With the speedy developments in e-commerce and information technology, legislations and policies of whether a software-implemented business method is able to acquire patent protection has become tactically crucial. In the latest decision Alice Corporation vs. CLS Bank International, on June 19, 2014, the U.S. Supreme Court ruled that an abstract process carried out by generic computer implementation is ineligible for a patent. The decision draws much attention to relevant fields for its debate on the patent eligibility for both business methods and software-implemented inventions.

The issue of whether a software-implemented process can be patented has also been widely discussed in Taiwan, although not many related court decisions to be seen so far. A ruling of Taiwan Intellectual Property Court (IP Court) made on January 25, 2013 regarding a software-implemented business method patent might reflect some views from the IP Court. Summaries of the judgment are stated below.

The Patented Process vs The In-game Auction Rules

The battle was fought around a Taiwanese invention patent, I305629, entitled “Method for Bargaining Auction,” which was issued on January 21, 2009. The patent at issue claimed a series of steps of a software-implemented process related to certain commercial operations. One key step of the patented process is determining the bid winner in a bargaining auction based on dual limitations of “the lowest bid in the auction” and “the sole bidder offering such bid.”

The patent holder of the process invention accused an online game software company for patent infringement on the ground that the online game software company used exactly the same process in its online game.

More specifically, the online game software company developed several popular on-line games, and had been running on-line shops for holding auction-type events in its games. The rules of the in-game auctions were set to the participants as to offer a bid in advance in an auction event; then, the bid winner of each auction would be determined based on complying with both conditions of “the lowest bid offered in the auction” and “the only one participant who has offered the bid.”

The patent holder alleged that the outcome of the bidding in each in-game auction is an indispensable result due to the participants’ operations under the auction rules, which is substantially identical to the outcome of the implementation of his process invention. As such, the auction rules applied in the on-line games of the software application company should fall within the claimed scope of the patent, and thus the software application company had step into patent infringement.

In defense, the accused infringer argued that the key technical feature of the patent at issue is merely a process for determining the bid winner through certain operational rules rather than technical ideas. Allegedly, the claimed scope of such patent pertains to the management and application of pure business affairs, instead of a creation of technical ideas that utilize the laws of nature as specified in Article 21 of the Taiwan Patent Act. Based on such, the claimed process is not eligible subject matter, and the patent at issue shall be invalidated.

IP Court’s Decision

The IP Court opined that, for any invention applied for a patent, the subject matter shall contain technical ideas that utilize the inherent laws of nature, and must have one or more technical solutions to solve certain technical problems.

In this regard, a business method in general shall pertain to the utilization of man-made rules, such as social laws, empirical law, or economic principles, and may not contain any technical ideas that utilize the laws of nature.

If an invention relates to a business method without utilizing the laws of nature, it does not conform to the legal definition of an invention as specified in the Taiwan Patent Act, and thus it is not patent eligible. However, if an invention relates to a business method realized through computer technology, the technical solution of the invention shall be deemed a specific embodiment of utilizing computer resources to achieve certain commercial purposes or functions, rather than a business method per se. If so, the invention as a whole is deemed to have technical solutions to resolve certain technical problems, and thus can be patented.

On the contrary, if the purpose of utilizing computer resources in the invention is a mere substitution for human services or operations, such invention as a whole is still not eligible for a patent, because the replacement of computer implementations for human operations does not contribute any technical solutions to resolve technical problems, not to mention creating any technical efficacy to the entire system.

In consideration of key aspects of the patent at issue, such as the technical problem to be solved intentionally, its efficacy differed from a general auction event in prior art, the method for bargaining auction in the invention compared to the existing auction system, the IP Court ruled that the subject matter of the patent at issue does not pertain to a computer hardware-operated or software-implemented business method, but a business method itself that utilizes man-made rules. The main objective of the patent at issue is a mere substitution for human operations with the implementations of computer hardware and software, and thus it does not utilize the laws of nature. Therefore, the subject matter of the patent at issue is not eligible for a patent, and the patent at issue shall be revoked.

It is commonly agreed that business method per se is not eligible subject matter for patents, while a computer-implemented business method may be patentable. Although the IP Court’s verdict in this case does not contradict to this patent practice, the corroborative opinion of which may be somewhat hasty in concluding that the patent at issue does not utilize the laws of nature. According to the Patent Examination Guideline, simply adding a computer software or hardware to a claim, or applying only to substitute for human operations cannot make an ineligible subject matter patentable. But if the computer software plays an indispensable role in the invention related to a business method, and contributes technical solutions, the invention as a whole may have technical ideas and can be patented. As such, the rationale in the judgment should elaborate whether or not the claimed software-implemented business method has technical ideas, rather than contributing the patent ineligibility on not utilizing the laws of nature.