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By guest blogger Doug Calhoun

Thirty years after the Muldoon government first looked at patent law reform, a new patent law is on track to come into force by the end of 2013. This guest blogger has been involved in working with and on the current act since 1974. And my reaction to the second reading debate?

“This is the way the world ends:
This is the way the world ends:
Not with a bang but a whimper.”

“The Hollow Men”

-TS Elliott

The bill runs to 165 pages with over 300 sections. It emphasises the goal of its authors to make it as difficult as possible to obtain a patent and as easy as possible for anyone to invalidate one. But the second reading debate: was based almost entirely on whether patents should be granted for software. And not a single Maori Party MP took part. Only Steffan Browning (Greens) mentioned that none of the Wai 262 Report recommendations on changes to patent law were implemented – even though the introduction of the Patents Bill was delayed from 1994 until 2008, largely because government concerns about the Wai 262 claim (hence my TS Elliott quote) – but that’s another blog post.

A Bit of History

The Patents Bill was introduced in 2008 by the then Labour government. The original bill did not have any software exclusion. In the policy development process, the MED officials had issued policy papers, considered submissions and recommended that there be no software exclusion. The practice of the Intellectual Property Office (following a decision of the Commissioner of Patents) was that if an invention involved software as a means to an end and it was novel and inventive then it could be patented; but if the software was an end in itself it could not be. This had been the practice since 1994. It was founded on old UK decisions that you could not get a patent for a mere mathematical formula – and software code itself is a form of mathematical formula.

In the select committee hearings most of the submissions on software patents came from software developers who were vehemently opposed to them. And the squeaky wheels got the grease. The committee introduced an amendment saying:

“A computer program is not a patentable invention”.

The committee reported in March 2010 and the bill sat on the Order Paper for nearly two and a half years until this month. The government then introduced a proposed amendment that qualified the exclusion. The exclusion would, “prevent 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.”

The effect of the exclusion is that there is no real change in the law. Software as an end in itself is still not patent eligible; software as a means to an end still is patent eligible. That is the beginning and end of the effect of the words, “as such”.

But in politics reason is the first casualty.

The Second Reading Debate

The commerce minister, Craig Foss, stated that the intention of the select committee:

“was that granting of a patent should be prevented only where the novelty and inventive step lie in a computer program. In order to make the committee’s intention clear, and to avoid any doubt as to what is intended, I propose that the computer program provision be amended so as to provide that only computer programs as such are ineligible for patent protection.”

The opposition was adamant that the change had completely cut across and changed what the select committee had recommended. And the consequences were said to be putting the software development industry at risk.

Clare Curran was the lead Labour spokesperson. One example she gave of an industry at risk was the games development one:

“The chair of the New Zealand Game Developers Association said: ‘We’ve learnt how to make money from business models like digital distribution, freemium, virtual goods and crowdfunding. Exporting and acting global from day one have been key to the industry’s growth.’ Ninety-seven percent of Kiwi games were digital downloads, with low distribution costs and high margins. Ninety-nine percent of sales revenue came from exports, with the USA and Europe being the largest markets.”

The trouble with that example is that the New Zealand patent law is only applicable in New Zealand. So (on her quoted figures) only one percent of the games developers’ sales revenues would be at risk from infringing someone else’s New Zealand patents. Any sales made in the USA or Europe are still going to be subject to the patent laws there.

Trevor Mallard joined the fray:

“What has become clear over the last few days is that this Government has been captured. This Minister has been captured by offshore people who are involved in the software industry.”

What Trevor Mallard did not mention was that he was a member of a Labour cabinet that agreed to a cabinet paper (Review of the Patents Act 1953 – Stage 3, Part 1)

that included the paragraph:

“50. There are, then, no strong arguments for specifically excluding business methods and software from patent protection. In light of this, I consider that business methods and software should continue to be patentable as long as they meet the requirements for patentability.”

It could equally be argued that the select committee had been “captured” by the software development lobby. And it should be remembered that the select committee was chaired by Lianne Dalziel, also a member of the same Labour cabinet that could see no strong arguments for excluding software from patent protection.

No Software Patents Petition

The opponents of software patents are quick on their feet. They set up a website:and collected over a thousand digital signatures asking that the “as such” wording proposed by the government be replaced so that it says that the exclusion:

“does not prevent an invention that makes use of an embedded computer program from being patentable.”

The origin of that wording is in the select committee report where the committee expressed some reservations about the effect of the ban. While embedded computer programs are an example of inventions relating to software as a means to an end, they do not represent all such inventions – and the exclusion would not be of much assistance in making the more general distinction.

Clare Curran tabled the no software patents petition during the course of the debate. She also introduced a Supplementary Order Paper seeking to amend the government amendment exactly as proposed in the petition. And then her colleague, Mr Mallard, accused the government of being captured by an interest group – not the first pot to call a kettle black.

Those who signed the petition might well consider the complexity of making the distinction between software as an end in itself and software as a means to an end in this post by Australian blogger, Mark Summerfield.

The No Software Patents contains a space for comments as well as for signing. There are several recurring themes in the comments. Many petitioners are under the mistaken impression that the original Patents Bill was introducing software patents for the first time:

“The potential introduction of software patents in New Zealand critically threatens our ability to innovate in the information technology field.”

“It greatly disturbs me to think we may bring in software patents to appease the Americans with the TPPA.”

Others are under the mistaken impression that inventions related to computer code as an end in itself would be patentable:

“Computer software programs are essentially mathematical algorithms, i.e. methods to solve problems. If software were to be patented, then any thought process can be patented – an absurd situation.”

“Computer software is nothing more than design decisions mixed with algorithms.”

Many expressed concerns about the complexity and costs of enforcing patents in international markets. While these concerns are real, any change in New Zealand patent law is not going to have the slightest effect on the laws of other countries or the players that seek to take advantage of them there.

I am left with the same feelings as Ken Perrot in this recent post:

The Labour opposition has sided with an ideological ghetto that has not taken the time or effort to try to understand both sides of the debate on the worth of patents.

Patents and Innovation

Jonathon Young was the only speaker who talked about the positive role of patents:

“Recently it was announced that the Advanced Technology Institute is going to be set up and established. It will be named after Sir Paul Callaghan, one of our great scientists. He said that science could make New Zealand a better place, and that is such a true thing. We are focused on boosting growth and creating jobs, and you do not do that just by talking about it. You have to innovate, you have to invest, and you have to then commercialise those inventions and those products in order to get the financial gain from them.”

One of the man objectives of the Patents Bill is to ensure that quality patents are granted. A quality patent is one that claims an invention that is novel, inventive and of a scope that is fairly based on what is described. I know of no patent attorneys who do not strive to get quality patents for their clients. But the policy development and debate have been single minedly focused on how to make it more difficult to get a patent in New Zealand and how to make it easier to block patents from being granted and to overturn granted patents. What if the balance has been tipped so far against patents that very few innovators can be bothered, or afford, to get patents? The Paul Callaghan Institute mentioned by Mr Young will have to overcome the higher barriers being set by this law in order to fulfil its roll of transferring its inventions to the firms that will commercialise them.

What this country needs is a change in culture that embraces technology transfer – both inwards and outwards – as a path to improving innovation and thereby increasing productivity. And we need to acknowledge that patents are the currency of that technology transfer.