Introduction
In 2018, China's National Intellectual Property Administration issued guidance regarding a patent application titled "Clearing Method for Multi-Layer Blockchain." The invention described a virtual currency transfer system between parent/child blockchains requiring validation through ledger records. Authorities determined that financial-institution-involved virtual currency clearing methods violated the Notice on Preventing Bitcoin Risks (jointly released by China's central bank and four other ministries) under Patent Law Article 5, which prohibits patents that "harm public interests." Concerns included:
- Potential financial instability and illegal financing risks
- Cross-border wealth drainage and money laundering vulnerabilities
- Disruption to foreign exchange management and sovereign currency systems
However, subsequent reviews of the Digital Currency Research Institute's patent applications concluded that blockchain-based inventions themselves aren't unlawful—only their potential misuse for unauthorized virtual tokens would violate regulations. This distinction sparked widespread debate about patent eligibility for digital currency technologies.
Key Definitions and Legal Framework
Terminology Clarification
| Term | Definition | Legal Status |
|---|---|---|
| Currency | State-issued legal tender with sovereign credit backing (e.g., RMB) | Protected by law |
| Digital RMB | PBOC-issued法定数字货币 utilizing blockchain technology | Legal tender equivalent |
| Digital Currency | Decentralized digital assets (e.g., game tokens) without regulatory oversight | Non-legal circulation |
| Virtual Currency | Non-sovereign digital assets (e.g., Bitcoin) lacking legal tender status | Prohibited as currency |
Regulatory Foundations
Patent Law Article 5 excludes inventions that:
- Violate laws/social ethics
- Harm public interests
Patent Examination Guidelines further specify that public harm includes:
- Endangering social/economic秩序
- Compromising national金融systems
Critical distinction: Blockchain infrastructure ≠ prohibited虚拟货币 applications. The technology's neutrality allows patentability when divorced from illegal use cases.
Case Study: Storage Optimization Patent
Invention Overview
A patented method reduces blockchain node storage pressure by:
- Calculating unspent transaction output (UTXO) ratios in legacy blocks
- Triggering automated transfers to consolidate UTXOs into newer blocks
- Pruning emptied historical blocks while preserving data verifiability
Rejection & Reversal
- Initial驳回理由: Cited Bitcoin usage violating anti-crypto regulations under Patent Law Article 5.
- 复审决定:
✅ Technology本身无害
❌ Only abusive implementations (e.g., illegal Bitcoin transactions) harm公共利益
Ruling: Patent granted as misuse potential doesn't inherently disqualify the innovation.
This precedent aligns with China's pro-blockchain policy, encouraging technological advancement while containing金融risks through targeted regulation.
Frequently Asked Questions
Q1: Can Bitcoin-related inventions receive patents in China?
A: No. Patents enabling比特币发行/交易 violate PBOC禁令 under Patent Law Article 5.
Q2: How does digital RMB differ from cryptocurrencies in patent eligibility?
A: As sovereign-backed legal tender, digital RMB systems enjoy full patent protection unlike decentralized cryptocurrencies.
Q3: What blockchain aspects are patentable despite crypto restrictions?
A: Core technologies like:
👉 Consensus algorithms
👉 Encrypted data storage
👉 Smart contract architectures
Q4: Why was the storage optimization patent approved despite mentioning Bitcoin?
A: The technical solution was deemed分离from Bitcoin's illegal applications—highlighting use-case neutrality in evaluations.
Strategic Considerations for Applicants
- Claims Drafting: Emphasize technical mechanisms over currency-specific applications
- Prior Art Focus: Highlight non-financial blockchain implementations (e.g., supply chain tracking)
- Risk Mitigation: Avoid terminology like "decentralized货币" in favor of "分布式账本"
👉 For expert guidance on fintech patents, consult specialized IP attorneys to navigate this evolving landscape.
Analysis demonstrates that while regulators strictly prohibit virtual currency monetization, blockchain's underlying innovations remain vigorously patentable—provided applications steer clear of金融违规 scenarios.