Software patent ban could damage investment

Any exclusion of software from the New Zealand patents regime will "suck the lifeblood" out of the New Zealand software development industry, says Chris Auld, director of strategy and innovation at Microsoft-specialist developer Intergen.

One major effect, he says, would be to discourage venture capitalists from investing in the industry. Investors would be less willing to sink money into a project whose result will not have adequate protection against imitation.

"This will make it hard for ICT to remain competitive for venture capital alongside other industries that can still get patents for the products," he says.

Loss of patent rights, as flagged as favoured by Parliament's Commerce Select Committee last month, will also discourage people with keen minds from entering software development, Auld predicts. Instead they will apply their idea-generating capability to other fields, such as biotechnology or agricultural technology, worsening ICT's already serious staff shortage.

"Maybe that [diversion of bright minds into other fields] is government's intention," he says; "I don't know, I find this move hard to understand.

However, Open Source Society president Don Christie says Auld's is a "very tired old argument that has been discredited".

"It was, of course, made to the select committee who were obviously unconvinced," he says.

"All I need to do is point to the explosive growth of the internet, which was based on the idea of openness and uncapturability. In other words, no patents. Indeed, the heydays of the computer software industry have all occurred during periods where patents were not available to software developers."

Christie says many New Zealand companies now have to sign contracts with huge liability indemnity clauses. These generally indemnify the client against IP infringements and have changed the risk profile for small ICT businesses.

"Essentially they are taking on risks that are ruinous and they have very little real hope of being able to cover those liabilities, even when they increase insurance premiums up the wazoo," Christie says.

A former lawyer, Auld is not arguing that patents are perfect. The area has been bedevilled with cases of patents granted on reasonably obvious developments, obstructing further innovation.

But that doesn't reflect a weakness in patent law, he says; rather an under-resourcing of this country's Intellectual Property Office, charged with examining patent applications.

This is partly a consequence of the software industry's "meteoric growth", he says.

"We need better prior-art searches," Auld says, meaning searches for previous applications of an idea claimed as novel; existence of demonstrable prior art means a patent will not be granted. This would minimise the problem of trivial and obstructive patents.

Alternative ways of protecting software, such as copyright and licensing, don't offer as much protection as a patent, Auld says. Copyright only protects the particular expression of the idea -- the program code and documentation -- not the idea itself.

The Commerce Select Committee seems to have listened particularly to the open source lobby, he says, resulting in a biased view of the question. He did not, however, make a submission to the committee himself. "I and people like me are not impassioned, like the open source people. They treat it like a religion and they seem to be able to afford the time to front up and speak at Parliament. I'm just concerned to roll my sleeves up and get on with producing software.

"I don't know what our [supporters of software patents'] next move should be," he says.

-- Additional reporting by Rob O'Neill

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9 Comments

Peter Harrison

1

It is getting a little tiresome being accused of being religious when it comes to sacrificing our time and effort for the greater good. For the record, the time I took off to present before the Committee came out of my annual leave. The airfare was paid for by myself. The days of research and writing were done in my own time. I have no multinational to pay me for my efforts.

The reason I do these things is because I have a duty to do so. Every moral man has a responsibility to their family, their community and their country. I am a patriot. I care deeply about our future. And if that means a little personal sacrifice; and I do mean just a little; then it is a price I will pay gladly.

Mr Auld says that he is too busy writing software to appear before the Committee. What does he think my day job is? I have been writing software for twenty years. I live and breath software; it is what I love to do. And it is for this reason that when I see a system restrict the right of myself and other countrymen to do what we love we oppose it. It is our duty to do so. If I failed to do so I would fail in my moral responsibilities.

Dave Lane

2

I'm sorry, Brett. Your assertion about the need for "a supportive legislative environment" which includes software patents is not compelling unless you can provide evidence to support it. Why is copyright not sufficient? Seems to be for authors of books, music, and films...How does software differ from these?

To those reading this article, it's important that you recognise that the NZICT association does not represent most kiwi IT businesses. I can tell you, Brett, that you're certainly not representing my business' interests. Your organisational constitution ensures that your "Tier One" and a small proportion of your Tier Two member organisations dictate your policy and your voice.

90+% of NZ (i.e. non-multinational) IT businesses would never be able to afford membership above General Member status, making it fiscally impossible for your organisation to *actually* represent the New Zealand IT industry interests over those of multinationals who do business in NZ. Perhaps it's best if you accept this, and that our government takes your advice with a major grain of salt.

