To view additional information contained in the links in the article please see the original.

A change to proposed laws on patenting computer-implemented inventions brings good news for New Zealand's software industry.

Under the proposal, the previously considered exclusion of all software inventions is partly rescinded meaning software innovators will be in a clearer position and better able to protect their intellectual property.

Background to computer software in the Patents Bill

The Patents Bill, which promises a much-needed update to New Zealand's patent laws, was first introduced to Parliament in July 2008.  Controversy was sparked after a Commerce Select Committee report was published in March 2010 that unexpectedly recommended that computer programs be excluded from patentability.

This recommendation followed no prior discussion of such an exclusion and seemed to result from concentrated lobbying from part of the open source sector.

The Ministry of Economic Development (MED) subsequently published a proposed set of guidelines on how patents for computer software inventions would be examined under the exclusion.

Both the exclusion and the guidelines were extensively criticised by many stakeholders, including notable organisations in New Zealand's software industry.  They argued that the exclusion would prevent important developments in computer-implemented technology being protected, which would disincentivise innovation.

Furthermore, the exclusion was seemingly at odds with the Government's intention of allowing patents for "embedded" software.  This, combined with the lack of clarity in the guidelines, led to uncertainty around what would be patentable and what would not, which was generally agreed to be an untenable situation.

Resurgence of the Bill

Over the last two years there has been little indication that reform of the patent system has been high on the Government's agenda.  Now, this week, a Supplementary Order Paper (SOP) has been released that proposes a number of amendments to the Patents Bill.  A second reading of the Bill in Parliament is now imminent.

The SOP recommends a number of minor changes to the Bill but the most significant is the proposed change to the computer program exclusion.

Proposed amendment to the computer program exclusion

Where the previous version of the Patents Bill stated "a computer program is not a patentable invention", the proposed change qualifies this exclusion by limiting it only to computer programs "as such".

The use of these two words is far more significant than it may at first appear.  They bring the wording of the Bill into line with patent legislation in both the United Kingdom and Europe.  Since this has been the law in those regions for many years, a wealth of case law has been developed which we would expect to also apply in New Zealand (or at least to guide the interpretation and application of our own exclusion).

A significant number of the organisations that contributed to the debate, many of whom are New Zealand software innovators or their representatives, and including this firm, argued that the exclusion should not be present at all.  However, many also argued that if an exclusion were to be required, the "as such" wording would be essential to reflect the Government's intentions and for clarity.

James & Wells made exactly this recommendation in our submissions in response to publication of MED's proposed examination guidelines.

Impact on New Zealand innovators

The upshot is that, if passed into law in this form, New Zealand innovators will be in a clearer position to know what is likely to be patentable and what is not because they can refer to analogous cases in the UK or Europe.

While not all novel and inventive computer programs will be patentable (as is currently the case and was hoped by many to remain so), it is likely that any sufficiently unique computer-implemented invention that provides a technical effect or has a real-world consequence is likely to be patentable.

This will allow innovators to focus research and development budgets on areas where protection is viable, or to begin the patent application process with realistic expectations as to whether protection is likely to be obtained, a timely change given the intentions expressed in the Business Growth Agenda Progress Report on Building Innovation recently released by the Ministry of Business, Innovation & Employment.

The amendment also brings the proposed law back into line with the Trade-Related Aspects of Intellectual Property (TRIPS) agreement, an international agreement which promotes consistency in IP laws around the world.

Many will now hope that the software patent saga is at an end and Parliament can surge ahead with enacting the Patents Bill to update New Zealand's archaic patents system.

To view additional information contained in the links in the article please see the original.