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DIVERGING TREATMENT OF SOFTWARE PATENT APPLICATIONS IN THE US AND CHINA

, Myers Bigel
Blog Post Submitted by John Whetzel

It is hardly an unspoken secret that the patentability of software-related inventions has become more complicated in the US in the last few years. Recent court decisions, such as that of Alice v. CLS Bank[1], have made the patent landscape murky for software-related inventions in the US. China, in contrast, has made moves in recent years to expand patent eligibility for software-related inventions. Given the use of common patent specifications and claims in US and Chinese patent prosecution of corresponding patent applications, this divergence in patentability and prosecution and interpretation of claims for software-related patent applications can create traps for the unwary.

In the US, challenges have arisen during patent prosecution for software-related patent applications from two directions: 35 U.S.C. §§ 101 and 112. The challenges under § 101 relate to patent eligibility and took a more critical turn after the Alice decision. Historically, while patent applications directed to laws of nature, natural phenomena, and abstract ideas have always been judicially exempted from patent protection,[2] the general consensus was that “anything under the sun” made by humans was patent eligible.[3] In Alice, the US Supreme Court asserted that the software-implemented claims of the patent application were directed to an abstract idea, and thus were not eligible for patenting.  Since the US Supreme Court’s decision in Alice, the Federal Circuit has decided a number of cases that have attempted to further define the contours of which software-based patent claims are abstract ideas, and which are patent eligible.[4] The US Patent and Trademark Office (USPTO) has issued guidelines in 2016[5] and 2019[6] in an attempt to synthesize these decisions for practitioners and examiners. While these developments have increased post-Alice clarity in some technology areas of software-related patent applications (e.g., in patent applications providing software improvements to computer-related technology), there is a sense within the patent community that software-related patent applications are being deemed ineligible for patenting that would have been readily patentable less than ten years ago.

Though patent-eligibility challenges for software-related inventions under § 101 have received significant press coverage over the last several years, a more subtle challenge to such patent applications has recently emerged. Such challenges arise under 35 U.S.C. § 112 and attack a facet of patent claiming that is common with software-related inventions: functional claiming.  With functional claiming, an invention is claimed by what it does, rather than what it is. While functional claiming is explicitly supported by the courts[7] and the USPTO Manual of Patent Examining Procedure (MPEP)[8], it can lead to the types of broad claims that are a frequent target of patent quality initiatives. Software-related inventions, however, often rely on functional claiming. Software is often defined by the function that it accomplishes, and the specific software mechanism to accomplish that function may be less important. This is primarily due to the fact that software applications can accomplish a particular function in a wide variety of different ways. For example, a claim reciting the particular instructions used to accomplish a task may be  easy to “design around,” reducing the value/strength of claims of the resulting patent.

The prevalence of functional claiming in software-related patents and patent applications has further exposed applicants/patentees to challenges under 35 U.S.C. § 112.   These challenges come under the guise of means-plus-function interpretation under § 112(f). Means-plus-function interpretation is applied when a claim includes functional language and a term such as “means,” “step,” or “a substitute term [that] acts as a generic placeholder for the term ‘means’ and would not be recognized by one of ordinary skill in the art as being sufficiently definite structure for performing the claimed function.”[9] A means-plus-function claim “shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.”[10] Thus, a software-related claim interpreted under § 112(f) may result in an unexpectedly narrower interpretation that is bounded by those algorithms (and equivalents thereof) described in the specification.

Beyond the narrower claim interpretation, the interpretation of a software claim under § 112(f) may result in compounding damage. Interpretation of a means-plus-function claim, by statute, requires a review of the specification to identify “the corresponding structure, material, or acts described” therein.[11] During prosecution, an Examiner may find that inadequate detail regarding the corresponding structure is provided in the specification and/or drawings with respect to the claim terms, and issue a rejection under the definiteness requirement of 35 U.S.C. § 112(b).

This one-two combination under § 112(f)/(b) has the potential to cause serious headaches in prosecuting software-related applications, or in asserting software-related claims. Functional software claims interpreted under § 112(f) may receive either a more limited interpretation of the claims for infringement purposes or a rejection under § 112(b) if sufficient detail is not provided regarding the functional elements of the claims.

