New Zealand government clarifies software patent position
The New Zealand government has announced a change to patent legislation that clarifies its position on the patentability of computer programmes.
Commerce minister Craig Foss released a supplementary order paper (SOP) on May 9 to clarify the issues around software patents in the proposed Patents Bill (2010), which will replace the Patents Act 1953.
The bill takes into account the New Zealand Commerce Select Committee’s recommendation that computer programmes should not be patentable, on the grounds that they harm innovation. Some patent lawyers criticised the recommendation for creating inconsistency with major trading partners.
Last year Foss changed the wording in the proposed bill, which appeared to create a loophole that would allow the patenting of software. May 9’s amendment corrects this.
It says: “A computer program is not an invention and not a manner of manufacture for the purposes of this Act.”
Kate Wilson, partner at James & Wells in Hamilton, said that the amendment to the bill does not ban software patents altogether, but restricts the “scope of patentability.”
“Essentially embedded software [software that improves the performance of hardware, or a computer]... is still patentable,” she said.
Programmes performing accounting or data entry capabilities may not be patentable under the new guidelines.
She added that while the amendment aligns the Patents Act with UK case law, it moves it away from Australian law, “which has a broader scope of patentability.”
“This is in direct contrast to the stated intention by the AU and NZ governments to align their respective IP laws and systems,” she said.
Wilson says smaller companies may be harmed by the amendment’s implementation: “If the small business develops a new and inventive concept which is purely embodied in software (that is, has no effect on hardware) they will be severely disadvantaged by the new Act.
“Being small, they are more dependent upon using IP law to retain their competitive edge as they cannot compete through having more resources.
“If the business relies on piggy-backing off others’ inventive concepts, then they will have an advantage – provided they do their own coding,” she said.
Christopher Young, head of the IP team at Minter Ellison in Auckland, said that an update to New Zealand’s patent legislation is “long overdue”, and that the wording’s consistency with the position in the UK and Europe is “helpful to give some certainty to the provisions as in a country like New Zealand.”
He said that there is little court action in the country, and that case law that shows how statutory provision should be interpreted is rare: “We often need to rely on decisions overseas to understand how courts are likely to interpret our legislation,” he said.
“The position is still quite different and offers less protection than some of New Zealand’s other major trading partners (in particular the US and Australia) where computer programmes are not excluded from patentability.”
The change in patent law is likely to have the greatest effect on large businesses, he said: “For large software development houses patent protection provides an effective means of protecting their rights and preventing third parties from utilising their technology and this will be reduced, although the current proposal does provide more protection than the original proposal.”
Matt Adams, partner at AJ Park in Wellington, said that the Commerce Select Committee noted fears from the open source community that software patents can stifle innovation and competition, though there was no evidence that this was happening under current legislation.
“The amendment appears to a pre-emptive step to prevent this possibility in the future,” he said.
“The latest SOP is a compromise between stakeholders wanting to protect their R&D spend on the one hand, and those philosophically opposed to patents on the other.”
