Software patents – left vs right again?
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Opinion
By Stephen Bell | Wellington | Thursday, 8 July, 2010 | 17 Comments
The software patent debate is opening old sores associated with the change of government and government’s interface with the ICT industry.
A question that runs through or subtly underlies comments on the controversy in several online forums, is to what extent the NZICT Group represents New Zealand’s ICT industry and customers.
The Labour-led government set up the Digital Development Council (DDC) and Digital Development Forum (DDF) as an umbrella for ICT developer and user communities – TUANZ, InternetNZ, the NZ Computer Society and so on.
The idea was a single focus group for government and ICT to speak effectively with each other. The organisation representing predominantly multinational manufacturers – destined to become the NZICT Group — was considered simply one more potential member of the DDC.
With the election of the National-led government all that was swept away. ICT Minister Steven Joyce said that government had good enough contacts with the separate ICT organisations it wanted to talk to. NZICT achieved a new ascendancy. To be fair, it has some exclusively New Zealand-based members.
In trying to be neutral in reporting on software patents, I have been taken to task for suggesting that NZICT represents the local industry.
As one attendee at the OpenGovt2010 conference reminded me, NZICT represents suppliers, not customers, or as he put it, “the demand side”.
The software patents debate pitches the open-source enthusiasts against the champions of proprietary software and there are mutterings about closed-door meetings versus open, inclusive processes. I don’t think it is drawing too long a bow to see in this another facet of the DDC versus NZICT switch.
That, in turn, will be seen in some quarters as merely another expression of the contrast between a business-friendly government and one that listens to a broader cross-section of society. I think that’s simplistic; all governments of whatever claimed political stripe, are necessarily friendly to businesses, including international businesses, which keep a large part of this country’s economy running.
Similar opposing lobbies are evident in the copyright debate; international business versus individuals and small organisations; the champions of openness and reuse versus those who would draw boundaries around knowledge and see it as personal territory and a saleable commodity.
That said, the distinction between patentable and non-patentable inventions is not a simple one. The recent US Supreme Court’s Bilski vs Kappos decision refers to the “transformation test” – that an invention is patentable if it is associated with a machine and “transforms a particular article into a different state or thing”. If you acknowledge the computer itself as a machine or thing, and this sounds like a definition of what a program does – all the way back to Alan Turing’s work in 1937.
If you insist that the machine altered be a separate machine, some bright spark will set up one virtual machine to modify the operation of another while they both run on the same real server.
In this world of “virtual machines” is there a clear distinction between a mechanism and a program? NZCS CEO Paul Matthews suggests there is in his letter to Commerce Minister Simon Power in April supporting the removal of patentability of software in the Patents Act.
I am fascinated by Matthews’ definition of unpatentable software as “a separate concept from the physical world”.
Software entirely separate from the physical world wouldn’t have much hope of running. And some heavyweight philosophers would say “Mr Matthews, what is this ‘physical world’ of which you speak? Show us evidence of it which is not, in the last analysis a matter of language and notation – just like a program.”
“Software patents” will not be an easy problem to solve.
Comments
NZ Patent worth its weight in gold
I'm with a NZ company currently subject to a nuisance software patent infringement claim in the US. One of our best defenses turns out to be an early NZ patent that gives us priority in the US. Without that we'd be exposed to defense costs said to be at least US$1M with US courts rarely awarding legal costs.
It is true that patent trolls in the US exert a negative effect but I'm not aware of NZ companies being similarly stifled by NZ software patents and if the two quoted companies are the biggest then they're well-placed to claim prior art or other defenses if a claim were ever made against them on the basis of a NZ patent. I wonder how often that actually happens in real life? Apart from anything else, NZ courts do award at least partial costs and damages which does create a disincentive for frivolous claims against somebody who can defend themselves, unlike in the US where the incentive is to attack bigger companies in the hope they'll settle for $$$ rather than legal fees of $$$$$$.
IMHO it's far more likely that these companies would be exposed to an infringement claim in the US if they're doing well there, in which case an early NZ patent might be worth its weight in gold.
