holder could not stop an infringer from selling a computer-readable medium that included the claimed method.

In order to alleviate this confusion, the amendment allows software inventions to now be claimed as:

  • “A computer-readable medium, with computer program/instruction stored therein, wherein the program/instruction performs the following steps when executed by a processor”; or
  • “A computer-readable medium, with computer program/instruction stored therein, wherein the program/instruction performs the steps of the method of claim X, when executed by a processor.”9

This amendment seemingly moves the standard toward those patent laws followed in other established countries and enables applicants to seek to define software in a way that is much broader and more likely to capture an infringer. However, like business method claims, the software claims still need to incorporate a “technical solution” to be patent-eligible subject matter, which is defined as an aggregation of technical means applying laws of nature to solve a technical problem.10 Accordingly, in contrast to the U.S. courts and the USPTO, which are struggling to define what constitutes “significantly more” for business methods and software to be patent-eligible subject matter,11 these amendments to the Guidelines in view of the Chinese requirement for merely a technical solution appear to have made China friendlier than the United States to software-related inventions.

European Copyright Reform Update

European Parliament is seeking to reform its copyright rules through a controversial directive on copyright in the digital single market.12 The reason for this proposed directive is based on the acknowledged evolution of digital technologies, with new actors and new business models having changed the methods of creation, production, distribution, and exploitation of protectable creative works.13 A vote on this directive was due during a September 2017 meeting of the Committee on Legal Affairs (JURI), but it did not take place. The agenda for the next JURI meeting on October 10, 2017, included a vote on this directive, but it was removed prior to assembling. A workshop on this directive was then on the agenda for the December 7, 2017, JURI meeting, but still no vote. Reports were presented to the committee at the February 21, February 28, and March 27, 2018, JURI meetings, but no votes were cast.14 This directive was on the proposed agenda for the April 24, 2018, JURI meeting, but was not on the voting schedule.15 As a result, although this proposed directive has been presented to the European Commission for more than one year, there is still no resolution to this matter.

One possible explanation for the continued delay in progressing this reform is the imposing number of individual amendments proposed to the European copyright law. Specifically, more than 900 amendments have been presented for review by members of JURI since they received the first version of the draft. Two particularly contentious proposed amendments have drawn significant discussion. Proposed article 11 provides neighboring or ancillary rights for press publishers, and proposed article 13 introduces monitoring obligations for some online service providers.16

Proposed article 11 recites in part: “Member States shall provide publishers of press publications with the rights provided for in Article 2 and Article 3(2) of Directive 2001/29/EC for the digital use of their press publications.”17 Articles 2 and 3(2) of Directive 2001/29/EC provide exclusive reproduction rights and exclusive rights to authorize or prohibit public access of subject matter, by wire or wireless means, to performers, phonograph users, film producers, and broadcast organizations.18 Additionally, article 2 specifically provides these reproduction rights to authors.19 A draft report from JURI on the proposed directive explained that “press publishers face challenges with the digitalization of business and consumer habits” and that digitalization “makes it easier for the contents of press publications to be copied or reused.”20 JURI considered that because using digital technology to distribute content created by others is largely harmful to the financial interests of press publishers, these press publishers need to enforce their derivative rights to protect the investment they have made in their publication.21 Accordingly, JURI proposes that press publishers, on their own, should have a right to bring copyright infringement court proceedings against infringers of the works of authors that they have published. As this proposal nearly exclusively benefits the publishers, perhaps at the expense of the free distribution of information online, this measure remains in discussion.

