that could have a dramatic and lasting impact on the future shape of New Zealand's tech sector.
The hope held out by many was that software would be excluded from being covered by patents, however it now appears that the government is likely to change patent legislation so that software can be patented.
Even though the Commerce Select Committee and numerous industry experts have all recommended that software be excluded from patentability, amendments made to the bill after pressure was placed on the government could be sufficiently vague that software could end up being patented.
This, say the experts, would provide large lawyered-up multinationals with a means of tying smaller kiwi software developers up in court, effectively stunting our home-grown software industry.
Indications are that even though the Ministry of Business, Innovation, and Employment (MBIE) had agreed that software should be excluded from patents and were confident that this wouldn't impact on trade treaties, sources indicate that the Ministry of Foreign Affairs and Trade (who are currently in the midst of negotiating the trans pacific partnership trade agreement) are said to now be somewhat less enthusiastic about excluding software from patents.
Sources say that US lobbyists threatened to take New Zealand to the TRIPS tribunal (TRIPS is an international intellectual property agreement that NZ is a signatory to). Because of this, MFAT are said to have signalled they want change the wording of the patent bill, which could see software being patentable. This says Labours spokesperson for IT, Clare Curran, is tantamount to New Zealand's political processes being manipulated by big business:
"The Commerce Select Committee sought and received advice that the intention to exclude software from being patentable did not contravene any trade or treaty agreements. It is curious that after representations to the Minister behind closed doors by multinational software giants Microsoft and IBM that there was a mysterious change to the wording in the Bill which will allow software patents through the back door."
All told, if this is indeed the case and the government has caved into the demands of the US (who naturally enough, are seeking greater advantage for software companies based in the US), then the government could end up trading away the future of our small but potentially lucrative software industry, depriving future generations of wealth.
This, says Curran has to change "The NZ Government needs to start sticking up for Kiwi business interests and not bowing down to pressure from big overseas corporate interests which take their profits offshore."
At the end of the day, should software become patentable in New Zealand, the future winners will most probably only be large law firms and the multinationals who can afford them. In the US over the last 20 years, The estimated cost to the US economy of patent litigation has been an estimated half a trillion US dollars.
Worse still, according to David Lane, President of the NZ Open Source Society, there will be very little incentive for start-ups to consider New Zealand: "no software company in NZ can confidently pursue a specific line of business as it will be vulnerable to broadsides from deep-pocketed software patent holders, who without warning can initiate patent infringement suits - whether legitimate or spurious - to effectively shut down any domestic software company - even if the accused company ultimately prevails in the courts."
Sadly, Lane also goes on to point out that even though the benefits clearly outweigh the negatives when it comes to excluding software from being patentable, it appears we're still likely to proceed with changing the bill; "If we achieve an effective patent exclusion for software, I think companies - overseas start-ups and multinationals alike - will view NZ as a sanctuary - a safe incubator for them to explore new start up ideas safe from being stepped on and crushed before they can prove themselves by lumbering giant corporate patent holders and trolls - as happens all the time in the US now.
Several US and Canadian companies have contacted me to ask about the prospects of shifting their entire operations to NZ on the strength of us possibly having a software exclusion."
So is the government trading away a sizeable chunk of our tech sector so a free trade agreement can go ahead? Will the pros of doing so out-weight the cons? Sadly only time will tell.