Regarding how to avoid pitfalls in the application for business method patents and unlock innovative value

CHANG TSI
Insights

March11
2025

In the era of digital economy, corporate competitiveness has shifted from "product supremacy" to "model dominance." Innovations in business methods—from e-commerce recommendation algorithms to fintech risk control systems—are reshaping industries. However, many companies face repeated rejections when patenting these innovations, often deemed "non-technical" by examiners, wasting R&D investments.

Core Issue: The "subject matter eligibility" of business method patents is the biggest hurdle. How to prove your innovation is a "technical solution" rather than a "mere business rule"? This article decodes patent examination logic through authoritative cases, offering actionable strategies.

The Lifeline of Business Method Patents: The Three Technical Elements

According to Article 2(2) of China’s Patent Law, only "technical solutions" qualify for patent protection. A technical solution must fulfill three criteria:

  1. Technical Means: Employ tools following natural laws (e.g., hardware improvements, algorithm optimizations);
  2. Technical Problem: Address challenges in technical fields (e.g., data processing efficiency, device performance);
  3. Technical Effect: Achieve objective outcomes aligned with natural laws (e.g., energy savings, faster computations).

Common Misconception: Simply automating business processes with computers doesn’t guarantee eligibility. If only using known technologies to execute human-defined rules (e.g., An e-commerce company’s "Picking Path Optimization"), the solution may still fail.

From Failure to Success: Lessons from Two Landmark Cases

Case 1: An e-commerce company's "Picking Control Method"—Why Was It Rejected?

Solution: Optimizing warehouse staff’s picking routes to reduce walking distance.

Outcome: Deemed a "business management problem" lacking technical means.

Takeaway: Enhancing human efficiency ≠ technical effect. Without hardware/algorithm innovations, pure rule design won’t pass muster.

Case 2: An Internet company’s "Complex Event Processing Device"—Secrets to Success

Solution: Using state machine models to process data streams in real time, boosting system responsiveness.

Outcome: Recognized as a technical solution for improving data architecture and solving "inefficient manual analysis."

Takeaway: Embedding business rules into technical frameworks (e.g., optimizing database interactions) strengthens technical attributes.

Five Battle-Tested Strategies for Applicants

Strategy 1: Start with "Problem Definition"—Anchor Technical Pain Points

  • Bad Example: "How to increase advertising ROI?" (business problem)
  • Good Example: "How to reduce server load by optimizing recommendation algorithms?" (technical problem)

Tip: Reframe issues using technical language in patent descriptions (e.g., translate "user retention" into "data cache latency").

Strategy 2: Emphasize the "Irreplaceability" of Technical Means

  • Avoid: Generic "computer + routine operations" combinations (e.g., An Internet company’s "promotion account optimization").
  • Advanced Tactics: Integrate hardware innovations (custom sensors) or algorithmic breakthroughs (deep learning model compression).

Strategy 3: Quantify Technical Effects with Data

  • Non-technical: "Improve customer satisfaction";
  • Technical: "Increase image recognition accuracy from 85% to 97% while reducing GPU consumption by 30%."

Strategy 4: Beware of "Pseudo-Technical Jargon" Traps

  • Red Flag: Stuffing applications with buzzwords like "blockchain" or "big data" without technical relevance.
  • Solution: Detail technical implementations (e.g., "Reduce transaction verification time from 10 minutes to 2 seconds via an improved consensus algorithm").

Strategy 5: Dual Protection for "Technical + Business" Dimensions

  • Case Study: An e-commerce company’s "1-Click Order" patent—surface-level checkout optimization relies on cookie tracking and server async processing.
  • Advice: File both "method patents" (processes) and "system patents" (architectures) for the same innovation.

Future Trends: Navigating Stricter Policies

Globally, patent offices are tightening business method patent scrutiny. Post the U.S. "Alice Case," many abstract patents were invalidated. While China hasn’t adopted the "two-step test," its emphasis on "technical elements" mirrors global trends.

Action Plan:

  • Pre-Assess Eligibility: Partner with agents to simulate examiner objections;
  • Fuse Cross-Domain Technologies: Integrate AI, IoT, etc., with business scenarios;
  • Monitor Legal Precedents: Study rulings like the Supreme Court’s "Fresh Logistics Management" case, which clarified that "generic tech + rules" aren’t protected.

Conclusion: Patents Are Not Paper Tigers—They’re Shields and Spears in Business Warfare

At its core, a business method patent legally certifies "innovation value." It’s not just a shield against competitors but also a weapon for fundraising, M&A, and market dominance. Yet, without mastering examination rules, even brilliant ideas may crumble.

Call to Action: Audit your innovation now—Does it solve a technical problem? Does it transcend "ordinary business rules"? Only by fusing business ingenuity with technical rigor can you win the patent game.

Franklin Fu
Counsel | Patent Attorney
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