Posted by RVBoy at 22:05:32 on July 15, 2010
It is true that patent trolls in the US exert a negative effect but I'm not aware of NZ companies being similarly stifled by NZ software patents and if the two quoted companies are the biggest then they're well-placed to claim prior art or other defenses if a claim were ever made against them on the basis of a NZ patent. I wonder how often that actually happens in real life? Apart from anything else, NZ courts do award at least partial costs and damages which does create a disincentive for frivolous claims against somebody who can defend themselves, unlike in the US where the incentive is to attack bigger companies in the hope they'll settle for $$$ rather than legal fees of $$$$$$.
IMHO it's far more likely that these companies would be exposed to an infringement claim in the US if they're doing well there, in which case an early NZ patent might be worth its weight in gold.
Posted by RVBoy at 22:05:32 on July 15, 2010
For the record...
For the record, NZCS's letter to Simon Power didn't actually define unpatentable software as "a separate concept from the physical world".
The letter did give a couple of scenarios representing different "world views" of software and how the concept of patentability was invalid for each. It's important that this matter is considered from all perspectives and viewpoints.
The full letter to Simon Power is available here:
http://www.nzcs.org.nz/news/blog.php?/archives/92-.html
Posted by Paul Matthews at 19:27:20 on July 11, 2010
The letter did give a couple of scenarios representing different "world views" of software and how the concept of patentability was invalid for each. It's important that this matter is considered from all perspectives and viewpoints.
The full letter to Simon Power is available here:
http://www.nzcs.org.nz/news/blog.php?/archives/92-.html
Posted by Paul Matthews at 19:27:20 on July 11, 2010
Topic article re: SW Patent mess in the US
For those sitting on the fence on the software patents issue, the US - champions of "intellectual property" - appear to be scaring away their software industry with software patents... just like NZICT and their backers would to do to ours. This article offers insight from a US-based patent attorney.
Posted by Dave Lane at 13:03:21 on July 10, 2010
Posted by Dave Lane at 13:03:21 on July 10, 2010
Not open vs proprietary
"The software patents debate pitches the open-source enthusiasts against the champions of proprietary software"
Steve, I think this is very simplistic. There are many "champions of proprietary software" who are against software patents. One of the first was Bill Gates but most recently you have been quoting people like Ian McCrae of OrionHealth who are NZ's largest exporters of proprietary software and who are against s/w patents. This is about logic and economic rational more than anything else.
Posted by DonChristie at 22:33:30 on July 9, 2010
Steve, I think this is very simplistic. There are many "champions of proprietary software" who are against software patents. One of the first was Bill Gates but most recently you have been quoting people like Ian McCrae of OrionHealth who are NZ's largest exporters of proprietary software and who are against s/w patents. This is about logic and economic rational more than anything else.
Posted by DonChristie at 22:33:30 on July 9, 2010
InternetNZ and NZCS also against SW Patents
It's interesting that the NZICT and AJ Park seem to be trying to paint groups like the NZOSS and NZCS as entertaining "fantasy" over fact... A fact which might have escaped them both is that NZICT is alone in supporting software patents. It's worth noting that those organisations strongly opposing software patents include not only the NZOSS and NZCS, but also InternetNZ.
The real question is this: who more accurately represents the interests kiwi software developers (whose innovation software patents are meant to encourage)? The NZICT? Or the combined membership of the NZOSS, NZCS, and InternetNZ...
It's also worth asking: are *any* kiwi software developers besides, say Intergen (who are a MS development partner), represented by the NZICT?
We already know that AJ Park are simply cheerleaders in this process as they don't develop software, and have substantial vested financial interest in maintaining the status quo (but which provide no incentives for software innovation).
Posted by Dave Lane at 12:32:22 on July 9, 2010
The real question is this: who more accurately represents the interests kiwi software developers (whose innovation software patents are meant to encourage)? The NZICT? Or the combined membership of the NZOSS, NZCS, and InternetNZ...
It's also worth asking: are *any* kiwi software developers besides, say Intergen (who are a MS development partner), represented by the NZICT?
