In late 2016, the Chinese State Intellectual Property Office (SIPO) published an official notice which included a draft of proposed amendments to the Patent Examination Guidelines (the “Guidelines”) utilized by Chinese patent examiners.1 As in the United States, the Chinese Patent Examination Guidelines are not law, but rather are rules for instructing examiners on how to properly examine patent applications. In particular, the proposed amendments to the Guidelines significantly revise the rules relating to software and business method patents, which will likely make it easier to obtain software and business method patents in China—a difficult task recently in the United States. The proposed amendments also include changes which ease the standard for amending granted patent claims, which should benefit patent holders and patent assertion entities. Overall, the proposed amendments to the Guidelines evidence China’s maturing and improving environment for intellectual property owners as the software eligibility pendulum continues to swing in favor of inventors and owners. While there is no official timeline for when the Guidelines will be finalized and formally issued, many expect that could happen sometime this year.2

In many countries of late, patent applicants have found it increasingly difficult to obtain protection for computer programs, particularly in the United States3 in the wake of the Supreme Court’s decision in Alice Corp. v. CLS Bank International.4 The unanimous 2014 Alice decision declared certain software to be unpatentable subject matter, thus leading to a series of Alice-related patent application rejections from U.S. examiners.5 However, to combat these difficulties, the SIPO stated that a major force behind the proposed amendments to the Guidelines are the “urgent demand” received from companies operating in innovative industries both in and out of China.6 As such, in the United States’ post-Alice environment, China’s proposed revisions may make it easier to obtain software and business method patent protection in China than in the United States.

One of the most significant changes in the proposed amendments to the Guidelines confirms that software and business methods are, in fact, patentable. As related to business methods, the proposed amendments to the Guidelines state, “Claims related to business methods that contain both business rules and methods and technical characteristics, shall not be excluded from the possibilities of obtaining patent rights by Article 25 of the Patent Law.”7 USPTO senior counsel for China, Mark Cohen, recently commented that these proposed amendments to the Guidelines appear “to loosen the standards for obtaining business method patents if there is a technical element to the novel business method.”8 Cohen also stated, “[p]resumably these inventions were previously denied patentability on the basis that they were intellectual rules or methods under Article 25 of the Patent Law.”9

Furthermore, the changes seek to address concerns that Chinese examiners are overly stringent when examining software and computer related applications; there is a sense that any reference to a computer or business method almost immediately raises a flag for unpatentability. The proposed amendments to the Guidelines go as far as explaining that claims relating to a business method are not excluded from patentability so long as they contain sufficient technical features.10

Other proposed changes clarify that apparatus claims directed to software may contain both program components as well as hardware components.11 Furthermore, the proposed amendments to the Guidelines also offer changes in language frequently interpreted by some examiners to completely bar any and all references to computer programs.

As further discussed by Cohen, the proposed amendments also “appear to loosen the standards for obtaining software enabled inventions. In the second line of Part II, chapter IX, section 5.2, paragraph 1, the third sentence of the Patent Examination Guidelines are amended from, ‘and describe in detail which parts of the computer program are to be performed and how to perform them’ to ‘[t]he components may not only include hardware, but may also include programs.’”12

Additionally, the proposed amendments to the Patent Examination Guidelines ease the burden of amending granted patent claims in China. Under current Chinese rules, a patent owner can only either combine or delete granted claims; however, the proposed amendments contemplate allowing patentees to add limitations from another granted claim in the same patent, within certain limits. This relaxed amendment standard may benefit companies whose businesses focus on the licensing of their patent portfolios.

As an added benefit, especially in the life sciences space, the proposed amendments also add language stating that examiners should consider experimental data, even if the experimental data is submitted after the patent application is filed.13 Typically, such data is used to show improved effectiveness or technical effect of an invention.

Considering all the proposed amendments to the Patent Examination Guidelines, China may be seen as more welcoming of software and business method patents, while the Alice decision has rendered many software related applications unpatentable in the United States. Thus, China’s improving landscape may have a tendency to positively impact patent valuations in China, and encourage patent holders in China to enforce and/or monetize their intellectual property, particularly in the software and business method arts. Despite well-founded concerns surrounding enforcement of IP rights in China,14 those developing technology in the software and business method space may be well served by reevaluating their approaches to patent protection in China.