Building a wealthier nation through innovation
Microsoft is passionate about the success of New Zealand businesses on the world stage. From Windows, to Xbox, to the cloud, many Kiwi innovators build on Microsoft technology. When these innovators succeed, we succeed. We do our best to help, with inspiration , expertise , offshore scale , and special deals for start-ups .
Innovators also need clear, predictable laws that let them choose for themselves the business model that’s the “best fit”, and prepares them for success on the world stage.
In March 2010, a new provision was inserted in the Patents Bill which will take away choice from the technology sector and diverge from international norms – and the laws of New Zealand's export markets. The scope and effect to the provision, clause 15(3A), is so ambiguous that a seven page explanatory documents published by the Ministry of Economic Development were unable to adequately clarify how the provision will be applied. In fact no one – even those who asked for a restriction – seems to be able to say exactly which (if any) patentable inventions will be excluded if the proposal becomes law.
Many changes in the Patents Bill are constructive and will help to improve patent quality in New Zealand. However, the proposed exclusion in clause 15(3A) is a step in the wrong direction. And, setting aside policy considerations, an exclusion that no one can explain will be bad law.
We think the focus should be on patent quality, not on an arbitrary exclusion. However, if there must be an exclusion, the question must be asked: “How can inventors and investors make decisions about their commercialisation strategy if it is not even clear which inventions are now to be excluded from protection?”
If no patentable inventions are to be excluded from protection, or no one can say with certainty which patentable inventions (if any) it will exclude, clause 15(3A) will just be a troublesome white elephant, leading to years of pointless litigation to figure out something the Government can easily fix now with the stroke of a pen.
Innovators were faced with similar difficulties after the adoption of an exclusion in Europe. After decades of litigation and debate, there is still disagreement about how the exclusion should be interpreted, resulting in unnecessary inefficiencies, cost and uncertainty for innovators. Ultimately, this has been to the benefit of no one. However, rather than leaving the law as it is or ensuring that a known model where case law has resolved the more serious ambiguities will be adopted, the Ministry of Economic Development has, in both versions of its explanatory papers, proposed a novel approach that departs from international norms and ensures that New Zealand will need to start the process of interpreting and applying the provision from scratch.
Our view on patents is simple. Appropriate protection for intellectual property supports innovation and commerce, and all innovators should have the option to patent their inventions.
The current law is clear. It has not caused problems. It is similar to Australia, and that similarity saves inventors and taxpayers money by reducing re-work to satisfy different technicalities and by avoiding unnecessary cost, secrecy and complexity in commercial transactions.
We are joining Kiwi innovators and their representatives in calling for clause 15(3A) to be deleted from the Patents Bill before the Patents Bill becomes law.
We think this is important for New Zealand’s future.
Laws that encourage and reward organic innovative activity are preferable to relying on Government subsidies to prop up research and development – the fruits of which could then not be used to their full potential if patent protection that is available elsewhere in the world is removed.
Those who want to build a high income, export oriented, innovation driven economy for New Zealand should reject clause 15(3A).
We encourage readers to find out more about this issue.
Microsoft New Zealand Limited's submission further expands on our views and offers an interpretation of clause 15(3A) based on legal principles. We have also collated links to some other perspectives below for ease of reference.
UPDATE: Submissions on the draft guidelines have now been published by the Ministry of Economic Development. Detailed summaries are available from AJ Park, Henry Hughes, Dr Mark Summerfield, James & Wells and in Law News - Patents bill proposes no patents for computer programs . There have also been reports in the Dominion Post and Computerworld. The pie chart below gives an overview of the preferences expressed about clause 15(3A) in submissions to the Ministry of Economic Development.
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Recommended Reading:
Submission on Computer Programs Guideline, New Zealand Law Society
“The Society submits that officials should advise the Minister that to leave the Bill as it is, and continue to finalise guidelines (no matter what those guidelines say), would create ongoing uncertainty because Parliament’s intention will not be able to be discerned from the legislation.”
“If Parliament has doubts that the meaning is clear then it should follow the usual procedure and amend the Bill by supplementary order paper.”
Submission on Computer Programs Guideline, James & Wells
“In view of the proposed wording of clause 15(3A), we believe the Guidelines are both ultra vires and do not give an adequate indication of what is likely to be patentable in New Zealand under the Patents Bill. Therefore, the Guidelines are an inappropriate framework for examination of patent applications.”
