The Patents Act 2013 (the 2013 Act) received Royal Assent on 13 September 2013. The 2013 Act represents the first major overhaul of patent law in New Zealand in the 60 years since the Patents Act 1953 came into force. The 2013 Act is intended to go some way towards harmonising New Zealand's patent law with other countries and makes significant changes to the current regime. One such change is the controversial exclusion of "computer programs as such" from patentability.

The debate over software patents

The debate over whether computer programs ought to be patentable stifled progression of the Patents Bill through Parliament for five years. On one side of the debate were those who advocated that computer programs should not be patentable (generally arguing this on the basis that such patents stifle innovation). On the other side were those who argued that the current regime (which does not prohibit software patents) had operated successfully in New Zealand for many years.

The software exclusion

The debate was finally resolved by the introduction of section 11 of the 2013 Act, which declares that a computer program "as such" is neither an invention nor a manner of manufacture. The provision goes on to state that a claim in a patent or an application relates to a computer program "as such" if the actual contribution made by the alleged invention lies solely in it being a computer program. In identifying the actual contribution made by the alleged invention, the Act requires that the Commissioner or the Court (as the case may be) must consider the following:

  • The substance of the claim and the actual contribution it makes
  • What problem or other issue is to be solved or addressed by the invention
  • How the relevant product or process solves or addresses the problem or other issue
  • The advantages or benefits of solving or addressing the problem or other issue in that manner
  • Any other matters the Commissioner or the Court thinks relevant.

Contrary to some public perception, this provision does not impose a complete ban on software patents. Rather, it means that in order to be patentable, a computer program will need to improve the way in which an invention works.

Two examples are given in the 2013 Act. The first is a claim in an application that provides a better method of washing clothes when using an existing washing machine. The method is implemented through a computer program on a chip that is inserted into the washing machine, which operates the machine in a new and better way. In this case, the actual contribution made by the invention is not the computer program per se, but the new and better way of operating a washing machine. Accordingly, the claim involves an invention that may be patented (namely, the washing machine when using the new method of washing clothes). The second example given in the 2013 Act is a process which uses a computer program to automatically complete legal documents necessary to register an entity. The second example would not be patentable because the actual contribution made by the claimed invention is the computer program itself.

Venturing into a minefield?

The wording of section 11 of the 2013 Act conveys the Parliamentary intention that the Commissioner of Patents and the New Zealand courts follow a line of English jurisprudence in considering whether an invention involving a computer program is patentable. Examples of computer-implemented inventions that English Courts have found to be patentable include:

  • A better method of designing drill bits (Halliburton Energy Services Inc's Patent Application [2012] RPC 297)
  • A telephone system that provides a new method for making pre-paid telephone calls (Aerotel v Telco Holdings [2006] EWCA Civ 1371)
  • A system allowing computer devices with touch screens to respond to more than one touch at a time (HTC Europe v Apple Inc [2013] EWCA Civ 451).

Whilst the above examples provide a general idea of the sorts of computer-implemented inventions that are likely to be patentable under the 2013 Act, it is worth noting the divergent nature of precedents that have emerged from the English Courts and European Patent Office. The New Zealand legislature has chosen to model the software exclusion on provisions from English and European legislation that one Court of Appeal Justice has recently described as "the minefield of the exclusion from patentability of computer programs 'as such'" (HTC Europe v Apple Inc [2013] EWCA Civ 451 at paragraph 140 per Lewison LJ). It remains to be seen how the New Zealand Courts will interpret these provisions and the extent to which computer-implemented inventions will in practice remain patentable under the 2013 Act. 

When will we see the changes take effect?

At this stage, the 2013 Act is expected to come into force with the passage of regulations in September 2014. Any complete applications filed before the passing of these regulations will be examined under the current regime. Any patents for computer programs that have already been granted will continue to be enforceable. 

Has the right balance been achieved?

Generally speaking, we think that section 11 of the 2013 Act strikes an appropriate balance between competing interests and philosophies within the software industry. At the very least, the compromise that section 11 represents has provided a resolution to the political standoff which prevented the progression of the Patents Bill for five years. We now await the passage of regulations that will bring the 2013 Act into force, at which time the practical implications of the software exclusion will be borne out. How the test will be applied in practice, given the UK experience, is somewhat uncertain.