China: Computer Software Protection In China

Last Updated: 8 August 2007
Article by Seagull Song Haiyan and Xu Yuezhu

The rapid development of the information industry and the popular application of networks has made computer software ("software") a core part of the network information era. Since software is so important, protecting it is essential. Currently, the international prevailing practice in software protection is to place protection standards within the purview of copyright laws. Patent and trade secret regulations are also used to protect software.

The exact definition of software can fluctuate nation to nation, as each nation adjusts the definition provided by the World Intellectual Property Organization ("WIPO") 1to address their respective situations. In China, Article II of the Order of the State Council of the People's Republic of China defines "computer software" as "computer programs and the relevant documentation thereof." 2

I. Copyright Protection for Computer Software

Copyright protection is the most widely used legal protection model for software internationally. As a type of "works", copyright law offers a broad scope of protection to software. Because copyright law standards to qualify as works are not high, only formal innovation is needed. Therefore, almost all software falls within the purview of copyright protection. Based on the "automatic copyright" system, software can conveniently and efficiently be copyright protected immediately after its development without further application and approval. As copyright protection is the most prevailing protection system for intellectual property, most nations which have set up copyright protection systems are members of Berne Convention and Universal Copyright Convention. Therefore, international protection for software can be more easily gained under a copyright protection system, and there is no need to introduce new multilateral treaties to protect software.

Copyright Law of the People's Republic of China explicitly covers software.3 In 1991, China promulgated the regulations specific to software protection—Regulations on the Protection of Computer Software ("Regulations"). According to the Regulations, software that is independently developed and that is in a material form, such as magnetic media or CD, will enjoy copyright protection.

II. Patent Protection of Computer Software

Software protection is within the purview of the Patent Law of China. Inventions composed of software programs are significantly different from traditional "works" because it consists of a large amount of creative work. Therefore, the software developer's ideas are the most valuable and are most in need of protection. If technicians obtained the developer's design ideas, they can easily design a program-- via reverse engineering, reverse coding, or reverse assembly—that shares the same or similar function. However technical ideas can not be protected by traditional copyright law.

Under copyright law, only the expressive forms of works are within the purview of protection; ideas and "function" are excluded from the purview. For the programs depicting technical ideas, especially those inventions involving computer programs, patent law protection usually adopts the functional characteristics to limit their scope of protection. Patent protection is characterized by its exclusive and monopolized rights. Once patent rights are granted to computer software, any similar inventions, even those developed independently by others, falling into the scope of patent protection will constitute an infringement.

However, there are also some deficiencies in patent protection of software. Strict examination is needed for the approval of patent application. While the economic life span of most software is less than three years, it may take up to one year to receive a patent approval. When strictly following the examination procedure, the life of software is almost due when the patent application is finally approved. In addition, patent law requires the applicant to fully disclose the content of the invention, placing the invention at risk of theft. It is not difficult to develop a new program with the same function once the developer knows the ideas and structure of the software.

Article 25, Item 2 of the Patent Law of the People's Republic of China excludes "rules and methods for mental activities" from patent protection rules 4 under the theory that they do not belong to "inventions" as defined by the Patent Law. Article 25 was once an obstacle for patent applications for computer software. But with the recognition of the patent protection for software in the United States and some other countries, almost all countries now recognize it, too. In China, the Guidelines to Patent Examination ("Guidelines"), promulgated by the State Intellectual Property Office ("SIPO"), stipulate general principles and specific instances for software protection. However, the Guidelines offer no patent protection for common computer programs. But if the computer software described in the invention application constitutes a technical program, then it does fall within the purview of patent protection.

III. Trade Secret Protection of Computer Software

Before copyright protection for computer software existed, most countries protected computer software as trade secrets. Trade secrets, which provide their owners economic benefits, are not within the public domain. Technical and business information characteristics of trade secrets coincide with characteristics of software to some extent. Enforceable through software confidentiality requirements, the trade secret protection model has unique advantages over copyright and patent protection models. Trade secret protection has no time limitation and has a broader scope of protection. The trade secret protection model protects both the expressive forms and the ideas of software. At the same time, requirements for trade secret protection are less strict than those for patent application, but more strict than those for copyright protection. These characteristics are suitable for computer software protection to a certain extent.

The trade secret protection model has many defects, also. Once the relevant technical information is disclosed or divulged to the public, there are no conditions for trade secret protection for the target objects. A series of complementary measures must be taken in trade secret protection for software. For example, respective measures like technical and related personnel management and software management should be taken to ensure the confidentiality of the software. Confidentiality agreements and business competition prohibition agreements should be signed between the enterprise and its employees. Confidentiality scope should be stipulated clearly in the agreement. Since software is easily-copied, special attention should be paid to ensure the validity of evidence preservation. As the party who raises the tort suit bears the burden of proof, evidence collection procedures must be regulated to ensure the legitimacy and validity of the procedure.