Submission on Computer Programs Guideline, Bram van Melle (Maclean Law)
“The Select Committee proposed clause 15(3A) on its understanding of the difference between embedded and non-embedded software. ‘Embedded’ is a loose commercial concept not a technical distinction. […] Attempting to chart a course through this distinction will be problematic as technology is changing all the time.”
Submission on Computer Programs Guideline, Technology Interest Group
“Our group has grave reservations about the Guidelines, and the Patents Bill 15(3A) change on which they loosely rely. Both will increase the uncertainty surrounding patent protection for inventions, and thus increase patent application, litigation and business costs.”
Software: to patent or not to patent, Matt Sumpter (Chapman Tripp)
“[I]n this case the addition of clause 15(3A) introduced a new element which hadn’t been hinted at in the Bill before and it wasn’t something which many of these companies directly affected had even considered, let alone submitted on.”
Submission on Computer Programs Guideline, Business NZ
“BusinessNZ is perplexed as to how a process that started and continued through with a high level of consultation and considered views over the last ten years seems to have fallen at a crucial hurdle in a key area many considered would be left unchanged, as indicated during all stages of the consultation process up until the proposed Clause 15(3A) exclusion was introduced in March 2010.”
Opinion: Fog warning on computer-implemented inventions , Matt Adams (AJ Park)
“People who were opposed to ‘software’ patents emphasised that innovation is strong, even ‘rampant’, with the law that’s in place. One said the software industry is ‘highly competitive, innovative and prosperous,’ and another pointed out that New Zealand was appealing ‘due to the healthy and innovative software industry here.’ Statements like these suggest those who were most opposed to ‘software’ patents had not experienced any detrimental effects from our current law.”
Some musings on the Patents Bill , Elena at Elena's Blog
“In this day and age of clear and concise legislation that can be understood by the man (or woman of course) on the street, it is ridiculous that the plain and clear words of an Act – ‘A computer program is not a patentable invention’ – is not intended to mean what it appears to mean.”
“The New Zealand Patents Bill and draft ‘Examination Guideline: Patentability of Inventions involving computer programs’ are not consistent with UK Patent Law or with European practice more generally. UK Law excludes only claims to computer programs ‘as such’ so that in practice many patent applications for computer-implemented inventions are granted. In contrast, the New Zealand Examination Guideline adopts a far broader interpretation that would appear to exclude from patent protection virtually all computer-implemented inventions.”
NZICT calls for caution over abandoning software patents , New Zealand Information and Communication Technologies Group Inc
“NZICT chief executive Brett O’Riley says the country’s software development sector deserves the same protection as other sectors where invention and innovation occurs.”
“Software patents, while acknowledged as a less than perfect solution in some areas, are none-the-less integral to an individual or company’s right for commercial protection and essential for competing globally. We believe that it is very important that companies retain the option to protect their innovations under patent law, if that is their choice.”
Submission to the Commerce Select Committee , Henry Hughes
“We also support the continued patentability of computer software in New Zealand. [...] We consider that concerns about the novelty and obviousness of computer software patents will be mitigated by the more stringent examination criteria under the new Act.”
Submission to the Commerce Select Committee , New Zealand Institute of Patent Attorneys Inc
“We agree with an invention being patentable on the basis that it is a ‘manner of manufacture’, provided that the exclusions of clause 15 are deleted. […] Exclusions to patentability are not needed for the reason that the courts’ interpretation of ‘manner of manufacture’ enables flexibility to deal with changes in technology [...].”
Submission to the Commerce Select Committee , Fisher & Paykel Appliances Limited
“In relation to the subject matter excluded from patentability under clause 15 [Fisher & Paykel Appliances] specifically supports the absence of ‘computer software related inventions’ from the listed exclusions.”
“A significant proportion of FPA inventions are software related inventions. Much of what it once achieved using dedicated hardware circuitry is achieved using software controlled microprocessors. Many FPA product development engineers are software engineers. […] FPA has been seeking such software related patents since 1985.”
The computer programs affair , Chapman Tripp
“Computer programs run cars, telephones, pacemakers, whiteware and all manner of other gadgetry. Why would you exclude an inventive new camera, eftpos terminal or navigation system from patentability just because it is run by a computer program or used with a computer? Well you wouldn’t.”