Proposed article 13 recites in part:

Information society service providers that store and provide to the public access to large amounts of works or other subject-matter uploaded by their users shall, in cooperation with rightholders, take measures to ensure the functioning of agreements concluded with rightholders for the use of their works or other subject-matter or to prevent the availability on their services of works or other subject-matter identified by rightholders through the cooperation with the service providers.22

Article 13(1) also suggests using “effective content recognition technologies” to ensure the proper functioning of such agreements.23 Observers have wondered how this new provision can function cooperatively with the liability privilege previously established in 2000 under Directive 2000/31/EC. Specifically, section 4 of Directive 2000/31/EC ensures that information society service providers are not liable for information that is transmitted or automatically and temporarily stored, as long as the provider does not initiate the transmission, select the receiver of the transmission, and select or modify the information contained in the transmission.24 Additionally, article 15 of Directive 2000/31/EC clearly states that these service providers shall have no general obligation “to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activity.”25

As proposed in the draft report from JURI, however, article 13 actually compliments the liability measures in Directive 2000/31/EC by seeking to ensure effective implementation of agreements between rights holders and the service providers.26 For example, under a dual system of both directives, the rights holder remains liable for the eventual assertion of any rights over its works, but the service provider takes on the responsibility for the technology used to monitor these rights.27 Nevertheless, while there may be good intentions, there appears to be a need for further clarification on the terms of this proposal in view of the terms in Directive 2000/31/EC before it can proceed to a vote before the European Parliament.

This directive would appear to be in limbo at present, with no vote on the coming calendar, and more discussion is certainly to be on the horizon.

Endnotes

1. See Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014).

2. Patent Law of the People’s Republic of China, SIPO, http://english.sipo.gov.cn/laws/lawsregulations/201101/t20110119_566244.html (last modified Jan. 19, 2011).

3. Id. at art. 25.

4. SIPO, Guidelines for Patent Examination pt. II, ch. 1, § 4.2, at 134–35 (2010), http://www.sipo.gov.cn/zhfwpt/zlsqzn/sczn2010eng.pdf.

5. Id.

6. Id.

7. Id. at 135–36.

8. Id. at 136.

9. Stephen Yang, Amendments to the Guidelines for Patent Examination, Lexology (Sept. 4, 2017), https://www.lexology.com/library/detail.aspx?g=88cc460e-07d2-4d14-8e54-4f2c907ceec5.

10. Guidelines for Patent Examination, supra note 4, at pt. II, ch. 9, § 2, at 306–08.

11. 2014 Interim Guidance on Patent Subject Matter Eligibility, 79 Fed. Reg. 74,618 (Dec. 16, 2014).

12. Commission Proposal for a Directive of the European Parliament and of the Council on Copyright in the Digital Single Market, COM (2016) 593 final (Sept. 14, 2016) [hereinafter Directive Proposal], https://ec.europa.eu/digital-single-market/en/news/proposal-directive-european-parliament-and-council-copyright-digital-single-market.

13. Id. at 2.

14. Minutes, European Parliament Comms.: JURI (Apr. 18, 2018), http://www.europarl.europa.eu/committees/en/juri/minutes.html.

15. Draft Agendas, European Parliament Comms.: JURI (Apr. 18, 2018), http://www.europarl.europa.eu/committees/en/juri/draft-agendas.html.

16. Directive Proposal, supra note 12, at arts. 11, 13.

17. Id. at art. 11(1).

18. Council Directive 2001/29/EC, arts. 2, 3, 2001 O.J. (L 167) 10.

19. Id. at art. 2.

20. Draft Report of the Committee on Legal Affairs on the Proposal for a Directive of the European Parliament and of the Council on Copyright in the Digital Single Market, at 51 (Mar. 10, 2017) [hereinafter Draft Report], http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-%2F%2FEP%2F%2FNONSGML%2BCOMPARL%2BPE-601.094%2B01%2BDOC%2BPDF%2BV0%2F%2FEN.

21. Id. at 52.

22. Directive Proposal, supra note 12, at art. 13(1).

23. Id.

24. Council Directive 2000/31/EC, sec. 4, 2000 O.J. (L 178) 12.

25. Id. at art. 15.

26. Draft Report, supra note 20, at 40.

27. Id.

Clark A.D. Wilson

Clark A.D. Wilson is an attorney at Merchant & Gould P.C. and an adjunct law professor at Georgia State University College of Law.

Kamal Arvind

Kamal Arvind and Jeffrey Klenc are patent agents at Merchant & Gould and law students at Georgia State University College of Law.

Jeffrey Klenc

Kamal Arvind and Jeffrey Klenc are patent agents at Merchant & Gould and law students at Georgia State University College of Law.