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No, New Zealand has not abolished software patents

There has been a lot of excited reporting over the last 24 hours to the effect that New Zealand has enacted legislation that will ban the granting of software patents in the country (you can see some examples here, here and here). However, before writing a story about this I thought I would contact someone in the country who would know the true situation. So I got in touch with Kate Wilson, a partner based in the Hamilton offices of specialist IP law firm James & Wells. As I suspected, the story is a little more nuanced than some of the reports suggest. This is what Kate has to say:

The patentability of software in New Zealand has been a highly emotional topic with many of those in the NZ IT industry vigorously opposed to “software patents” as such.  Media reporting has been coloured as a consequence and the recent amendment to proposed patents bill has been misreported as a ‘victory’ for the anti software patent lobby, whereas the reality is more nuanced.

In August last year, the proposed wording referred to a computer program as not being an invention.  However the recent Supplementary Order Paper (SOP 237) softens(!) the effect of this wording by bringing in sub clauses that align the proposed NZ Patents Act with wording influenced by UK case law. This provides greater clarity around interpretation of the Act.  Further, given the dearth of cases in New Zealand, this ability to reference UK case law will assist New Zealand practitioners in giving guidance to their clients.

Effectively, if the invention lies purely in software, then it is considered unpatentable.  However, as outlined in the explanatory note of the SOP, patents will still be able to be granted for inventions that

a)      make use of computer programs where the contribution lies outside of the computer, or

b)     affect the computer but is not dependent on the type of data being processed or the particular application being used.

Essentially embedded software is patentable where it improves the operation of hardware, along with software that improves the way a computer runs. Again, this is consistent with the UK.

However, it is also less than what is currently considered patentable in New Zealand (new, inventive and having a commercially useful effect).  And, it takes New Zealand law away from Australia’s broader position on the patentability of software inventions. Doing so runs counter to the desire stated by the NZ and AU governments to align their IP laws and systems, and possibly reflects the impact of the NZ IT industry’s objections.

It should be noted that patents already granted under the present Act will still retain their scope and validity following implementation of the new Act.

My take on it all?  While thankful for the clarification by the recent SOP, I think reducing the scope of protection is a retrograde step.  The NZ software industry is an innovative one and ought to have their innovations protected in their own country against less innovative competitors.  Further, the more restrictive position here may lead to NZ businesses not protecting their software innovations in less restrictive markets (eg US and AU), again making them more vulnerable to competition from bigger players.

That last point is a crucial one. On its own New Zealand is a small market of a little under 4.5 million people. For companies to grow, they need to export. If they export stuff that infringes patents elsewhere, or if they fail to get protection and so make it much easier for competitors to legally copy what they have done, then they are not going to be very successful in building their market shares and could find themselves very quickly going out of business.

You can access SOP 237 here.

Joff Wild
IAM Magazine
10 May 2013

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RE: No, New Zealand has not abolished software patents

The administration of any property system requires clear boundaries. The fundamental problem with software patents is that claims are constructed as broadly as possible and if you take the doctrine of equivalents to extremes, means that it becomes intractable to determine infringement. Think of it as drawing smoke circles in the air. Whilst any single pilot can see that it is not hitting any other plane (claim) when you project it down to the ground, you get a tangled mess. The social deadweight costs of resolving such conflicting boundaries has been removed by govt, effectively giving software imported or executed in NZ, the freedom to operate.

As for export of software, we have moved beyond packaged shrinkwrap. It is perfectly possible to put a Platform as a Service (PaaS) within NZ and deliver the service to customers overseas, Akamai v Limelight shows that infringement can be split, but liability from induced infringement is a question of fact. Copyright would still control legal copying and tradedress any UX and any true innovation would be a trade secret (which allows for independent invention). Therefore I ask for any evidence to support the assertion that lack of software patents leads to loss of market shares when academic papers show that the linkage between patents and innovative activity is very weak at best. Refs on request.

Lawrence Luke Lau, L&A Lau Partnership on 17 May 2013 @ 07:29

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