NZ Government Backtracks – to Europe – on Software Patents

In 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!

BACKGROUND

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.

THE CHANGE

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

CONCLUSION

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

Tags: Computer programs, Law reform, New Zealand, Patentable subject matter, Politics