Asia IP

Patent preemption was developed by and is used in the US judicial system, which provides that a claim may not preempt abstract ideas, laws of nature, or natural phenomena. The terminology of patent preemption is not expressly used in China, but the concept of preemption that guards against the issuance of overly broad patents is implicitly embodied in Chinese patent law in two aspects, says Ethan Ma, a partner at Orrick in Shanghai.

“First, compared with Section 101 of the US Patent Act that limits entitlement to a patent to ‘whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter,’ China’s patent law adopts a legislative model of elimination that specifies the patent ineligibility. Article 25 of the patent law specifically points out that scientific discoveries, rules and methods for intellectual activities shall not be granted patents,” Ma says. “Rules and methods for intellectual activities fall into the range of abstract idea or thinking method of humans, which do not use technical means or apply the laws of nature, nor do they solve any technical problem or produce any technical effect, hence, they don’t constitute technical solutions. If the examiner finds that the content of a patent application is an abstract idea and the applicant’s observations fail to deny the essence of abstract idea in the application, the examiner will reject the patent application.”

China’s patent law requires the subject matter of patent protection be technical solutions that obtain technical effects and solve technical problems by technical means. Especially for a patent for a computer program, Chapter 9 of Part 2 of the Guidelines for Patent Examination (2010) specifies that if a claim of a patent for a computer program merely relates to an algorithm or mathematical computing rules, such as a method to solve the ratio of the circumference of a circle, or a computer program itself, which is recorded in mediums or rules or methods for games, etc., it falls into the scope of the rules and methods for mental activities and does not constitute a subject matter for which patent protection may be sought, Ma says. “For example, in the administrative patent dispute for a patent application, Kaixiu He applied for a patent for the invention of computer programs that involved a method of resource integration and management, which combined social resources with digital code. The Beijing Higher People’s Court supported the decision of the Patent Reexamination Board to reject the application because the content of patent application didn’t conform to the natural law or solve technical problems, which actually was a method for intellectual activities.”

Second, China’s patent law aims to encourage invention-creations and protect public interests. Article 5 of the law provides that patents shall not be granted for invention-creations that are detrimental to public interests. Article 44 also requires the preliminary examination shall include whether or not an application for a patent falls under Articles 5 or 25 of the Patent Law, Ma says. “Therefore, if an overly broad patent will cause preemption in public domain that harms public interests, the patent shall not be granted in China.”

From a strict legal perspective, if preemption (prior application) was filed in China, it will definitely impact on the issuance of a later application, adds Elliot Papageorgiou, head of IP and a partner at Clyde & Co in Shanghai. “In such a case, the prior application will be considered as a conflict application and the Chinese patent examiner will examine whether the solution claimed in the later application is disclosed in the prior application, no matter whether the prior application was published or not. However, where the prior application was filed in another country (rather than China), the impact on the later application in China depends on whether the overseas prior application was published before the application date of the later application. If the prior application was published, it forms part of the ‘prior art’ and most definitely impacts on the issuance of the later application. If it was unpublished, the prior application is not considered ‘prior art’ and would not impact on the issuance of the later application. From this perspective, preemption capture does form an effective measure against issuance of overbroad patents in China.”

The US courts’ concept of preemption provides a useful roadmap for the US Patent and Trademark Office to avoid granting overbroad patents, which would cover natural law or fundamental scientific principles themselves and thus preempt use of the claimed approach in all fields and severely restrict follow-up innovation, says Shaobin Zhu, a partner at Morgan, Lewis & Bockius in Beijing. “For example, in Mayo Collaborative Servs. v. Prometheus Labs, the US Supreme Court held that patents must be directed to ‘significantly more than a patent upon the natural law itself.’ In Bilski v. Kappos, the Supreme Court stated that upholding Bilski’s patent would ‘preempt use of this approach in all fields.’ In Diamond v. Diehr, the Supreme Court permitted a patent on a method of curing rubber using the Arrhenius equation because it did not ‘pre-empt use of that equation.’”

The concept of preemption also provides a useful guidance to patent applicants attempting to overcome a Section 101 abstract-idea challenge. “They can show to the USPTO that the claimed approach is directed to a specific implementation that doesn’t preempt all uses of the abstract idea. Moreover, applicants should consider preemption while drafting applications, e.g., drafting claims and specifications disclosing specific implementations or specific improvements of a technical feature,” Zhu adds. “When receiving a Section 101 rejection later on, the applicants could argue that the claims lack preemption to help traverse the Section 101 challenge.”

What Is Invention?

According to Article 2 of the Chinese patent law, invention means any new technical solution relating to a product, a process or improvement thereof. According to the guidelines for patent examination, technical solution refers to the collection of technical means that are adopted to solve a technical problem in observation of laws, and the technical means is usually embodied by technical features. Therefore, in many cases, the determination of patentability is based on whether the technical solution is adopted to achieve an expected effect.

