30 August 2012

NZ Government Backtracks – to Europe – on Software Patents

Kiwi SlicesIn New Zealand, the new Patents Bill is at last back on the parliamentary agenda, and looks to have very real prospects of being debated and passed in the coming months, following some further amendments by the government which will, amongst other things, moderate the proposed exclusion of computer programs from patentability.  If passed in its current form, the new Patents Act will contain a limited exclusion in essentially the same terms as the European Patent Convention, and its implementing national laws (including the UK Patents Act 1977).

This will be seen as a positive development by many stakeholders, who had previously argued that patent-eligibility provisions in New Zealand should be modelled on those of one of its major trading partners, e.g. Australia, the US or Europe/UK.

The last-minute computer program exclusion appeared to have become something of a stumbling block for further progress of the Bill, following widespread criticism, including by the Office of the United States Trade Representative (USTR), which stated in its annual report on ‘foreign trade barriers’ in April that the exclusion ‘departed from patent eligibility standards in other developed economies’.

Now, hopefully, the Bill will be able to move forward, and New Zealand will finally have a modern patent law for a modern world!


Readers with long memories may recall that a long-overdue replacement for the New Zealand Patents Act 1953 emerged from a review by the Commerce Select Committee about two-and-a-half years ago.  It has since been hanging around the Parliamentary Order Paper, being repeatedly bumped back down the list by higher priority items.

As noted above, one issue which appears to have kept the new Patents Bill on the back-burner is the exclusion of computer programs from patentability, which was inserted at the eleventh hour by the Select Committee after strong lobbying from free and open source software (FOSS) advocates.  When then Commerce Minister Simon Power supported the exclusion, he left the parliament in possession of something of a hot potato.

The amended Bill stated simply, and without qualification, in proposed clause 15(3A) that ‘a computer program is not a patentable invention’.  Objections were raised by Fisher and Paykel Appliances, among others, that this blanket wording might bar patents on inventions in which key new features happened to be implemented using embedded microprocessors and software, which did not seem to be the intention of the exclusion.  Faced with this complication, the Minister declined to amend the proposed wording, instead directing the Ministry of Economic Development (which encompasses the Intellectual Property Office of New Zealand, IPONZ) to develop ‘guidelines’ to explain how the exclusion, as worded, would be applied to prevent patents being granted for some types of computer-implemented inventions, while still allowing for patents on embedded software.

To put it bluntly, the process was a debacle.  Draft guidelines were duly prepared and published for comment, which were almost universally negative (see Stakeholders Say ‘No’ to NZ Computer Program Exclusion).  With the government still unwilling to back down, IPONZ responded to the stakeholder submissions by issuing an ‘Explanatory Note’ which was 50% longer than the guidelines it purported to explain (see IPONZ Issues ‘Explanatory Note’ on Computer Program Guidelines).  With the workability of the guidelines in question, and their legal standing uncertain (i.e. New Zealand courts would not be in any way bound to endorse, support or implement examination guidelines as though they were part of the law), the issue – and the Patents Bill – quietly disappeared from the agenda.


A change in ministerial responsibility (Simon Power has been replaced as Commerce Minister by Craig Foss, following an election in 2011 which left the incumbent National Party in power, but without a clear majority in the New Zealand parliament) appears to have been accompanied by a new focus on economic policy.  Progress of the Patents Bill has now been tied to a package of reforms around exports, innovation, workplace skills and safety, capital markets, natural resources and infrastructure.

Suddenly, it seems the parliamentary drafters have been hard at work beating the bill into shape for passage.  The amendments are set out in a Supplementary Order Paper available from the New Zealand legislation web site.

In a key change, the controversial clause 15(3A) has been dumped, and a new clause 10A added, in the following terms:

10A Computer programs
(1) A computer program is not an invention for the purposes of this Act.
(2) Subsection (1) prevents anything from being an invention for the purposes of this Act only to the extent that a patent or an application relates to a computer program as such.

