If so, then you would probably be, strictly speaking, mistaken. As I shall explain, it is quite likely that a wide variety of computer-implemented inventions will continue to be patentable in New Zealand, assuming the Patents Bill passes in the proposed form. However, it is also true that many of the types of ‘software patents’ which cause the greatest concern to advocates of free and open source software (FOSS) will be excluded under the proposed provisions, just as they are in Europe.
However, it appears that the amendment put forward by aptly-named Commerce Minister Craig Foss in a new Supplementary Order Paper (SOP) is the result of an extended process of consultation behind the scenes, which has resulted in it receiving broad-based support across the New Zealand IT industry, and political opponents of the previous version of the provision (including Labour MP Clare Curran, who rather hyperbolically refers to the addition of what amounts to a clarification as ‘a humiliating back down’ by the Government).
As I have explained previously, the New Zealand Government had adopted a ‘European-style’ approach to software patents, excluding computer programs from patentability, but ‘only to the extent that a patent or an application relates to a computer program as such’. Those two little words – ‘as such’ – which also appear in the European Patent Convention, and corresponding national laws, were the cause of great consternation among opponents of software patents, such as the New Zealand Open Source Society (NZOSS) accusing Minister Foss of throwing Kiwi software developers ‘under a bus’ (yes, hyperbole does seem to be par for the course over in New Zealand).
But even though the two evil words remain in the latest SOP, NZOSS is now back on speaking terms with Mr Foss, proclaiming itself ‘gratified by the government's willingness to work with the software industry to reach this stage’.
More importantly, the fact that the New Zealand Government has managed to find an acceptable compromise means that the Patents Bill should now be able to proceed through the remainder of its passage into law. I can only agree wholeheartedly with NZOSS that this update to the creaky old Patents Act 1953 is long overdue.
The Computer Program Exclusion in the SOPThe new SOP (no. 237, dated Tuesday 14 May 2013) replaces the previously proposed clause 10A with the following provision.
10A Computer Programs
(1) A computer program is not an invention and not a manner of manufacture for the purposes of this Act.
(2) Subsection (1) prevents anything from being an invention or a manner of manufacture for the purposes of this Act only to the extent that a claim in a patent or an application relates to a computer program as such.
(3) A claim in a patent or an application relates to a computer program as such if the actual contribution made by the alleged invention lies solely in it being a computer program.
(4) The Commissioner or the court (as the case may be) must, in identifying the actual contribution made by the alleged invention, consider the following:
(a) the substance of the claim (rather than its form and the contribution alleged by the applicant) and the actual contribution it makes:
(b) what problem or other issue is to be solved or addressed:
(c) how the relevant product or process solves or addresses the problem or other issue:
(d) the advantages or benefits of solving or addressing the problem or other issue in that manner:
(e) any other matters the Commissioner or the court thinks relevant.
(5) To avoid doubt, a patent must not be granted for anything that is not an invention and not a manner of manufacture under this section.
The first change in this version is that the phrase ‘…not an invention…’ is replaced with ‘…not an invention and not a manner of manufacture…’. This is presumably intended to clarify that although the law relating to ‘manner of manufacture’ (essentially based on the Australian case law) may be more permissive in relation to computer implemented inventions, this provision is intended to excise computer programs from the scope of patentable subject matter in New Zealand.
I think that everybody understood that this was the intention previously, although some were concerned that the potential for inconsistency between ‘invention’ and ‘manner of manufacture’ might have unintended consequences. The change should clarify the intent, and ensure that this does not happen.
New ProvisionsSubclauses (3), (4) and (5) are new. Subclause (5) does nothing, other than to emphasise the intended effect of subclause (1), so there is probably no need to say anything more about that.
The meat of the new provision is in subclauses (3) and (4). Subclause (3) defines what is meant by ‘a computer program as such’. The potential for this particular formulation to be construed narrowly by the Patent Office or the courts was of concern to many opponents of software patents, so providing a definition goes a long way towards addressing those concerns.
It was always the intent of the New Zealand Government that the computer program exclusion would be generally consistent with European law (or, if it makes any difference, UK law). The definition in subclause (3) is based upon the test established in the UK case of Aerotel Ltd. v Telco Holdings Ltd  EWCA Civ 1371. That case established a four-step test, of which the first three are relevant outside the specific context of the European law:
- properly construe the claim;
- identify the actual contribution; and
- ask whether it the contribution falls solely within the excluded subject matter.
Thus, for example, if the ‘actual contribution’ of a claimed invention is to solve a problem or produce some other benefit which is not due solely to the fact that practical implementations of the invention may (or even must) include the use of a computer program, then the claim is not directed to a computer program ‘as such’, and is not therefore excluded under clause 10A (although, of course, it might fail to be patentable for some other reason).
Subclause (4) sets out certain matters that a decision-maker must take into account when determining the ‘actual contribution’ of the claim. Paragraph (a) appears to embody the requirement that the claim be properly construed. This is hardly controversial, since it ought to be the first step in assessing any invention, not just those involving computer programs.