Meanwhile, Article 25 of the law also defines what is nonpatentable, which includes scientific discoveries; rules and methods for mental activities; methods for the diagnosis or for the treatment of diseases; and animal and plant varieties. In traditional theory, discoveries just reveal objects existing in nature but not known by humans, so the discoveries are non-patentable. However, plenty of inventions are truly based on new discoveries, especially in pharmaceutical and genic industries, says Xu Li, a patent attorney at Chofn in Beijing. “So, in conclusion, the most important standard to judge by is whether a practical use has been derived from a discovery, but not the object discovered itself if it has been changed in some way.”

In April 2017, the patent examination guidelines were amended and, generally, software-implemented inventions (in which technical features are involved) can no longer be rejected as nonpatentable, citing Article 25, and more types of claims for such inventions are now allowed. Li says. “However, in practice, the examiner will cite Article 2 to question if it is a technical solution, which could be worse for the applicant in some cases.”

All in all, there have been few legal changes in China regarding patentability, which is different than what has happened the US. “As for the question of to what extent should a non-naturally occurring product of human ingenuity qualify as an ‘invention’ to be eligible for a patent, the answer will depend on the key factor of technical solution, and it seems that there is not going to be any major legal changes in the foreseeable future,” Li says. “However, with the ever-evolving technology, including artificial intelligence, this legal frame will eventually encounter some serious problems.”

This can we illustrated through the Novartis v. Union of India case, in which Novartis filed a patent application at the Indian Patent Office in Chennai for a chemical compound called Imatinib Mesylate that was a therapeutic drug for chronic myeloid leukemia and certain kinds of tumors, marketed under the names Glivec and Gleevec. The instant invention claimed that the beta crystal form of Imatinib Mesylate possesses more beneficial flow properties, better thermodynamic stability and lower hygroscopicity than the already-known alpha crystal form of said drug, and further claimed that the aforesaid properties contributed towards the novelty of the said drug. The Assistant Controller of Patents and Designs heard all the parties and rejected Novartis’ application to the subject by five separate, though similar, orders passed on January 25, 2006, on the opposition petitions. The assistant controller held that the invention claimed by the applicant was anticipated by prior publication and was obvious to a person skilled in the art in view of the disclosure provided. The Patent Office rejected the said application, stating that the invention fell under the purview of Section 3(d) of the Patents Act as said drug did not exhibit any major changes in efficacy as compared to its pre-existing form, says Jaya Bhatnagar, founder and chair at SiebenIP in New Delhi.

Aggrieved with the decision of the Patent Office, Novartis filed writ petitions on May 17, 2006, before the High Court of Madras in Chennai challenging the validity of Section 3(d) of the Patens Act on the ground of the section being unconstitutional. The said writ petitions were converted into appeals by the order of the court, and the said appeal was transferred to the Intellectual Property Appellate Board as per the central government’s direction dated April 2, 2007. The IPAB held that the beta crystalline version of Imatinib Mesylate was both new and involved inventive step; however, it failed the test under Section 3(d), which requires demonstration of “significantly enhanced efficacy.” This led to Novartis approaching the Supreme Court challenging the IPAB’s order, says Bhatnagar.

The Supreme Court rejected Novartis’ patent plea on April 1, 2013, and held that “for a product to be patented, it needs to pass two tests laid down by Section 2(1)(j) of the Patents Act, 1970, which are the test of invention and the test of enhanced efficacy.” The court also held that “Section 2(1)(j) of the Patents Act lays down standards for qualifying as “inventions” things belonging to different classes; and for medicines and drugs and other chemicals substances.”

With all laws in place, South Korean courts still find it difficult to judge what invention is patent-eligible in practice. “For example, selection inventions in the chemical field or gene sequencing in the genetics field are technically ‘findings’ rather than ‘creations,’ but have been granted patents in the past. Further, in the software field, patents were granted for any software that utilizes hardware to operate. Business method patents are also abstract ideas that are realized by using a computer and don’t fall under an ‘idea utilizing the laws of nature’ but have been granted patents,” says Choong Jin Oh, a partner at Lee & Ko in Seoul. “Finally, although objects that exist in nature cannot be patented, any variations may be patented if the claim utilizes the natural object.”

Accordingly, the term in the legislation “utilizing the laws of nature” can merely be interpreted as “it is not a law of nature,” Oh adds. “In order to include useful industrial technology that may be developed in the future, such relaxation of the reading of the Act is a necessity.”

To What Extent Should Products that have been Isolated From Their Natural Surroundings as a Result Of Human Ingenuity be Eligible for a Patent?

It depends on the contribution made by “inventing” such a product. The contribution is assessed by those skilled in the art. China’s Supreme Court made a retrial decision regarding an e-money data access system in 2014 with JinFu Huang v. PRB. In the decision, the court held that the invention related to monetary transactions and payment rules was ineligible for a patent, although the system comprised a host computer, a cashing machine, a recharging unit and so on, on the ground that it did not solve a technical problem and therefore did not constitute a technical solution as required by Article 2, says Yuanyuan Tian, a patent attorney at CCPIT Patent and Trademark Law Office in Beijing.