We already know that AJ Park are simply cheerleaders in this process as they don't develop software, and have substantial vested financial interest in maintaining the status quo (but which provide no incentives for software innovation).
Posted by Dave Lane at 12:32:22 on July 9, 2010
InternetNZ and NZCS also against SW Patents
Plus the NZ Software Association, I believe.
Wayne Hudson, a well known and highly respected Technology and IP Lawyer, has spoken out against them several times on behalf of NZSA. He points out they are a waste of time and expensive, and represent more of a threat than an opportunity to NZ software companies.
I'm not sure if he said this representing just NZSA (with hundreds of software companies as members) or the Software Alliance, including Canterbury Software (Canterbury hosts companies providing 52% of New Zealand's software exports) and others.
I've spoken to homegrown NZ software houses and companies up and down the country, and it's fair to say that almost without exception they are either against patents or neutral on the subject.
Posted by Paul Matthews at 19:16:26 on July 11, 2010
Wayne Hudson, a well known and highly respected Technology and IP Lawyer, has spoken out against them several times on behalf of NZSA. He points out they are a waste of time and expensive, and represent more of a threat than an opportunity to NZ software companies.
I'm not sure if he said this representing just NZSA (with hundreds of software companies as members) or the Software Alliance, including Canterbury Software (Canterbury hosts companies providing 52% of New Zealand's software exports) and others.
I've spoken to homegrown NZ software houses and companies up and down the country, and it's fair to say that almost without exception they are either against patents or neutral on the subject.
Posted by Paul Matthews at 19:16:26 on July 11, 2010
Fact versus fantasy
There has been some considerable discussion around the Patents Bill 2008 debate in general but some of the comments now being made by particular members of the anti patent group are outright fantasy. Given some of these comments are being made publicly in this blog they deserve to be corrected:
FACT 1: NZICT first formally surveyed its Members about IP and patents on October 2nd, 2009 as part of understanding their position, providing input into meetings with Commerce Select Committee members, and for the Auckland Uniservices Survey conducted on behalf of the Ministry of Economic Development. This survey of NZ business and its findings is instructional and another important Government consultation forum around IP.
FACT 2: MED publicly stated in June 2009 in Computerworld the following in relation to the Patents Bill: "The proposals discussed in this regulatory impact statement are part of Stage 2 of this Review," it says. "Contentious issues, including #computer software and business methods, will be dealt with in Stage 3 of the review."
However, the Ministry of Economic Development says the third-stage review has already been completed and software patentability stands. "The Bill incorporates the outcomes of all three stages of the review. The issue of software patents was considered as part of the third stage, but a decision was taken not to exclude software from patentability," says an MED spokeswoman.
As a result of this statement existing patent holders and organisations like NZICT chose not to participate in the Commerce Select Committee process. When it became apparent to NZICT from discussions with Select Committee members like Clare Curran MP that the Commerce Select Committee was in fact still discussing software patentability, we immediately became engaged in discussions, although submissions to the Committee had unfortunately already closed.
FACT 3: NZICT has maintained a regular consultation with its Members on intellectual property issues with a particular focus on the importance of understanding issues around the commercialisation of IP. Maintaining the right regulatory environment and choice for NZ companies with regard to the development and protection of Intellectual Property is a founding principle of NZICT, and this has regularly been discussed and debated by NZICT's competitively elected board since I have been CEO (March 2009), with direct input from non elected Member CEOs and other guests who are invited to every Board meeting.
FACT 4: NZICT has circulated its policy position on Patents to all Members and sought feedback and input.
FACT 5: NZICT given its limited budget asked Members for assistance to progress the issue, review our submission, and attend the one and only meeting with MED. As a result a number of companies, including Microsoft and IBM, offered to make available some legal resources in addition to our own legal advisor Simon Martin. This was particularly important for attending the MED meeting where the discussion was likely to be quite technical, in accompanying the other NZICT members Aptimize and Pingar, who were initially available to attend the meeting with me. A number of other companies expressed interest in attending but were not available on that day. In addition to our Members and own legal advisor, NZICT have also consulted with a number of third party IP commercialisation experts, patent attorneys and legal experts on the Commercialisation of IP issue in general, and Patents specifically. We acknowledge there are diverse opinions on this subject and consider open fact based debate to be important.