For those wanting to confirm this for themselves, see here: http://www.ict.org.nz/wp-content/uploads/2009/02/nzict-rules-for-15-dec1.pdf

The NZCS is much closer to representing NZ IT professionals than NZICT, and 80% of their members are for the software patent exclusion...

DG

3

Note that India doesn't allow software patents either. It doesn't appear to have hurt them in doing outsourcing. As far as not filing New Zealand patents for software, there are other venues wherein they could be filed, and would have to be to protect foreign markets in any event.

The only threat the lack of New Zealand software patents hold is when the software is intended to be wholly consumed within New Zealand's relatively small market. With a lack of disclosure from a lack of patent filing how would your competition be advantaged? Further licensing terms as part of a sales contract can restrict the ability to reverse engineer.

Software that is market viable only when protected by patents suffers the woes of obviousness to persons having ordinary skill in the art. It would seem the 'intellectual property' innovation value of a company producing software might be more in it's ability to market and support the software rather than the strength of technical implementation.

The value in software is the cost to produce it and the inability of competition to profit from your public disclosures in patents allowing you to recoup cost. This model is threatened by open source software which can establish prior art - should the process be corrected in establishing patent eligibility.

There is a potentially larger threat than outsourcing to the value of software for which the method of production has remained largely unchanged for 50 years. Automation such as that promised by Charles Simonyi's Intentional Software allowing programming problems to be addressed in domain specific language comes to mind. The idea being to generate code that follows intent and doesn't allow scrivener's errors so frequent in works of authorship.

Business reliance on open source software is simply a stop gap method of allowing re-use where the need for software programmers is seen to be growing to outstrip the supply. Change in authorship methods is likely inevitable.

Innovation doesn't have to be about having reached the market with hard to produce software first, needing artificial protections to recoup investment because of the narrowing time frame for competition to catch up. It can be about addressing more markets specifically or giving better value to customers, in particular if your competition is still authoring software in the equivalent of using cloistered monks while you are using the printing press.

Patents are about encouraging advancement of the sciences and arts - innovation. Not about protecting the status quo and insuring water empire marketplaces. If you can't stand competition otherwise you may not really be innovating. Software is bound to become a commodity proposition in the the future, in particular when the costs can be undercut by outsourcing or new technology needed to answer the scarcity problem.

Lawrence D'Oliveiro

4

Look at the entire history of the Internet-built on open, nonproprietary, unpatented protocols that anybody is free to copy and implement. Would it have thrived as it has if everybody had to get licences before they could develop anything new?

In fact, we have about three centuries' accumulation of empirical evidence showing that patents as a whole do not encourage innovation, they tend to strangle it. See Boldrin & Levine, "Against Intellectual Monopoly" http://levine.sscnet.ucla.edu/general/intellectual/againstfinal.htm

Jonathan Hunt

5

If you want to convince people of your ideas, you can start by dropping the snark. As a developer using open source technologies, I've got better things to do than write submissions to select committees - like writing code, for example. It's encouraging that soon I won't be liable for patent infringement every time I write some software.

It's rich for you to accuse anyone involved with open source of bias, when you clearly have your own agenda. Its clear that software patents are problematic for proprietary developers as well as open source. Much of the analysis indicates NZ developers, as compared to large software multinationals, will be better off without software patents.

invest

6

You spend countless hours writing thousands lines of code, thousands of hours marketing it, and then someone comes to you saying "your product infringes my patent here and there, I want money or shutdown your product".

A piece of software is typically covered by hundreds of patents, making the probability of legal certainty that you can sell your work without any risk virtually null.

Michael Kay

7

Amazing - there are still people other than patent lawyers who think software patents are a good thing. I thought such people had died out. After things like the Microsoft XML patent affair, it's hard to see any arguments in their favour. I run an innovative small software company, and the risk of one of my larger competitors flattening me with a patent I've never heard of (and probably don't actually infringe) is the biggest risk to my business, by a wide margin. Software patents are sucking the lifeblood out of the software industry in all countries that allow them.

Michael Kay

8

"A former lawyer, Auld..."

Sorry, I missed that. My surprise that there are people other than patent lawyers who support software patents was based on a false premise.

Jonathan Clark

9

akin to the free press...
.The free press is the omnipresent eye of the spirit of the people
, the embodied confidence of a people in itself
the articulate bond that ties the individual to the state and the world,
the incorporated culture which trnsfigures material struggles into intellectual struggles
. It is the ruthless confession of a people to itself
and it is well known that the power of confession is redeeming

So free us from people like Auld who want to restrict and dominate

Jonathan.Clark@xtra.co.nz

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