In India, in Dimminaco v. Controller of Patents and Designs and others, Dimminaco, a Swiss company, developed a live (attenuated) vaccine against bursitis, an infectious poultry disease, and applied to patent the process of its preparation. The Controller of Patents and Designs rejected the patent application based on the fact that the end product of the said vaccine contained a living material and its procedure of development was only a natural process. Aggrieved by the decision of the Controller, the applicant filed an appeal before the Calcutta High Court in Kolkata under Section 15 of the Patents Act, 1970.

The Court held that the controller erred in law by holding that merely because the end product contained live virus, the process involved was not an invention. Since there is no statutory meaning of the term “manufacture,” the dictionary meaning should be accepted, which did not exclude a vendible product containing living organism from it. The claims of the patent should have been considered by the controller on the principle of Section 3 of the Patents Act as no objection was raised by the examiner under Section 3. The court also said that the application of the appellant/petitioner may be reconsidered for grant of patent as early as possible.

“The court in India accepted a claim for patenting a product that contained a micro-organism that was isolated from its natural surrounding but was in a modified form,” Bhatnagar says. “A natural product in its original form cannot be patented in India but satisfies the criteria of patentability if the said product is modified by human intervention.”

What Should Be, But Are Not?

Although not formally excluded from patenting, software and business method inventions are often found ineligible – even when they should be patentable. “Having said that, with ‘national champions’ like Alibaba and Tencent (and their interests in online business methods and financial services) becoming ever more powerful and prominent, and also increasing their levels of R&D and innovation, we would expect to see an increase in the patentability of software-enabled inventions, and perhaps business-method related inventions,” Papageorgiou says. “The former appears to be borne out by recent signals from SIPO that the patentability criteria for software-enabled patents are being reconsidered and appear to be moving in the direction of those practiced by the European Patent Office.”

“In Indonesia, there are ongoing lobbying efforts to make software and Swiss-type claims patent eligible,” says Nidya Kalangie, a partner at SKC Law in Jakarta.

While most of the other countries do not protect software programs per se as subject matter, Europe and Japan do, says Aki Ryuka, president at Ryuka IP in Tokyo. “Software programs should be protected, because various kinds of inventions can be included therein.”

Should Patents Cover Methods Not Involving Machines or Transformations?

In keeping with the understanding that the purpose of patent law is to foster innovation in technological fields where commerciallyimportant improvements might otherwise be held in confidence, it makes sense to consider allowing patent protection of any subject matter that meets that societal goal, even if it does not involve a machine or transformation. “Rigidly defining the types of inventions that are considered to be patentable as opposed to the areas where innovation is to be incentivized might increase the risk of patents being granted in areas where they serve no compelling societal interest, such as in technology fields where there is a large body of general knowledge that might not be in a form that is readily searched by a patent examiner, which can result in patents being granted on information that was already in the public domain. Any constraints that are placed on the types of inventions that can be patented are in essence constraints on the types of information for which public disclosure is to be incentivized,” says Christopher Rourk, a partner at Jackson Walker in Dallas. “Allowing patents to be obtained in new areas that do not fall within the conventional understanding of a machine or transformation, such as biological nanotechnology or complex communications technologies and encryption, will not only promote progress in such areas, but will also organically create a taxonomy for such new areas of technology that is oriented towards the practical applications of those technologies. Such taxonomies make it easier to identify areas where what might appear to otherwise be non-obvious combinations can be more readily seen as the obvious application of a well-known technique for solving a problem in one field to problems of the same kind in a different field, thus preventing the grant of a monopoly on information that is already in the public domain.”

Besides Judicial Exceptions, What Can Be Done to Prevent Issuance of Overly-broad Software or Computer Patents That Cover Wide Swaths Of Economic Activity?

Making the requirements of patentability – especially the standards and levels of “inventiveness” – more strict and onerous is one way to handle the issuance of over-broad patents in all jurisdictions, Papageorgiou says. “In China, the invalidation rate of patents is quite material, meaning that the Patent Re- Examination Board, the initial authority considering the validity and invalidation of Chinese patents (China operates a bifurcated patent system), is in fact another authority which has the power to limit the ambit and breadth of patents, including and especially software-enabled and computer-related patents. Making the patent invalidation process in China even more streamlined can therefore act as a further check on overly-broad patents.”

In the US, the classic mechanism of patent obviousness remains to prevent the issuance of overly broad software and computer-related patents, especially those which take an existing economic activity and merely implement the activity on a computer or on the internet.

Additionally, the limitations on patentability imposed by Section 101 of the US Patent Code limits greatly the ability to get overly broad patents in the software and computer industries that similarly cover overly broad innovations related to economic activities. Beyond just seeking invalidity in the courts, the USPTO’s Patent Trial and Appeal Board will review patents for unpatentability due to obviousness and, in certain circumstances, for violation of Section 101, says Antony Pfeffer, a partner at Orrick, Herrington & Sutcliffe in New York. “This process can be less expensive and faster than resolution through the court system and statistically has resulted in a higher rate of invalidating issued patents than the court system.”