Media reports that software patents are to be banned in New Zealand are not wholly accurate.

The passing of the New Zealand Patents Bill will introduce a tougher set of criteria for the patentability of computer programs, but reports of a complete ban are premature.

Patents for computer-related innovations will continue to play an important role in the protection and commercialisation strategy of many New Zealand software innovators.

Under the proposed wording, an invention where the improvement to existing technology lies solely in the fact that it is a computer program will not be patentable. However other types of computer-implemented inventions will continue to be patentable.

The software patents debate

The new Patents Act will update New Zealand’s archaic patent legislation. One controversial issue has been whether software-related inventions should be patentable in New Zealand. Currently, computer-implemented inventions are patentable. Strong arguments on whether that should have remained the case were voiced by both pro-patent and anti-patent lobbyists.

Those that argued against software patents in New Zealand were generally small software developers and proponents of the free or open source movements. They believe software patents are a barrier to innovation because software developers cannot use some technologies for fear of being sued. They also believe copyright protection for software is sufficient.

Those that wanted to maintain software patents disagreed, arguing that the New Zealand software industry has been operating successfully for many years despite, or perhaps because of, software patents. Also, they believe computer-related innovations should be subject to the same laws as those in any other field of technology. These views generally come from larger New Zealand software developers, multi-national companies and legal practitioners.

New law on patentability of software

The New Zealand Government has now passed into law wording first proposed in Supplementary Order Paper (SOP) 237 concerning the provision that will determine the patentability of software.

The provision specifies that inventions for a “computer program as such” are not patentable, and goes on to clarify that this means that the actual contribution made by the alleged invention over existing technology must lie solely in the fact it is a computer program. It also introduces wording influenced by UK case law (from the Aerotel decision) to provide guidance as to how the contribution made by the invention should be identified.

The passing of the Act with this wording has been widely lauded in the media as a victory for the anti-patent lobby. However, the reality is more nuanced and there are reasons why software patents cannot be ignored now that the legislation is passed.

Existing patents still valid

Firstly, patents for software inventions that have already been granted will continue to be enforceable, and may survive for up to 20 years.

Further, pending complete applications filed before the new provisions come into force (sometime in 2014) will be examined and granted under the current regime. Those looking to secure their patent rights in relation to current developments should contact their intellectual property advisers to ensure opportunities are not missed in this regard.

It will continue to be important for software companies to check that they do not infringe any existing rights.

Some software still patentable

Despite the headlines, some software will continue to be patentable under the new provision. Software innovators that want to protect their innovations would still be able to in some circumstances.

SOP 237 included an explanatory note stating that patents will still be able to be granted for so-called ‘embedded software’ inventions, i.e. where the contribution lies outside of the computer.

Patents will also still be granted where the invention affects the computer but is not dependent on the type of data being processed or the particular application being used. This appears to be an attempt to marry the New Zealand legislation with a UK decision (Symbian), where it was held that a software invention that enables a computer to run other software more quickly is patentable. This is a clear example of software still being patentable under the new law.

SOP 237 also includes examples of processes involving computer programs which would and would not be expected to be patentable under the new law.

The patentable example is that of a known washing machine operated by a computer program in a new and improved way that results in cleaner clothes and reduced electricity use. The contribution is held to lie in the way the washing machine works, not solely in the computer program itself.

Meanwhile, a process for automatically completing legal documents necessary to register an entity having received answers to a questionnaire from a user would not be patentable because the only contribution lies in the computer program itself.

Trans-Tasman pressures

The new law will reduce the extent of what is patentable compared to the current law, which has no statutory exclusion at all. This represents a divergence from the Australian position where a broader range of software inventions are patentable. In light of the intention of the New Zealand and Australian Governments to align the patent regimes in the two countries, the issue may still evolve in the years ahead.

The right balance?

The Government has attempted to strike a balance between the desires of different parties within New Zealand’s software industry, the need for a clear law and consistency with legislation in other countries as well as New Zealand’s commitments to international trade agreements (notably TRIPS).

Broadly speaking, this seems to have been achieved in that there is greater clarity than some of the previous proposals on this issue. However, as with any new legislation, some grey areas remain – such as the extent to which the explanatory note and other UK case law will be followed by the Intellectual Property Office of New Zealand (IPONZ) or a Court, and the approach that will be taken with inventions falling somewhere on the spectrum between the two examples.

Only time will tell whether this balance has been struck in a manner which is in the best interests of the New Zealand economy.

In summation, the new law will place limitations on New Zealand “software patents”, but reports of their death have been greatly exaggerated.