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It's official: Software will be unpatentable in NZ

Paul Matthews. 15 July 2010, 12:52 pm

Despite what appears to be a big-budget lobbying effort by the pro-patent fraternity, Hon Simon Power announced today that he wouldn't be modifying the proposed Patents Bill hence software will be unpatentable once the Bill passes into law.

This is significant. As we've previously pointed out software patents aren't black and white, and there are certainly pros and cons. However on balance, we believe they represent a far greater risk to smaller NZ-based software providers than opportunity, and there are many cases where they have significantly stifled innovation.

We believe it's near impossible for software to be developed without breaching some of the hundreds of thousands of software patents awarded around the world, hence many software companies in New Zealand, creating outstanding and innovative software, live a constant risk that their entire business will be wound up overnight due to litigious action by a patent holder.

This has led to many a "patent troll" company, primarily in the US. These are non-software companies who exist only to buy up old patents with the sole intention of suing innovative software companies for apparent breach of these patents. The effects of this have been chilling.

Make no mistake, the intellectual property contained in software should be protected. However Copyright provides significant protection, as per other similar activities. The very nature of software should preclude it from patentability in our view.

The case against software patents has been laid out well by companies such as Orion Healthcare and Jade Corporation, probably the two largest software exporters in New Zealand by far.

Orion's Ian McCrae recently stated:

Obvious things are getting patented. You might see a logical enhancement to your software, but you can't do it because someone else has a patent. It gets in the way of innovation.

If an inventor has a really original and outstanding idea, then a patent might be merited. But, in general, software patents are counter-productive and are often used obstructively.

We are a software company. Our best protection is to innovate and innovate fast.

Jade sent me this note in support of NZCS's position on software patents:

Jade Software Corporation does not support patents related to software.

Reflecting this position we withdrew from applying for patents a number of years ago.

We believe the patent process is onerous, not suited to the software industry, and challenges our investment in innovation.

As I understand it, Orion and Jade together represent around 50% of New Zealand's software exports, so the fact that they have come out so strongly against is significant.

There's a good reason these companies and most other NZ-based software companies don't support software patents. The risk they pose to genuine, innovative and hard working New Zealand software companies is simply too great.

We believe this is a win for innovative New Zealand software companies who will now have a reduced, albeit still present, risk when creating innovative software.

Interestingly, the Bilski case, a major case looking at patentability of business processes and by extension software patents, was settled in the US in the last week or so as well. At first this seemed to not have dealt with the issue or settled the case of whether business processes or especially software should be patentable in the US, however there are some interesting developments since that may mean this isn't the case after all.

For instance, according to Groklaw, the first of a huge backlog of software patent applications in the US system has been rejected due to Bilski, with the ruling that "The unpatentability of abstract ideas was confirmed by the U.S. Supreme Court in Bilski v. Kappos". On the face of it, this would appear to have the effect of canning pure software patents in the US, which is massively significant.

It will be interesting to see how this one develops.

The matter isn't over yet in New Zealand, of course. The next issue will be in ensuring that the guidelines to be developed protecting embedded systems (ie non-abstract inventions with a software component) are strong enough to remove the possibility of software patents by stealth, and NZCS will maintain a very close watching brief on this.

All in all, however, we believe this is great news for software innovation in New Zealand.


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