FACT 6: NZICT supports globalisation, free trade agreements and the proposed Trans Pacific Partnership. We believe that the harmonisation of trade and IP policy, and compliance with our WTO obligations, is an important prerequisite to growing the New Zealand economy to benefit all New Zealanders, and certainly the majority of the ICT industry.
FACT 7: The large majority of NZICT members are wholly owned New Zealand companies engaged in the business of providing software, hardware, services, networks, education and training to their customers.
NEXT STEPS: We intend to hold a series of forums on the Commercialisation of IP in August so that these wider issues (as opposed to the narrow issue of Patents) can be better debated and discussed by the industry, taking into account the many aspects of this subject.
Posted by Brett O'Riley at 11:06:36 on July 9, 2010
FACT 1: NZICT first formally surveyed its Members about IP and patents on October 2nd, 2009 as part of understanding their position, providing input into meetings with Commerce Select Committee members, and for the Auckland Uniservices Survey conducted on behalf of the Ministry of Economic Development. This survey of NZ business and its findings is instructional and another important Government consultation forum around IP.
FACT 2: MED publicly stated in June 2009 in Computerworld the following in relation to the Patents Bill: "The proposals discussed in this regulatory impact statement are part of Stage 2 of this Review," it says. "Contentious issues, including #computer software and business methods, will be dealt with in Stage 3 of the review."
However, the Ministry of Economic Development says the third-stage review has already been completed and software patentability stands. "The Bill incorporates the outcomes of all three stages of the review. The issue of software patents was considered as part of the third stage, but a decision was taken not to exclude software from patentability," says an MED spokeswoman.
As a result of this statement existing patent holders and organisations like NZICT chose not to participate in the Commerce Select Committee process. When it became apparent to NZICT from discussions with Select Committee members like Clare Curran MP that the Commerce Select Committee was in fact still discussing software patentability, we immediately became engaged in discussions, although submissions to the Committee had unfortunately already closed.
FACT 3: NZICT has maintained a regular consultation with its Members on intellectual property issues with a particular focus on the importance of understanding issues around the commercialisation of IP. Maintaining the right regulatory environment and choice for NZ companies with regard to the development and protection of Intellectual Property is a founding principle of NZICT, and this has regularly been discussed and debated by NZICT's competitively elected board since I have been CEO (March 2009), with direct input from non elected Member CEOs and other guests who are invited to every Board meeting.
FACT 4: NZICT has circulated its policy position on Patents to all Members and sought feedback and input.
FACT 5: NZICT given its limited budget asked Members for assistance to progress the issue, review our submission, and attend the one and only meeting with MED. As a result a number of companies, including Microsoft and IBM, offered to make available some legal resources in addition to our own legal advisor Simon Martin. This was particularly important for attending the MED meeting where the discussion was likely to be quite technical, in accompanying the other NZICT members Aptimize and Pingar, who were initially available to attend the meeting with me. A number of other companies expressed interest in attending but were not available on that day. In addition to our Members and own legal advisor, NZICT have also consulted with a number of third party IP commercialisation experts, patent attorneys and legal experts on the Commercialisation of IP issue in general, and Patents specifically. We acknowledge there are diverse opinions on this subject and consider open fact based debate to be important.
FACT 6: NZICT supports globalisation, free trade agreements and the proposed Trans Pacific Partnership. We believe that the harmonisation of trade and IP policy, and compliance with our WTO obligations, is an important prerequisite to growing the New Zealand economy to benefit all New Zealanders, and certainly the majority of the ICT industry.
FACT 7: The large majority of NZICT members are wholly owned New Zealand companies engaged in the business of providing software, hardware, services, networks, education and training to their customers.
NEXT STEPS: We intend to hold a series of forums on the Commercialisation of IP in August so that these wider issues (as opposed to the narrow issue of Patents) can be better debated and discussed by the industry, taking into account the many aspects of this subject.
