Amazon's 1-click software patent is finally history (almost)
Monday 11th September 2017 may seem like any other Monday, but signifies the end of a 20-year technology patent battle that saw heavyweight Amazon pitched against most of the tech industry across the world, including New Zealand.
Or more to the point, patent lawyers across the world pitched against the IT industry.
But the IT industry fought back, and in our case, secured changes in New Zealand's Patent Act to ban patents like 1-click from ever being awarded again, in NZ at least. But how did it happen and what role did retiring MP Peter Dunne play in it?
For those that haven't heard of it, the infamous 1-click patent was granted on 11 September 1997 and essentially patented the idea of storing a previously entered postal address and credit card and allowing someone to purchase items from an online store using these saved details. It led to outrage and boycotts, legal challenges, suing and much more.
Does the "invention" of a 1-click cart seem non-inventive and obvious? Apparently not - despite ridicule and condemnation, and plenty of examples of alleged earlier works, this was deemed an "invention" and Amazon was declared the inventor. Following the case, Amazon used the patent to stifle competition, going as far as suing bookstore Barnes and Noble for providing an "express lane" in their online bookstore. B&N eventually got around the patent by changing their system to require a second "are you sure?" click. Such innovation.
I'm not going to go into the raft of pros and cons on software patents, except to say that they represent the largest threat to software development currently. It's mathematically not possible to develop software without breaching a software patent, the world is full of patent trolls (law firms that go after tech startups for payouts based on patents they've acquired), and New Zealand is absolutely not immune to this. But that's for another post.
In New Zealand, NZTech predecessor the IT Association of NZ (ITANZ) initially led the charge against 1-click and other software patents that threatened the industry, but didn't have the financial means to pursue the case beyond initial filings. InternetNZ formed a taskforce led by ITP Fellow Jim Higgins to examine software patents, but again didn't have the means to challenge them in court.
Internet Entrepreneur Patrick Costigan took on the legal challenge to get the patent overturned in NZ, with support from another ITP Fellow Lech Janczewski as an Expert Witness, finally giving up in 2011 (resulting in the patent being reaffirmed in New Zealand). In a comment posted at the time, Costigan said that challenging it had cost him personally 10s of thousands of dollars in cash and time but he had been "clearly out-resourced" by Amazon, who had spent a huge amount of money on the fight.
It was another kiwi who almost overturned the original US patent, with kiwi actor Peter Calveley being partially successful in having it struck out. Back in 2006 Calveley raised enough money to have the patent re-examined, resulting in 21 of the 26 steps claimed in the patent eventually being overturned. The result was a narrower patent that only covered online shopping carts (previously it had a far wider scope of all e-commerce).
In Australia, Telstra partially succeeded in challenging the 1-click patent, also resulting in a significant reduction in scope.
The Europeans had a more robust software patent regime in place at the time, and refused to grant the patent despite a huge legal effort from Amazon. Following initial rejections, the European Patent Office Appeals Board finally dismissed the application and appeal in July 2011.
This is the likely outcome now in New Zealand too, if the patent application had come in under the new Patents Act brought into force in 2013 following a significant lobbying effort led by ITP (then NZCS) and others over several years. But it was almost not to be.
How our tech sector won changes to the Patents Act
The changes to the Patents Act in New Zealand all started in 2010 when the Commerce Select Committee, reviewing proposed changes to the Patents Act, recommended that software be excluded following submissions by the NZ Open Source Society and others outlining the dangers of software patents to the tech industry.
All hell broke loose, and an intensive lobbying effort commenced by the pro-patent fraternity. Certain large multinationals invested heavily in the outcome, concerned that a removal of software patents in New Zealand would cascade to other countries. In some respects it pitted the multinationals against the NZ industry, with a poll at the time finding 81% of IT Professionals supporting the removal of software patents.
However in the end, following consultation with the Select Committee, Simon Power (the Commerce Minister at the time) reaffirmed that the proposals wouldn't be modified.
The blog post we wrote announcing this to the world was massively welcomed by the tech industry globally. It was duly slash-dotted, re-tweeted massively and seen by over a million people, with tens of thousands of tweets and messages of congratulation to New Zealand.
Fast-forward to the 2011 election, and Simon Power stood down and Craig Foss became Commerce Minister. With a new Minister, the lobbying efforts to revert the Bill began again in earnest, this time primarily led by patent lawyers. Most people don't know how close we came to having the change reversed at that stage and software patents re-introduced.
When the pro-patent lobbying intensity ramped up again, ITP (or NZCS as it was then) met with Craig Foss and senior IP officials from what's now MBIE and put the case against software patents yet again. However, it became clear that the new Minister was intending on overruling previous Minister Simon Power's decision with a "compromise" allowing software patents back in; and sure enough, the draft Bill reflected this.
