Nature of Patent Bill change disputed

Commerce Minister Simon Power and the Economic Development Ministry have rejected claims from commerce select committee chairwoman Lianne Dalziel they have significantly shifted their position by proposing software which has a "technical purpose" could be patented.

Mr Power announced in April that the Government would back changes to the Patents Bill proposed by the commerce select committee that would mean computer software could no longer be patented. The committee's understanding was that inventions that relied on "embedded software" – software that is built into a physical device – would still be patentable.

Rory McLeod, director of the ministry's competition, trade and investment branch, says the bill will be reworded to ensure inventors would be able to patent software that has a technical purpose.

He says the select committee accepted embedded software was "not a good term" and "always understood we would have to look at how we framed it legally, and they were happy to go forward on that basis". The new wording would mean software that was separate from a physical device could be patented, if it drove "some sort of invention".

"Our worry is that some inventions would be missed if you said `embedded', and `technical purpose' seems to have slightly wider scope."

Policy analyst Warren Hassett admits "the distinction isn't quite the same as the one the committee wanted to make" and would widen the range of software that could be subject to patents, but denies the change is significant.

However, Ms Dalziel says allowing software that has a technical purpose to be patented is not consistent with the committee's recommendation and it is "very sad" the Government has changed its position.

Information technology industry body NZICT has campaigned in favour of software patents, fearing the effect that restricting software patents could have on both its multinational members and locally owned software exporters.

Chief executive Brett O'Riley said the change would bring the bill into line with European law and he was "extremely encouraged" by a meeting with ministry officials. "While European law does restrict software patents this is positive progress, and the view of our team is that this would be a good outcome for the New Zealand industry."

Mr Hassett says it is "hard to be definitive" about what a "technical purpose" might be, but the general definition is that it has an effect that goes beyond the interaction between the program and the computer it is running on.

"It is something that runs an external process, for example. While it is perhaps not the perfect solution, it is the best we have got."

Software that has a technical purpose is generally likely to be developed by "manufacturing-type industries", he says.

Mr McLeod says that despite any concerns about the lack of meaning of the phrase, there is a lot of case law in Europe that could be drawn on. "Essentially, we are following a model that has been tried in Europe and seems to be successful enough."

Mr Hassett says that if the term "embedded" had been included in the bill, courts would have had to start from scratch developing a legal definition. "We would probably end up with the same result anyway."

At present, any software can be patented so long as it produces a "commercially useful step". The committee said it accepted that new software invariably built on existing software and that software patents were often granted for "trivial or existing techniques".

Labour's information technology spokeswoman Clare Curran noted NZICT had not made a submission to the select committee on the Patents Bill and feared the parliamentary process had been subverted by subsequent lobbying.