Multinationals protest New Zealand's removal of software patents
In what could be seen as a David and Goliath struggle, New Zealand is coming down on the side of the Davids and removing the ability of companies to patent software.
In making its recommendation on the change to the Patents Bill, the Commerce select committee accepted the argument that software patents can stifle innovation and competition.
The New Zealand Information and Communications Technology Group (NZICT), whose members include Microsoft, IBM, Cisco and other multinationals as well as New Zealand software developers and exporters, says the committee got it wrong.
Chief executive Brett O'Riley says software patents protect companies and are essential for competing globally.
But the change, which is back before Parliament this week, has been welcomed by other software developers and exporters, and by internet NZ, which points out that without open source and unpatented software the internet would not have happened.
The current law allows a program to be patented if it produces "a commercially useful effect", but the mathematical algorithms which underlie software cannot.
It comes down to questions about what software is and whether approaches coming out of corporate America are good for anyone else.
Already a chasm has developed between the US and European Union on the issue, with the EU only allowing patents on computer programs if they have a "technical effect", whatever that means once the lawyers have finished their work.
Nigel Jones, the contracts manager for Jade Software, says the Christchurch-based technology developer and exporter sought patents in the past, but no longer considers them useful.
"Our view for a long time is not to patent any software technologies, mainly because by the time the patent gets through, we hope our software would have moved on to a level where we would be patenting the next thing anyway," Jones says.
"Patents look backwards, not forwards, and the cost of administration would be phenomenal.
"We get approached on a regular basis by lawyers looking for business work doing patents, but we want to be looking forwards."
Jones says working in a patent environment would require developers to be constantly checking to ensure their ideas don't contravene an existing patent.
"The whole industry survives on re-use of ideas and principles," he says. Jones believes any protection for software can come through the copyright laws.
Mark Loveys from Auckland firm Enprise takes a similar approach.
"I would rather have an open environment to work in. The dealings I have had with software patents are for things that common sense would say would be in there anyway," Loveys says, pointing to the problems patent authorities have had determining the "prior art" that should have prevented many techniques and business processes from winning such protection.
He believes software development in New Zealand could thrive in a patent-free environment: "Patents tend to block people. What software developers do is a logical progression of what is out there. They may take things to the next level, but it is harmful to the industry as a whole when one individual can block off a direction of development."
Enprise works closely with major vendors who do go down the patent track, including Microsoft, but Loveys believes copyright is sufficient protection for its business software.
"People pay us to use our software, but we don't want to go round and reverse engineer anyone else's products to find if they violate our patents - that would be a nightmare."
In its submission on the bill, the New Zealand Open Source Society argued large companies use patents to engage in monopolistic behaviour.
It cited its battle over Microsoft's attempt to gain New Zealand patents covering the use of XML (extensible mark-up language) for word processing documents.
If those patents had been granted, they would have allowed the software behemoth to lock customers into its own file formats, by ensuring Microsoft-generated documents couldn't be opened by competing programs.
Still, NZICT's O'Riley fears the Government is throwing the baby out with the bathwater. He says support for patents comes not just from multinationals like Microsoft but from smaller members as well.
"Some of them are going through the patent process because they see it as an essential part of establishing their intellectual property and positioning themselves for international expansion," O'Riley says.
"Patents are one of the measures international investors use to determine the value of IP, like it or not. The high-level concern is this has the potential to dissuade international investors from investing in the New Zealand industry."
He doesn't believe the select committee thought through all the implications.
"No one doubts there was need for a change, but if we are going to completely throw out software patenting it is incumbent on us to understand any possible downside," he says.
"There is a lot of grey ... and a lot of confusion round the different forms of IP protection and how to use them."
NZICT plans some debates next month so the issues can be aired more fully.
That may be closing the gate after the horse has gone on to the next generation of software.