Therefore, to make up for the insufficiency in trade secrets protection, most software manufacturers adopt the method of signing a licensing agreement with the distributors and end-users, using the confidential provisions in the agreement to ensure "confidentiality" of trade secrets. Common methods for the acceptance of the agreement are as follows: 1. Via Shrinkwrap Contract. The contract will come into force once the user opens the shrinkwrap. 2. Via mail-back agreement. This method requires that users sign the attached agreement and mail it back to the distributor after purchasing the software. 3. Via Clickwrap Contract.Users must accept a series of provisions before the end of installation.

But it must be noted that the legal effect of the agreement, accepted by the end-user through one of these formats, still requires further consideration. For example, though prohibition of reverse engineering is always provided in the clickwrap contract, it is commonly agreed that redeveloping software through reverse engineering is legitimate. In addition, to make it more compatible with other software in a software development project, reverse engineering is sometimes unavoidable. Article 12 of the Interpretation of the Supreme People's Court on the relative Issues Concerning the Application of Law in the Trial of Civil Disputes over Unfair Competition, which became effective on February 1, 2007, provides that acquiring trade secrets through reverse engineering is not identified as an infringement of trade secrets. Meanwhile, Article 17 6 of the Regulations on Protection of Computer Software of China also recognizes that reverse engineering is legitimate for the purpose of learning and studying. Therefore, combined with the consideration of the stipulations of the laws of China when software developers draft the end-user agreement, more detailed, powerful and practical provisions should be included in the agreement; otherwise, the legal effect of relevant provisions will be greatly reduced.

IV. Technology Anti-circumvention Protection of Computer Software

To avoid the theft of core technology, many enterprises have taken technological measures to prevent reverse engineering. However, certain professional technicians can still circumvent the technical measures. Therefore, it is necessary to prevent circumventing activities to protect software copyright holders.

Interim Regulations on Administration of software Products, 7 China's first anti-circumvention provisions in the form of ministry regulations, was promulgated by the Ministry of Electronics Industry in 1998. The amended Copyright Law of 2001 also introduces anti-circumvention rules. 8 In 2002 the State Council promulgated theRegulations on the Protection of Computer Software which include the same anti-circumvention rules 9 On June 1, 2006, Regulation on the Protection of the Right to Network Dissemination of Information was promulgated by the State Council, in which anti-circumvention measures were stipulated. 10

The anti-circumvention provisions greatly expanded the protection scope, which extends from encryption software to all the technical protection measures of copyright holders and adjacent right holders of video and audio products. These anti-circumvent principles can help copyright holders protect their rights and combat piracy under the digital environment.

However, there is still much to be improved in anti-circumvention law for the following reasons:

  • Anti-circumvention rules are too simple and vague.
  • The new rules make no distinction between different technical measures and provide for a blanket prohibition, while not all technology circumvention activities should be prohibited. In many cases circumvention activities serve important legitimate interests, such as, research and academic activities. Hence, most countries and regions allow reverse engineering under certain conditions.
  • No provisions are made to stipulate the protection scope, and this will easily cause the abuse of technical measures. Jiangmin's "logic lock" incident is a typical example. 11

To provide for public interests, copyright law should list the restrictions and exceptions of technical measures that precondition when legitimate technical measures can be protected. In this regard, with the consideration of reasonable use principle of the existing copyright system, restraints and exceptions of technical measures should be stipulated after referring to similar laws, like the United States' Digital Millennium Copyright Act. 12

In short, each protection model has its advantages and disadvantages, and a choice should be made after comprehensive consideration. Since the patent protection model has strong exclusive and protective powers, computer software that can meet application requirements for the Guidelines for Patent Examination of China and that have longer economic life spans should be ascribed under patent protection. For those that do not satisfy the patent application requirements, copyright and trade secret protection should be applied. If trade secret protection is used, confidentiality of the computer software should be confirmed before any action is taken. A discrete consideration of consequences should be made before adopting technical measures.

(This article was originally written in Chinese. The English version is a translation.)

Footnotes

1. According to WIPO Model provisions on the protection of computer software, Geneva 1978, "computer software" refers to: computer program, program description and program user instruction. Computer program" means "... a set of instructions, expressed in words, codes, schemes or in any other form, which is capable, when incorporated in a machine readable medium of causing a machine having information-processing capabilities to indicate, perform or achieve a particular function, task or result." "Program description" means a complete procedural presentation in verbal, schematic or other form, in sufficient detail to determine a set of instructions, constituting a corresponding computer program; "User instruction" means any auxiliary materials, other than a computer program or a program description, created for aiding the understanding or application of a computer program.

2.Regulations on the Protection of Computer Software

Article 3 definitions for the following terms used in these Regulations are:

1) Computer program: refers to the coded instructional sequences -- or those symbolic instructional sequences or numeric language sequences which can be automatically converted into coded instructional sequences -- which are for the purpose of obtaining a certain result and which are operated on information processing equipment such as computers.

The source code program of a piece of computer software and its object code program should be regarded as one work.

2) Documentation: refers to written materials and diagrams which are used to describe the contents, organization, design, functions and specifications, development circumstances, testing results and method of use of the program, for example: program design explanations, flow charts, user manuals, etc.