This provision is almost identical with the wording in the European Patent Convention, and in the UK Patents Act.  The Explanatory Note states that:

Rather than excluding a computer program from being a patentable invention, new clause 10A clarifies that a computer program is not an invention for the purposes of the Bill (and that this prevents anything from being an invention only to the extent that a patent or an application relates to a computer program as such). This approach is considered to be more consistent with New Zealand's international obligations (the TRIPS agreement, in particular, contains restrictions on the ability to exclude inventions from patentability). This approach is also more consistent with overseas precedents and makes it clear that it is only computer programs themselves that are ineligible for patent protection. Under the Bill, a patent may still be granted for an invention that meets all of the criteria for patentability (for example, novelty and an inventive step) despite the fact that the relevant invention involves a computer program in some respect


We would hope that decision makers in New Zealand (IPONZ examiners, Deputy Commissioners, and the courts) will look to the UK and European jurisprudence for guidance on the interpretation of the provisions of clause 10A, assuming that it is passed in its present form. 

This is a great improvement on the confusing and uncertain situation under the previous version of the bill, and should provide patent applicants and their advisors with greater certainty, on the basis that anything that would be patent-eligible in Europe should also be patentable in New Zealand.

However, even though the amended Bill places greater restrictions on the patent-eligibility of computer-implemented invention than exist under the Australian and US law, and is consistent with the position originally advocated by FOSS lobbyists, it seems there is just no pleasing some people.  In a 29 August 2012 blog post, the New Zealand Open Source Society has stated that:

With the removal of the explicit software patent exclusion, and the addition of two tiny words, “as such”, the Commerce Minister, Craig Foss, has more or less thrown kiwi software developers under a bus.

Let’s hope, then, that in addition to economic reforms, public transport and hospital funding are also on the New Zealand government agenda!

Image: FreeDigitalPhotos.net


Dave Lane said...

You might know a bit about patents - bully for you. I'm a software developer. You're right, there's no pleasing some people, particularly me. I'm only happy when the just prevail. In this case, I consider your position unjust. Are you a software developer? If not, than I suggest you stick to your knitting, because this legislation is not meant to provide you with any incentives. Ideally, your profession will become increasingly unnecessary.

Patentology (Mark Summerfield) said...

Hey Dave,

If you need the 'just' to 'prevail' in order to be happy, you must lead a very miserable life. You don't think that perhaps there are some greater injustices in this world than the NZ government only partly limiting the availability of patents on computer implemented inventions?

If you want to know whether I am now, or ever have been, involved in software development -- not to mention whether I list knitting among my hobbies -- you could always look up my LinkedIn profile. It's not hard.



Andy Mukherji said...

Hi Mark
It seems that there are a number of lay people (including Dave Lane) who dont seem to understand the value of patents in the commercial space and come up with irrelevant arguments and examples to support their view without understanding the underlying issues.
Unfortunately, such members of the public are under a wrong impression that Attorneys such as yourself have no technical qualifications or knowledge.
On another note, I am not sure how this effects the Trans Tasman Mutual Recognition Agreement. The Australian Act has been amended recently and clearly software is considered to be a patentable invention in Australia.

Patentology (Mark Summerfield) said...

Thanks for your comment, Andy.

I do not think that there is any issue here with regard to the Trans Tasman Mutual Recognition Agreement (TTMRA). The TTMRA provides that (most) goods able to be legally sold in one country can be legally sold in the other without having to meet further sales-related requirements, and that people registered to practice an occupation (including that of patent or trade marks attorney) in one country are entitled to register to practice the equivalent occupation in the other country without the need to undergo further testing or examination.

The TTMRA does not require total harmonisation of laws in both countries. As far as I am aware, New Zealand is not party to any agreement or treaty that would prevent it from making the kind of limited exclusion now proposed, which is no different from that which exists in Europe, China, and many other countries.