The interplay of § 112 and § 101 with respect to software-related applications is somewhat subtle.  While a software-related patent application may be able to survive a challenge based on patent-eligibility under § 101 (e.g., by providing a technological solution to a technical problem), the application must still survive potential challenges/interpretations under § 112(f)/(b) if drafted as a broad functional claim. The potential interconnection between these two facets of patent law appears to not have been lost on the USPTO, which issued two different guidance documents clarifying the interpretation of §§ 101 and 112 with respect to computer-implemented inventions on the same day.[12]

While application of § 112(f) is presumed to not apply unless certain phrases are used or particular conditions are met[13], the threshold for inviting interpretation under § 112(f) has been enforced more stringently recently.  For years, software-related applications could attempt to avoid the application of § 112(f) by avoiding certain specific terms, such as “component,” “system,” or “element,”[14] and instead focusing on the underlying structure executing the software. However, patent drafters now run the risk of inadvertently using a particular term or phrase in the specification that results in additional scrutiny during prosecution or litigation.

One example of a term that is now contentious is “module,” even though “module” is a commonly-accepted term in the technical field to describe groups of software code. Nevertheless, in Williamson v. Citrix Online, LLC[15], the Federal Circuit found that a patent claim to a “distributed learning control module” should be interpreted as a means-plus-function limitation and was invalid for indefiniteness under 35 U.S.C. § 112(b) due to inadequate description of a module algorithm in the specification. The application of § 112(f) to a software “module” was continued more recently in Rain Computing, Inc. v. Samsung Electronics Co., Ltd.[16], where the Federal Circuit found that the term “user identification module” should be interpreted as a means-plus-function limitation[17].  The court further held that “where a general purposes [sic] computer is the corresponding structure and it is not capable of performing the controlling access function absent specialized software, an algorithm is required.”[18] Again, the court held that the patent claim invalid as indefinite, finding that the specification did not adequately describe the algorithm for the “user identification module.”[19]

On the other side of the Pacific, patent eligibility of software-related inventions has expanded in China. Previously, software-related applications had difficulty obtaining patentability in China, and then, typically, only as a method claim. In China, computer programs were often considered to fall within the category of “rules and methods for mental activities” in a manner similar to the current approach in the US related to the judicial exception to patent eligibility for abstract ideas.[20] That strict approach changed somewhat in 2006, when China’s State Intellectual Property Office (“SIPO”) Guidelines for Patent Examination were expanded to include a section on the patentability of software-related inventions.[21]  Under the revised guidelines, an apparatus incorporating “functional modules” could be patent-eligible.[22] The “functional module architecture” was to be interpreted as a “functional feature,”[23] which received similar protection as a means-plus-function claim in the US. Namely, its interpretation was limited by the interpretation of the specification. For example, a claim might be recited as “an apparatus comprising modules for . . .” or similar language.

The approach in China changed again in a 2017 update to the SIPO’s Guidelines for Patent Examination. In that update, SIPO affirmed patentability of computer program product, machine-readable medium, and apparatus claim types. The update also changed the term “functional module” to “program module.”[24]  The change distances such module-based claims from the “functional feature” and allows for a broader interpretation of the claim scope. Drawing a direct comparison between the US example documented earlier, the term “module” in a Chinese patent claim has experienced expanded patent eligibility and interpretation over the last decade, while the same claim term in the US has had both its patent eligibility and interpretation limited over the same time period.

Inventors and assignees often seek protection in a number of jurisdictions to ensure protection in different regional or national markets.  It is typically preferable to maintain common specifications and common claim sets in patents and applications in multiple jurisdictions to ensure that a priority date is kept and to maintain coordinated prosecution. US and Chinese inventors and companies are both major sources of international application filings, and the number of international applications filed by Chinese inventors actually surpassed those in the US in 2019.[25]  That trend has continued more recently.[26]

However, the divergence between how software-related applications are handled in the US and China can lead to different outcomes. A patent specification or claim set that is drafted to improve chances for patentability in China may run afoul of patent eligibility and/or disclosure rules in the US.  Using the “module” example discussed above, a claim set from an international Chinese application that utilizes the module architecture (e.g., “a user identification module”) that is accepted in China may suffer a restricted interpretation and/or a potential rejection for indefiniteness in the US, if the application is not drafted with enough specificity.  Similarly, applications drafted in the US should include algorithm and/or structural details in the specification that support the claim elements of the various types of claims that are favored in China with respect to software-related applications.