Posted by Brett O'Riley at 11:06:36 on July 9, 2010
Fact versus fantasy
Brett, a number of your "FACT"s above, particularly those related to "consultation" with your members and how you missed out on making a submission to the Select Committee, are substantial contradictions to what you told me personally (with witnesses present) when we discussed exactly these issues face to face on 3 May, 2010 in Christchurch. I have documented our discussion here: http://davelane.name/blog/dave/nzict-unwarranted-influence-software-patents
Do you take issue with any of my statements?
I'm afraid I will be sceptical of your other statements of FACT until I see independent verification by entities with no vested interest in the process.
I still have no doubt that the NZICT's agenda favours (and is set by) your multinational constituents and board members, and that the minority of *independent* (not Microsoft Gold Partners, for instance) kiwi-owned members have had little or no influence. NZICT does not have the best interests of kiwi-owned businesses at heart in its lobbying efforts.
Posted by Dave Lane at 11:45:55 on July 9, 2010
Do you take issue with any of my statements?
I'm afraid I will be sceptical of your other statements of FACT until I see independent verification by entities with no vested interest in the process.
I still have no doubt that the NZICT's agenda favours (and is set by) your multinational constituents and board members, and that the minority of *independent* (not Microsoft Gold Partners, for instance) kiwi-owned members have had little or no influence. NZICT does not have the best interests of kiwi-owned businesses at heart in its lobbying efforts.
Posted by Dave Lane at 11:45:55 on July 9, 2010
Software Patentability
Sorry, I was a bit sweeping with my statement "software developers everywhere want patentability". I am extremely pleased to have learnt more about the distinction between software patents and copyright. However my new awareness makes me think it is even more important that software does not become patentable when it is able to be adequately protected by copyright law. We should not crawl into the I.P. hole the U.S. is digging for itself just because it may affect so called free trade.
Posted by Bart Hanson at 10:26:51 on July 9, 2010
Posted by Bart Hanson at 10:26:51 on July 9, 2010
Not lef vs right
I would like to address the suggestion that this is a left vs right issue. It is rather sad that complex issues are boiled down two sides. The NZOSS has taken a stance of political neutrality, not just because of the attendant risks of taking a political position, but because the society itself has members all across the political spectrum.
However, as I have said repeatedly, this issue is not primarily about supporting open source, but rather encouraging technological innovation in our IT sector without undue legal restrictions. Closed and open source are equally threatened by a patent regime that is tilted toward the big players.
I'm a capitalist in the sense that I think there needs to be a fair playing field for businesses to operate efficiently. Patents were originally envisioned as tools for the little guy to make it against big business. It is now used for the opposite effect.
My point is that it is a mischaracterisation to talk about this issue as left vs right. Protecting NZ businesses from unfair multinational influence is 100% in line with the values of National and Labour.
What I support is a rational and objective analysis of what impacts policy will have on our national interests. Right now giving in to pressure to allow software patents will potentially compromise our negotiation position in any free trade agreement with the US. We don't want to be making decisions like this based on pressure from multinationals; we need to carefully consider what is in the best interests of NZ as a whole.
Posted by peter harrison at 13:20:36 on July 8, 2010
However, as I have said repeatedly, this issue is not primarily about supporting open source, but rather encouraging technological innovation in our IT sector without undue legal restrictions. Closed and open source are equally threatened by a patent regime that is tilted toward the big players.
I'm a capitalist in the sense that I think there needs to be a fair playing field for businesses to operate efficiently. Patents were originally envisioned as tools for the little guy to make it against big business. It is now used for the opposite effect.
My point is that it is a mischaracterisation to talk about this issue as left vs right. Protecting NZ businesses from unfair multinational influence is 100% in line with the values of National and Labour.
What I support is a rational and objective analysis of what impacts policy will have on our national interests. Right now giving in to pressure to allow software patents will potentially compromise our negotiation position in any free trade agreement with the US. We don't want to be making decisions like this based on pressure from multinationals; we need to carefully consider what is in the best interests of NZ as a whole.
Posted by peter harrison at 13:20:36 on July 8, 2010
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