3. Article 3. For the purposes of this Law, the term "works" includes works of literature, art, natural science, social science, engineering technology and the like which are expressed in the following forms:

(8) computer software;

4. Patent Law of the People's Republic of China

For any of the following, no patent right shall be granted:

(2) rules and methods for mental activities;

5. Guidelines for Patent Examination of China(2006)

Chapter 9 Some Provisions on the Examination of the Patent Application Relating to Computer programs

Introduction

Computer programs per se said in this chapter mean a coded instruction sequence which can be executed by a device capable of information processing, e.g., a computer, so that certain results can be obtained, or a symbolized instruction sequence, or a symbolized statement sequence, which can be transformed automatically into a coded instruction sequence. Computer programs per se include source programs and object programs.

The invention relating to computer programs said in this chapter refers to solutions for solving the problems of the invention which are wholly or partly based on the process of computer programs and control or process external or internal objects of a computer by the computer executing the programs according to the above said process. The said control or process of external objects includes control of certain external operating process or external operating device, and process or exchange of external data, etc.; the said control or process of internal objects includes improvement of internal performance of computer systems, management of internal resources of computer systems, and improvement of data transmission, etc. Solutions relating to computer programs do not necessarily include changes to computer hardware.

6. Regulations on Protection of Computer Software

Article 17Those that use the software by installing, demonstrating, transmitting or storing it for the purpose of learning and studying the design ideas and theories contained in the software may do so without the approval of the software copyright owner and without paying remuneration to the owner.

7. Interim Regulations on Administration of software Products, Article Eighteen: Production of pirated software, software for deciphering secret and software with the main function of removing technology-protection measures are prohibited.

8. Article 47 Those who commit any of the following acts of infringement shall bear the civil liability for such remedies as ceasing the infringements, eliminating the effects of the act, making a public apology or paying compensation for damages, depending on the circumstances; where he damages public interests at the same time, the copyright administration department may order him to cease the act of tort, may confiscate his illegal gains, confiscate and destroy the reproductions of infringement, and impose a fine on him; if the case is serious, the copyright administration department may also confiscate the materials, instruments and equipment, etc. mainly used to make the reproductions of infringement; where his act has constituted a crime, he shall be investigated for criminal liabilities in accordance with the law:

(6) without the permission from the copyright owner or obligee related to the copyright, intentionally avoiding or destroying the technical measures taken by the obligee on his works, sound recordings or video recordings, etc. to protect the copyright or the rights related to the copyright, except where otherwise provided in laws or administrative regulations;

9. Regulations on the Protection of Computer Software, Article 24 Except as otherwise prescribed by the Copyright Law of the People's Republic of China, these Regulations or other laws and administrative regulations, anyone who has committed any of the following infringing acts without the approval of the software copyright owner shall, according to the circumstances, bear the civil responsibilities of stopping the infringement, eliminating the effects, making apologies, compensating for losses, etc; for anyone who damages the public interests at the same time, the administrative department of copyright shall order the offender to stop the infringing acts, confiscate the illegal gains, confiscate and destroy the infringing copies, and may impose a fine on him at the same time; if the circumstances are serious, the administrative department of copyright may also confiscate the materials, tools, equipment, etc. that are mainly used in the making of the infringing copies; if there is any violation of criminal laws, the criminal responsibilities shall be investigated according to the provisions of the Criminal Law on the crime of infringing upon copyright law and the crime of selling infringing copies…

10. Regulation on the Protection of the Right to Network Dissemination of Information, Article 4 In order to protect the right to network dissemination of information, an owner may adopt technical measures. No organization or individual may purposely avoid or break the technical measures, purposely manufacture, import or provide to the general public any device or component that is mainly applied to avoiding or breaking the technical measures, or purposely provide such technical services to any other person for the purpose of avoiding or breaking the technical measures, unless it is otherwise provided for by any law or regulation that the relevant technical measures may be avoided.

11. In 1997, Jiangmin anti-virus Software Company suffered great loss because of software piracy, but they could not get effective legal protection. Therefore, "logic lock", a type of protection program security was installed on the software. When the decoded software was run by the pirate, the "logic lock" would be automatically activated, and frequent computer locks would occur. Users suffered great damage from "logic lock" attacks. Jiangmin Company fell into the embarrassing situation of a worldwide condemnation. Eventually, due to the importation of hazardous data that endangered users' computer system, Jiangmin was subject to an administrative fine.

12. Article 120 of DCMA stipulates the exceptions and exemptions of the technical protection measures, including the reasonable use exceptions: (1) A nonprofit library, archives, or educational institution; (2) Law enforcement, intelligence, and other government activities; (3) reverse engineering; and (4) encryption research. If these activities are conducted to advance the state of knowledge in the field of encryption technology or to assist in the development of encryption products, under certain circumstances, encryption of the technical measures can be carried out.

This article was first published in King & Wood IP Bulletin & is republished with the consent of King & Wood

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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