A ruling by the Taiwan Intellectual Property Court on December 26, 2013 started a debate on the examination of the obviousness of a software-implemented business method invention. The court overruled the Taiwan Intellectual Property Office (TIPO)’s rejection of patent application number 092129649, which covers the invention.

The non-obviousness rejection of the software-implemented business method invention

The patent at issue claims a method for bargain shopping in which a trading system is introduced that provides real-time inquiry and price negotiation functions for each individual transaction through the system. The computer-implemented trading system is able to provide to a buyer all possible sale prices, and is further able to suggest ways to make a purchase, thereby enabling timely completion of each transaction.

Through implementing the method, the buyer, after choosing a specific product, may choose one of the bargaining options provided by the trading system for price negotiation, or may be directly given a suggested price by the system. If the sale price generated through the selected bargaining option is not accepted by the buyer, the trading system will provide another bargaining option for negotiation.

Therefore, the buyer can choose multiple bargaining options in one transaction until all of the options have been exhausted, and the buyer may ultimately choose to complete or abandon the transaction.

During the prosecution stage of the patent, TIPO rejected it on the ground of lacking non-obviousness. The rejection mainly relied on the combination of two citations—an academic article entitled “A cybermediary system for collective purchasing” (citation one) and Taiwan patent number TW 200301445 (citation two). Citation one introduces six types of bargain models for processing price negotiation in a collective purchase intermediary system, while citation two discloses several alternative payment methods that can be automatically selected by a telecommunications system for fare payment.

TIPO believed that the technical field of the patent was relevant to citations one and two, and that citation two provides sufficient motivation to combine its concept with citation one. TIPO concluded that the patent can be easily accomplished in view of citations one and two, and therefore said it is not allowed. 

In response, the applicant pursued an administrative remedy against the decision, and eventually appealed to the IP court.

The Legal Basis of Non-obviousness and Examination Procedure

Non-obviousness is stipulated as one of the patentability requirements for an invention in the Patent Act. In particular, it says, a patent will not be granted when the invention can easily be made by a person having ordinary skill in the art based on the prior art ("PHOSITA"), even if its industrial applicability and novelty fulfill the patentability requirements.

Based on such a provision, the Patent Examination Guidelines divide the inquiry with regard to obviousness into two aspects: whether an invention as a whole is deemed obvious, or whether an invention can be readily accomplished. To facilitate examination in this respect, the Patent Examination Guidelines outline the following steps that should be taken when office personnel are undertaking such an evaluation:

Step 1: Determine the scope of the subject matter sought to be patented.

Step 2: Determine the content disclosed by related prior art.

Step 3: Determine the technical level of a PHOSITA of the subject matter sought to be patented.

Step 4: Determine the difference between the subject matter sought to be patented and the related prior art.

Step 5: Determine whether the subject matter sought to be patented can be readily accomplished as a whole by a PHOSITA of the invention by referring to the content disclosed by the related prior art and the common knowledge at the time when the application is filed.

The IP Court Decision

In contrast to the TIPO’s finding, the IP court said that even though citation one depicts several price negotiation models, each of these models requires multiple buyers to participate simultaneously to jointly negotiate with the seller for the final sale price, in order to proceed with the one-time transaction.

Moreover, the buyers may negotiate for the final sale price only in a single price negotiation model, instead of being able to select from the multiple price negotiation models for bargaining as suggested by the patent. Citation two is also silent on providing multiple price negotiation options for a user through a one-time transaction scheme.

The IP court opined that the patent has distinguishing technical features concerning citations one and two that allow the buyer to choose one of the bargaining options or that directly suggest to the buyer a retail price in a price negotiation process for bargaining in the trading system. The ground of the rejection was not properly supported by TIPO’s examination opinions, the IP court concluded. Therefore, the IP court’s judgment overruled the decision and the patent was granted.

When examining a computer-implemented business method invention, TIPO will not reject the application outright based on non-patentable subject matter, as long as the claimed subject matter conforms to the patent eligibility requirement—namely, a business method and the method is implemented through a computer hardware. A rejection will nevertheless be issued based on obviousness if no distinguished technical result is found by utilizing the invented method. But it is true that for TIPO it can be quite burdensome to locate sufficient prior art to support its rejection. While both prior art and common knowledge may be relied upon in a determination of whether a claimed invention is obvious, the IP Court believe that the evaluation of the relevant evidence and the reasoning for lacking non-obviousness should be thoroughly inferred and elucidated to avoid hindsight bias.