Approaches to Algorithm Protection in China, from the Perspectives of Trade Secrets and Patents

Partner Xiangxiang Ma of Anjie Broad Law Firm examines the advantages and disadvantages of two key approaches to the legal protection of vital AI algorithms

Summary


  • Patent and trade secret protection provide two very different legal approaches to protecting algorithms, and each has distinctive pros and cons
  • Filing patent applications for algorithms can be difficult and uncertain
  • Although there are no registration or disclosure requirements for trade secret protection, this can be difficult to enforce and requires rigorous confidentiality measures
  • Foreign businesses should consider issues including employee mobility and leakage risks and risks from collaborative ventures when engaging in AI-related business


In the digital era, algorithms have become fundamental elements of artificial intelligence (“AI”) and critical components of technological innovation, which further drive business and even geopolitical competitiveness. With complex sets of rules or instructions designed to perform computations or offer solutions, algorithms power almost everything from search engines and social media to autonomous vehicles and financial trading systems. Due to their intangible nature and the rapid pace of technological advancement, however, the legal protection of algorithms presents unique challenges.

“Patent protection requires public disclosure of the invention in exchange for exclusive rights, while trade secret protection relies on maintaining the confidentiality of valuable business information”
Under the current Chinese legal system, particularly the field of intellectual property (“IP”) law, there are two key legal mechanisms for protecting algorithms: patents and trade secrets (the copyright system is another possible route to protection as an algorithm can be registered as computer software and can obtain further protection if it can be expressed as computer code; however, this approach has certain limitations when it comes to protecting algorithms and is therefore ineffective and inefficient in practice). Patent protection requires public disclosure of the invention in exchange for exclusive rights, while trade secret protection relies on maintaining the confidentiality of valuable business information. Each approach offers distinct – but different – advantages and limitations for algorithm developers.

I. Patent Protection for Algorithms

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