Guest Post #2 on Patents

Guy Burgess, whom I quoted yesterday, has also taken up my offer of a guest post, which is below:

Software patents – lets make it patently clear

Guy Burgess – www.burgess.co.nz/law

The software debate in New Zealand is, in theory, over. In 2010, the Commerce Select Committee (including National, Labour, Act, Maori and Green MPs) unanimously recommended that software patents be banned in New Zealand. The local software industry cheered, and then-Commerce Minister Simon Power confirmed that the Government had accepted the Select Committee’s recommendation.

However, last week Commerce Minister Craig Foss announced what he called a “minor amendment” to the Bill: while the slightly reworded software patent exclusion remains as clause 10A(1), new clause 10A(2) adds the seemingly innocuous – but legally loaded – proviso that the exclusion only applies to software, “as such”. The “as such” language is from European patent law, with the stated purpose being to bring the section more “into line” with Europe – which must be a good thing, right?

Well, not really, because unfortunately those two, harmless-sounding words (“as such”) have – perhaps surprisingly – proven very controversial in Europe, and have allowed software patents to continue to be granted despite the intention to exclude them. That’s why patents are still available in Europe covering things like:

• electronic shopping carts;
• a pop-out context menu;
• long filenames;
• trapping viruses;
• digital signatures;
• etc.

So instead of having a minor effect, the “as such” language has actually undermined the intended exclusion of software patents in Europe. It has also led to a chaotic situation. For example, the Institute of Patent & Trade Mark Attorneys of Australia said in their submission on our Patents Bill:

The approach in Europe has also led to considerable uncertainty and criticism amongst European industry, the European Patent Office and the Courts… the approach has been often criticised as being inconsistent and contradictory to the EPC itself… In our view, adopting the EPC approach would create a significant degree of uncertainty as to how the section is to apply and which, in any event, is inherent in the EPO approach.

Adopting an approach comparable to the EPC and UK Patents Act is also likely to lead to unpredictability, as an interpretation of the “as such” clause by the European Patents Boards of Appeal has that computer programs are only patentable if they produce a “further technical effect” so as to render the claim allowable under article 52 of the EPC… The EPO approach has often been criticised in Europe as giving rise to unpredictability in that jurisdiction…

Bringing our laws into line with other jurisdictions is often a good thing, but not when the other jurisdiction’s laws have led to uncertainty, inconsistency, contradiction, and unpredictability!

Simply, the last-minute addition of the “as such” proviso undermines the unanimous, cross-party recommendation of the Select Committee.

The good news is that there is a logical and sensible solution to this. Since Tuesday, over 880 people have signed on to an IT industry petition calling on the Government to replace the problematic clause 10A(2) with a new one – see the petition site for details. This change:

• preserves the intended exclusion of software patents, and is consistent with the Government’s statements;
• ensures that inventions containing software, such as Fisher & Paykel smart appliances can still be patented (in fact it is consistent with Fisher & Paykel’s own suggested change to the Bill); and
• avoids needlessly importing bad European law (“as such”) into New Zealand.

Just as importantly, this requested change has been resoundingly embraced by New Zealand software developers and supporters. Those who have signed the petition include InternetNZ, the Institute of Information Technology Professionals, local IT industry group NZRise, the NZ Open Source Society, and hundreds of other New Zealand IT-sector organisations and individuals.

Of course, there are some who still oppose the exclusion of software patents altogether, such as NZICT (representing software patent holders). However, the debate is no longer about whether we should have software patents or not – that argument was settled (in principle) in this country over two years ago.

The question is one of implementation and clear law: do we implement the exclusion in a clear manner such as proposed by the petition – and supported by the industry most affected by software patents – or do we instead choose to follow the troublesome European approach?

Two important notes:

1. The industry-supported amendment does not allow patenting of “embedded software” – under the amendment, all software is unpatentable. The amendment is simply to ensure that an otherwise-patentable invention (e.g. an inventive new washing machine by F&P) will not suddenly become unpatentable just because it contains embedded software.
2. Some have expressed concerns that the term “embedded software” may be uncertain. I answer those concerns in my post here.

Thanks to Guy for this. This is an important issue. Bad patent law does harm innovation, and can impose significant costs on businesses. I recall when DET tried to invoice dozens of NZ companies on the basis of a patent for multi-currency website transaction software (something which is as common as apples today).