As a practical matter, substantive differences between the laws in the two countries mean that attorneys who have passed testing and examination in one country will not necessarily be familiar enough with the law in the other country to be able to practise equally competently. Clients cannot assume, for example, that an Australian attorney actually has the necessary skills, knowledge and experience to represent them effectively in New Zealand merely because they are registered to practise in that country. (And vice versa.) Of course, we have a professional obligation not to misrepresent our capabilities, and a legal obligation not to engage in deceptive or misleading conduct, so I am certainly not suggesting that this is currently an issue.

Another consideration will be the impact of such differences on the proposed 'Integrated Patent Examination' procedure (see this article from February 2011). The more differences there are in the laws of Australia and New Zealand, the more difficult it will be for examiners to keep up-to-date on developments in both countries, and the less benefit there will be in terms of avoiding duplication.

My own feeling is that 'integrated search' makes very good sense, but that the process of applying the substantive law of each country would be better handled by Australian and New Zealand specialist examiners.


lightweight said...

Your idealism is inspiring, Mark. If I cared enough about your experience to look you up, I would have. As for my opinions and those of other "lay people", well, I guess we'll just have to see how the chips fall. Good luck with your life.

Patentology (Mark Summerfield) said...

...because nothing says 'I don't care' like repeatedly posting comments on somebody's blog.

cauld said...

I'm both a software developer and someone who knows a bit about patents. Glad to see that the Minister has taken feedback provided by myself and others through this process and now proposes to table an SoP which will bring our approach into line with our trading partners. Glad to have you on the bus too Mark, got you on Twitter, maybe do a drink in Sydney some time?

Patentology (Mark Summerfield) said...

Hi Cauld, and thanks for your comment.

Those of us who work in the profession know from daily experience that there are many software developers who can see the ways in which patents can add value to their businesses - sometimes - just as open source (as user and/or contributor) can add value - sometimes. Most just want to succeed, and make the best products they can in the process.

It's good to hear another view from within the developer community!

I'm actually in Melbourne, so if you're ever in town…



Matthew Lay said...

Regarding the animostity software developers/programmers have against patents (particular open source fans), what I don't understand is how they are meant to make any money.
If anyone can copy your software, there is no incentive for anyone to pay for it right?
Sure, Google/Andriod has been a very successful business, but you can't all work for Google can you?

Patentology (Mark Summerfield) said...

Hi Matthew. Thanks for your comment.

I suspect that many are not making money from open source software. They may be users, fans, hobbyists, or contributors who are involved for any number of reasons, including the sense of belonging to a community of people making a real contribution to the world. All of which is absolutely fine, and more power to them.

There are also many viable business models built on open platforms, and open innovation. Building, customising, deploying and maintaining enterprise software is expensive, even if the code base is free. These are all areas in which open source service providers can add value to a business, and thus make money.

All of this can be true, and still leave a role for patents, which support different business models. The idea that it is an 'either/or' proposition is no doubt theoretically appealing, but it breaks down upon contact with the real world, in which there is no such thing as 'one size fits all'.



Name said...

Google/Android is really the exception not the norm in the sense that google gets its revenue from advertising and therefore can provide other products/services, free of charge.

Can anyone imagine google adwords or adsense becoming an open source advertising platform?

Patentology (Mark Summerfield) said...

Yes, Google is in a unique position to leverage an open source platform into advertising revenue. And you are right that Google is highly selective about what it keeps as proprietary information.

Of course, Google's model is not the only one for making money from open source software. But open innovation models are still in the minority. Business operators need to have the choice of adopting proprietary models, and obtaining protection for their innovations, if that is what works best for them.

It is simply absurd to argue that innovation is inevitably enhanced by allowing copying. Of course people can learn and develop by imitating and building on the work of others (which is no doubt what appeals to many open source advocates). But once you move into the commercial realm, imitators commonly cannibalise the markets opened up by innovators.

Most people value innovation and creativity. It is then inconsistent to argue for the abolition of the only mechanism we have for innovators to protect their inventions, and obtain a reasonable return on their contribution.

Maybe the pro-software patent contingent needs a catchy slogan to grab people's attention. How about 'My Software, My Choice'!?

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