The varying standards for patentability for software-related applications between the US and China provide challenges for drafting specifications and claims that are capable of taking advantage of both jurisdictions.  It is important for the drafters of patent specifications to have a broad understanding of the types of challenges that their application may face in the future in not just one jurisdiction, but several.  By carefully drafting both the claims and the specification of a patent application with an eye towards trends in patent eligibility, it may be possible to obtain relatively broad protection for software-related patent applications that can take advantage of, and not be limited by, the different approaches to software-related patent applications that may be present across different patent jurisdictions.

Article published on Lexology July 16, 2021

[1] Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014).

[2] See Parker v. Flook, 437 U.S. 584 (1978); Gottschalk v. Benson, 409 U.S. 63 (1972);

[3] Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980), citing S Rep. No 1979, 82d Cong., 2d Sess., 5 (1952); H.R.Rep. No. 1979, 82d Cong., 2d Sess., 6 (1952).

[4] See Enfish, LLC, v. Microsoft Corp., 822 F.3d 1327 (Fed Cir. 2016); BASCOM Global Internet Services v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016); Electric Power Group, LLC., v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016); McRO, Inc. dba Planet Blue v. Bandai Namco Games America Inc., 837 F.3d 1299 (Fed. Cir. 2016).

[5] USPTO Memorandum from Robert W. Bahr  to the Patent Examining Corps, “Recent Subject Matter Eligibility Decisions,” 2 (November 2, 2016), available at  https://www.uspto.gov/sites/default/files/documents/McRo-Bascom-Memo.pdf; Memorandum from Robert W. Bahr  to the Patent Examining Corps, “Recent Subject Matter Eligibility Decisions (Enfish, LLC v. Microsoft Corp. and TLI Communications LLC v. A. V Automotive, LLC),” 2 (May 19, 2016) available at  https://www.uspto.gov/sites/default/files/documents/ieg-may-2016_enfish_memo.pdf.

[6] “2019 Revised Patent Subject Matter Eligibility Guidance,” 84 Fed. Reg. 50 (January 7, 2019).

[7] See K-2 Corp. v. Salomon S.A., 191 F.3d 1356, 1363 (Fed. Cir. 1999).

[8] See MPEP § 2173.05(g).

[9] MPEP § 2181.I.

[10] 35 U.S.C. § 112(f).

[11] Id.

[12] “2019 Revised Patent Subject Matter Eligibility Guidance,” 84 Fed. Reg. 50 (January 7, 2019); “Examining Computer-Implemented Functional Claim Limitations for Compliance with 35 U.S.C. 112,” 84 Fed. Reg. 57 (January 7, 2019).

[13] See MPEP § 2181.I.

[14] See MPEP § 2181.I.A.

[15] Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015).

[16] Rain Computing, Inc. v. Samsung Electronics Co., Ltd., No. 20-1646, slip op. (Fed. Cir. 2021).

[17] Id. at *6.

[18] Id. at *9.

[19] Id. at *9.

[20] See “Obtaining patents for software-related inventions in China,” (August 2017), available at https://www.lexology.com/library/detail.aspx?g=b4c7acac-634a-4d10-99da-29ac9478d460 (last accessed July 5, 2021).

[21] See Zhang, Yan et al., “Comparison between practices related to functional features in China and the United States: with comments on Nokia v. Huaqin,” China Patents and Trademarks. Vol. 117 No. 2, April 2014, pp. 26-32, available at http://www.cpt.cn/uploadfiles/20140723163729599.Pdf (last accessed July 5, 2021).  In 2018, SIPO was renamed to China National Intellectual Property Administration (CNIPA).

[22] Id.

[23] Id.

[24] See “SIPO amends its Patent Examination Guidelines,” (March 2017), available at https://www.lexology.com/library/detail.aspx?g=15afd9e6-26af-47b0-8db1-3986ce4af7da (last accessed July 5, 2021).

[25] See “China Becomes Top Filer of International Patents in 2019 Amid Robust Growth for WIPO’s IP Services, Treaties and Finances,” available at https://www.wipo.int/pressroom/en/articles/2020/article_0005.html (last accessed July 5, 2021).

[26] See Farge, Emma, “China extends lead over U.S. in global patents filings, U.N. says,” (March 2, 2021) available at https://www.reuters.com/article/us-un-patents/china-extends-lead-over-u-s-in-global-patents-filings-u-n-says-idUSKCN2AU0TM (last accessed July 5, 2021).

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