So we had to take a different approach.
The Parliament at the time was made up of 121 seats, with 61 needed for a majority to pass a new law. National held 59 seats and were supported in coalition by ACT (1 vote) and United Future (1) to get them over the line, and sometimes the Māori Party (3) instead. The Patents Amendment Bill was a huge revamp and update of the Patents Act of 1953, and generally had widespread support across Parliament.
We were in close contact with all parties about the issue, and Clare Curran from Labour was able to secure support from her party to vote against the new Patents Bill unless the software patent issue was resolved to our industry's satisfaction. The Greens, NZ First and the Māori Party also confirmed they'd vote with us on it, despite also generally supporting the Bill as a whole.
However the National Government still had the numbers to pass the Bill with the support of ACT and United Future. ACT didn't want to know; they confirmed with us that they would be supporting National no matter what.
But United Future's Peter Dunne took a different approach. He took a meeting with us and spent a considerable amount of time getting to grips with the issue. Following follow-ups and further discussion, and support from other political players, Peter Dunne confirmed that United Future would also vote against the Bill unless the issue was resolved - and with that, the Government no longer had the numbers to pass the entire Bill unless they came to the party on banning software patents.
Minister Foss and the Government found themselves on the wrong side of the bulk of the local IT industry, and in the position of not being able to advance a major piece of legislation because of one small section. And so, the negotiations began.
Much of the negotiations over the following weeks and months happened behind closed doors and without going into detail, ITP was in the position to negotiate directly with the Government on the software patent exclusion, supported pro-bono by several lawyers closely linked to ITP (one of which now sits on our Auckland Branch Committee). We held our ground, liaising with the NZOSS, InternetNZ, NZRise and others, until a solution we were all happy with was found.
Without going into massive detail, the changes put the Patents process around software in line with how the Europeans used to do it, before some court decisions changed their approach and allowed more software patents through.
The resulting section of the Patents Act bans software from patentability. Lawyers like to argue and there is still debate about what this actually means, but basically software itself, such as Amazon's 1-click, isn't patentable. Other domains of invention that happen to be partially implemented in software are patentable, provided the "inventive step" isn't the software. For example, a method and system to analyse interference susceptibility of a radio receiver design might be found to be patentable, even if it is implemented with part of the analysis conducted by software, as long as the inventive step isn't the software. I say "might" because even though this particular case was successful, it's not until a patent is challenged that we really find out whether it stands.
Confusing? Yes. This whole area is hugely complicated, but just think of software out, embedded systems in, provided that it's not relevant to the invention whether or not the inventive step happens to be implemented in software.
With that change agreed and software patents out, the Patents Act (2013) was passed in Parliament with 117 votes for, 4 against (the Greens). I believe the Greens voting against it was an error (they had intended to vote for it as well, but messed up on the day). It was again reported globally with huge interest.
And so it came to pass that software was excluded from patentability in New Zealand, in the end all down to one MP (Peter Dunne) taking the time to understand the issue and vote against the Government. And given his decision to stand down today it's fitting to say that, having worked with many MPs and Ministers over the last few years, he really was one to take the time to understand an issue and vote based on what he thought was right, even if it meant voting against the Government he supported. That ethic will be missed.
This outcome also never would have happened without huge efforts by the NZ Open Source Society and others over many years, other MPs like Clare Curran coming into bat for the local industry, industry leaders like Orion Health's Ian McCrae and Jade's John Ascroft speaking out, and ITP's dogged determination and ability to negotiate with Government on behalf of New Zealand's tech sector and profession.
And as patents like Amazon's 1-click start to expire, we should take a moment to reflect on how far we've come as a country. The tech sector is slowly becoming a safer place to do business, in New Zealand at least.
NZ Herald (29.3.2003)- IT body joins protest ranks
Computerworld (2.11.2003) We can't fight patents alone, ITANZ says
NZOSS (7.08.2009) Commerce Select Committee Hearings - Patent Bill
NZOSS (24.06.2010) Report of MED re-introducing Software Patents
ITP TechBlog (15.07.2010) It's official: Software will be unpatentable in NZ
Ars Technica (3.11.2010) Controversial Amazon 1-Click patent survives review
The Register (07.07.2011) Nice try, Amazon: 'One-click' payment too obvious to patent
Computerworld (29.08.2011) Amazon's 'one click' patent reaffirmed in NZ
Law and Technology Blog (10.05.2013) Universal support for exclusion of software patents
Legislation.govt.nz (28.08.2013) Patents Act 2013, section 11 Computer programs
ZDNet (28.08.2013) New Zealand bans software patents
Law Library of Congress (30.08.2013) New Zealand: Patents Bill Passed, Includes Ban on Software Patents
ZDNet (12.08.2015) NZ IT industry mobilises to fight TPP software patent threat
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