Paragraphs (b) to (d) are interesting, in that they encroach upon territory which is normally the domain of inventive step analysis. Identifying a problem and the solution provided by a claimed invention, and considering whether the claimed solution in fact offers advantages or benefits not achieved or realised in the prior art, commonly forms part of the process of determining whether a claimed invention is obvious. It therefore seems likely that some overlap will exist between assessing whether an invention involving a computer program is excluded under clause 10A, and assessing whether it involves an inventive step.
This is probably not surprising, since something very similar occurs in Europe, although it has evolved through case law rather than being set out in the Convention or any national statutes.
Although it has been widely hailed as barring ‘software patents’, the latest SOP on the New Zealand computer program exclusion clause 10A in fact introduces a restriction, rather than a ban, which is intended to replicate the UK position.
Recent Developments in UK LawThose who think that this means an end to software patents in New Zealand need to look at how the law has developed in the UK since the Aerotel decision. In Re Halliburton Energy Services Inc  EWHC 2508 (Pat), the High Court of England and Wales held that a claim directed to a computer-implemented method of designing a drill bit (essentially a special-purpose engineering CAD program) was not excluded from patentability. The court determined that the actual contribution resided in:
A computer-implemented method of designing drill bits that includes simulation of the performance of the drill bit based on calculating a three dimensional mesh for each cutting element and for the earth formation and using that to determine the forces acting on each mesh segment of the cutting element and then the forces and stresses acting on each cutting element.
In answering the question of whether the invention was more than ‘a computer program as such’, the court decided: ‘… plainly yes. It is a method of designing a drill bit. Such methods are not excluded from patentability … and the contribution does not fall solely within the excluded territory.’
Shortly after the Halliburton decision, the same court issued its judgment in Re Protecting Kids the World Over (PKTWO) Ltd  EWHC 2720 (Pat), in which the patent claims were directed to:
… a system for monitoring the content of electronic communications to ensure that users (e.g. children) are not exposed to inappropriate content or language. … the invention comprises a data communications analysis engine which samples (or in jargon "packet sniffs") data packets [which] are then monitored using a sequence of "hash tables" which assign a score to the data packet depending on the expressions found in the data packets. An aggregate alert level is assigned to the packet. The aggregate alert level is passed to a security warning algorithm which generates an alert notification to users. There is then a "request and response engine" for sending a notification … and for receiving a response … comprising one of several actions to be taken by the computer. … What is envisaged is that the computer will send the alert notification, in effect an alarm, to a parent by email or SMS message. The parent will be able to send a remote response command of one of the specified types and the computer will respond accordingly.
Many programmers would consider this invention to be ‘pure software’. Of course it is not: it involves the use of physical communications networks to send messages which cause a response to be generated in the ‘real world’. Whether that is sufficient to take the contribution of the invention outside of the excluded subject matter may be open to debate. In this case, the High Court of England and Wales held that:
…the contribution made by [the claim] includes … the generation of a more rapid and reliable alarm notification. Viewed in that way, although, at a high level of generality, alarm notifications were not novel, the particular alarm notification described in the specification and claimed … was not known and formed part of the contribution to human knowledge made by the application.
… First of all, the concept, although relating to the content of electronic communications, is undoubtedly a physical one rather than an abstract one. … Secondly, the contribution of [the claim] does not simply produce a different display, or merely rely on the output of the computer and its effect on the user. The effect here, viewed as a whole, is an improved monitoring of the content of electronic communications. The monitoring is said to be technically superior to that produced by the prior art. That seems to me to have the necessary characteristics of a technical contribution outside the computer itself.
Accordingly I would hold that the contribution of claim 33 does not reside wholly within the computer program as such exclusion.
Despite the fact that the above examples are implemented wholly in software executing within a conventional hardware environment, what they have in common is that the effects they produce, and the benefits they provide, extend outside of the realm of the computer programs ‘as such’.
In the Halliburton case, the effect of the software is to produce an improved drill bit design, which can then be used to manufacture the actual drill bit, which is employed to produce (presumably) superior results.
In the PKTWO case, remote users (i.e. parents) are provided with superior information regarding use of a computer to access inappropriate content, and enabled to take action at a distance to immediately address the issue. There is, in a sense, an alarm and a response switch which, if they were hard-wired rather than software-implemented, would not be excluded from patentability. The ‘actual contribution’ is the same either way – the court was here looking to the substance rather than the form of the claim, just as the proposed paragraph 10A(4)(a) directs.
ConclusionGiven that the stated intention of the exclusion is to follow a UK-style approach, it seems likely that the New Zealand law will follow the lead of the UK courts in permitting patents to be granted on inventions similar to those in the Halliburton and PKTWO cases.
On the other hand, computer-implemented inventions which have effects that reside wholly within the ‘virtual’ world, i.e. without external physical effects or results, are likely to be excluded from patenting in New Zealand. Much of the software developed within the FOSS community, including compilers, editors and other utilities, office productivity software, much web-based software, and so forth, falls into this category. There is little demand for open source software which targets highly technical niche applications, such as the computer-aided design of drill bits for use in the mining industry.
It therefore seems likely that the exclusion in the latest SOP strikes a good compromise. With any luck, the Patents Bill will now pass out of the Committee Stage, where is has been languishing since last September, and finally proceed to become law.
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