Alert 331 China - Revocation of Citibank 'business method' patent


The recent revocation of an important business method patent belonging to Citibank comes as no great surprise: Business method patents are generally considered to be unregistrable in China.  There are, however, some interesting lessons to be learned from the decision. 

Background
Business method patents, which protect new methods of doing business, such as various forms of e-commerce and financial and data management, are a relatively new type of patent, not available in all jurisdictions.  In general, the United States, Australia, Japan and Singapore look favourably on patents of this type, whereas in most of Europe, and in India and China, 'business methods' are thought to fall within matter that is specifically excluded from patentability.  

Nevertheless, several years ago, Citibank managed to register two business method patents in China.  One, for an 'electronic-monetary system', was subsequently allowed to lapse, but the other, granted in 2003 for a 'computer system for data management and method for operating said system', remained in force until it was recently declared to be invalid.

Revocation Action
The invalidation request was filed by the IP centre of a Chinese university in December 2008.  Only four months later a hearing was held before the Patents Re-examination Board, and in June 2009 the University revealed on its website that the patent had been revoked.

Interestingly, Citibank was not represented at the hearing and no reasons for the decision have been published. 

Citibank has three months within which to appeal the Board's decision.  The fact that it was not represented at the hearing may, however, indicate that it has decided to abandon the patent.  

Our Comment
Although it is not surprising that the Board decided to revoke this patent, there are lessons to be learned from its decision. 

First, despite the fact that Citibank's patent had been in force for five years before the invalidation request was filed, and that the request was ultimately filed by the IP centre of a University rather than one of Citibank's competitors, the case reflects a growing awareness on the part of Chinese enterprises of both the IP system and the legal tools that are available to them to protect their position.  They are now much less likely than they were in the past to be intimidated by the mere existence of a patent, or any other IP, registration. 

The decision also reflects the fact that China's IP system is continuing to develop and improve.  Whereas in 2004 it took almost three years to conclude the much publicised revocation action relating to a Viagra patent, it took just six months for Citibank's patent to be invalidated.  It is likely that, in future, it will not take five years for invalidation requests of this sort to be filed!