If you wondered how Bill Gates topped the Forbes rich list for the 11th year with a personal fortune of US$46.5 billion ($63 billion), look no further than the New Zealand Intellectual Property Office.

Patent 525484, accepted by the office and now open for objections until the end of May, says Microsoft invented and owns the process whereby a word-processing document stored in a single XML file may be manipulated by applications that understand XML.

It is one of a raft of patent applications Microsoft has dumped on the overworked staff of the office, and on patent offices worldwide.

Some of them might have more merit than this particular piece of junk, but they are part of a strategic effort by Microsoft to control another generation of technology, just when its grip on the personal computer is being undermined by the Open Source movement.

Gates' greatest achievement has never been the software he created - some is good, some is terrible, a lot is a knock-off of someone else's stuff - but the way he was able to get people to pay for it.

When the precocious teenager was writing his first bits of code, computers were rare and expensive and owned by organisations that would pay people to write programs for them.

That changed in January 1975 when the cover of Popular Electronics featured the Altair 8800, a US$500 kitset computer developed by Albuquerque research engineer Ed Robert.

Altair users had to solder the kit together and use toggle switches to program the machine.

Gates and his friend, Paul Allen, offered to develop a version of the BASIC operating system for the Altair. Roberts bought it, and allowed Gates and Allen to sell copies separately.

When Gates discovered copies of the program were circulating among hobby computer clubs, he wrote "An open letter to hobbyists", published in a New Mexico club newsletter.

"Almost a year ago, Paul Allen and myself, expecting the hobby market to expand, hired Monte Davidoff and developed Altair BASIC. Though the initial work only took two months, the three of us have spent most of the past year documenting, improving and adding features to BASIC.

"The value of the computer time we have used exceeds US$40,000," the outraged Gates told the hobbyists.

He said most Altair owners didn't pay for the BASIC they were using, and the royalties the trio received amounted to less than US$2 an hour.

"Most of you steal your software," he scolded. That practice would prevent good software being written.

Gates' manifesto set the stage for a software licensing revolution running alongside the personal computer revolution.

Although many of the hobbyists disagreed with the principle and baulked at the US$500 price tag Gates and Allen had on their product, enough paid up to give a useful boost to their fledgling business.

What rankled with the hobbyists was the fact that the 4kB BASIC interpreter appeared to be cribbed from other BASIC implementations in the public domain.

The development work was done on a taxpayer-subsidised PDP-10 at Harvard University, where Gates was a student. Although they might have used US$40,000 of computer time, they didn't pay for it.

Now the old-time hackers and hobbyists are back. The amount of good software they have created through the Open Source process, and the economic value that has had, showed up the flaws in the Microsoft taxation model.

There are three viable models for software creation: firms, markets, and community-based peer-production, as Open Source is sometimes described.

Patents allow firms to create artificial legal barriers that can hinder or prevent community-based peer-production, as those communities may lack the resources to apply for patents, object to patent applications, pay patent licensing fees or defend themselves from patent litigation.

Allowing software patents is a decision favouring one form of software production over another.

The internet works because the protocols and software behind it were developed by peer-production and left free as a software commons.

Patent 525484 says if a document is created in Extensible Markup Language or XML, it may contain a schema or set of instructions for interpreting the document, which will be used when you want to use another application to make changes to the document. There is no novelty there. The whole idea of XML was to allow interoperability.

Interoperability standards have been around for as long as people realised it would be a good idea for programs to talk to each other.

The patent should be rejected for obviousness, if not for other criteria such as prior art.

New Zealand Open Source Society president Peter Harrison said the society would object.

The society is opposed to patents being issued for software at all, a point it made in its submission on a bill overhauling patent legislation.

"Allowing software patents will damage the economy because it means few small players can enter the field against players with big software portfolios," Harrison said.

"It creates uncertainty and fear in the software development field."

Harrison said copyright protection was sufficient for software, as it allowed creators to license or control use of their creations.

The issue is being able to protect or monopolise an activity just because you were first to do something obvious. If the patent is granted, other word-processing programs will not be able to interact with Microsoft XML word processing documents without Microsoft's permission.

"It means if you write a document in Word and save it in an XML format, you have to have Microsoft's permission to read it or change it," he said.

Earlier versions of Microsoft Word had no such patent protection, and although it has taken years to achieve, programs like Open Office can now interact directly with Word.

Microsoft has spent hundreds of millions, if not billions, over the years to make its vision of intellectual property rights the standard. It won its biggest victories at home, but that vision is now being steamrollered around the world through bilateral free trade agreements. Politicians still talk of a free trade agreement as benefiting this country. The reality is intellectual property rights will be high on the US agenda and it won't be to this country's benefit.