IP Protection on the Business Model—- From the perspective of patent

Before the emergency of the computer and internet, the majority of business models are carried out entirely or partly by the individual’s behavior, which says the pure business methods. Such business models would be deemed as the ‘intellectual activity and method’ which is prescribed in Article 25 of the ‘Patent Law’, and it could not be patentable.

With the development of the computer and internet, more and more business models are carried out by ‘individual’ and ‘Computer’, ‘individual’ and ‘Internet’, or even ‘Computer’ and ‘Internet’. Because more and more techniques are applied into those business models, the founder of such business model would certainly try to patent the business model.

Early in 1996, the American Citibank was authorized a patent in mainland China, named as the ‘Integrated full-service consumer banking systems and open systems and methods’, which involves electronic cash system, data management computer systems and the operation methods.[1] There is another domestic company’s example, in 2007, Beijing Capital Online Network Technology Co., Ltd. has applied a patent, named as ‘the system and method in using the computer’s background screen to display the information of the internet’. The company is aimed at preventing the competitors from copy its business model, the ‘Internet Desktop Media’ (that is ‘Activate Screen Mode ’). And the patent has been authorized in 2012.
But in practice, lots of business models have been rejected while being applied for a patent. In view of this, if a company plans to protect its business model as a patent, it shall be acknowledged about the requirements on the patent for a business model (despite those pure business model, only refers to the business model implemented by the computer and internet), the practical rules in the examination of a patent application by the patent examination departments and the relevant changes.

The ‘Guidelines for Patent Examination’ provides that if a claim in its whole contents contains not only matter of rule or method for mental activities but also technical features, then the claim, viewed as a whole, is note a rule or method for mental activities, and shall not be excluded from patentability under Article 25 of the ‘Patent Law’. It seems that it is possible to patent a business model. However, Chapter 1, Part 2 of the ‘Guidelines for Patent Examination’ has clearly stated that the methods and systems of managing organization, production, commercial activities, or economy, etc.; computer language, computing rules; computer programs per se and etc. belong to the ‘Rules and Methods for Mental Activities’. If the business model is not closely attached with the computer software and internet, or is applied the current software or programs, then it would be possibly be rejected.

In fact, the patent examiners would be focused on the ‘technical features’, which says that whether there is a technical solution, whether such technical solution has used technical methods to solve technical problems and achieve any technical effects.

Therefore, if a company wants to patent a business model, it shall be focus on the ‘technical problems’, ‘technical solution’ and ‘technical effects’. The company could emphasize the ‘technical problems’ instead of the business effect in the application files. The company should propose a ‘technical solution’, in which it shall highlight the combination and utilization of the computer, internet, special equipment and etc.. Last but not least, the company could describe more on the efficiency and security of the applied patent in the view of ‘technical effects’.

Any business model would have its own characteristic, so its ‘technical features’ for a patent shall be personalized. In addition, some business models could not be patent due to its characteristic. Nevertheless, the founder could still apply for a patent for such business model, because such action could prevent the others to apply for a patent, and prove that the founder is a prior user.

Note: [1] Quoted from ‘China Banking Business Method Patents Segmentation and Strategic Analysis’, Zhi Chao SHEN, Xiaoguang WU, ‘Economic Research Guide’ Issue 36, 2013.