Patents Bill amended to clarify software issue

New Supplementary Order Paper seen as clarifying non-patentability of software; Responses from IITP, Orion Health, Open Source Society, Jade Software, InternetNZ

A new Supplementary Order Paper (SOP) has been injected into the Patents Bill debate by Commerce Minister Craig Foss and is seen by some industry organisations as moving the position of software patentability closer to the total ban established by the Commerce Select Committee in 2010.

The clause relating to software in the Bill as returned from Select Committee in 2010 simply stated “a computer program is not a patentable invention.”

The principal part of the new SOP reads:

“10A Computer programs

(1) A computer program is not an invention and not a manner of manufacture for the purposes of this Act.

(2) Subsection (1) prevents anything from being an invention or a manner of manufacture for the purposes of this Act only to the extent that a claim in a patent or an application relates to a computer program as such.

(3) A claim in a patent or an application relates to a computer program as such if the actual contribution made by the alleged invention lies solely in it being a computer program.”

This replaces the clause that Foss had planned to put up for debate in the next (Committee) stage of the Bill, which left the contentious phrase “as such” undefined. Clause 3 is based on a test set out in UK case law. “These changes ensure the Bill is consistent with the intention of the Commerce Select Committee recommendation that computer programs should not be patentable,” Foss says.

Industry organisations such as the Institute of IT Professionals and the NZ Open Source Society saw the earlier proposal as too vague and likely to admit some pure-software patents.

IITP supportive

Institute of IT Professionals now says it “strongly supports the government’s announcement today,” which it sees as “clarifying that software will not be patentable in New Zealand”.

“The Institute thanks Minister Foss for responding to industry concerns, clarifying the Patents Bill’s intention to remove patentability of software and for taking extra steps to ensure the law around software patents is clear and unambiguous,” says CEO Paul Matthews. “Software will not be patentable in New Zealand and a major barrier to software innovation has been removed.

“The patent system doesn’t work for software. We believe it's near impossible for software to be developed without breaching some of the hundreds of thousands of software patents awarded around the world, often for ‘obvious’ work,” Matthews says. “Thus many software companies in New Zealand, creating outstanding and innovative software, live with a constant risk that their entire business could be threatened due to litigious action by a patent holder.”

Ian McCrae, chief executive of New Zealand’s largest software exporter Orion Health agrees, saying “we welcome this announcement. Under the current regime, obvious things are getting patented. You might see a logical enhancement to your software, but you can't do it because someone else has a patent. In general, software patents are counter-productive, often used obstructively and get in the way of innovation. We are a software company and as such, our best protection is to innovate and innovate fast.”

John Ascroft, chief innovation officer of Jade Corporation says “we believe the patent process is onerous, not suited to the software industry, and challenges our investment in innovation.”

“The Institute acknowledges this is a complex issue with many arguments for and against patentability of software,” says Matthews. “However on balance, it is in New Zealand’s best interests for software to continue to be covered through the provisions of copyright in the same way movies and books are, rather than through the patent system, which has significant problems,” he says.


“It’s a backdown”, was Opposition MP Clare Curran’s initial reaction to Foss’s announcement.

Foss denies that suggestion and says the new SOP is rather an “enrichment” of his earlier one. “I’m very pleased IT professionals were supportive of the [latest] SOP,” he says “and I look forward to the passage of the Bill as soon as the legislative timetable permits.”

In addition to defining the term “as such”, the SOP appends two examples:

  • a washing machine which performs its task more effectively because of a program encoded onto a chip is patentable because “the actual contribution [toward better washing] lies in the way in which the washing machine works (rather than in the computer program per se)”;
  • a method of automatically completing the legal documents necessary to register an entity, via a computer-delivered questionnaire. Here “the hardware used is conventional. The only novel aspect is the computer program,” so the innovation is not patentable.

This essentially reflects a precedent of the UK courts, known as the Aerotel test – derived from the judgment in the case Aerotel v Telco Holdings (2007). This test has four well-defined steps: A court or commissioner must have regard to:

“(a) the substance of the claim (rather than its form and the contribution alleged by the applicant) and the actual contribution it makes;

(b) what problem or other issue is to be solved or addressed;

(c) how the relevant product or process solves or addresses the problem or other issue;

(d) the advantages or benefits of solving or addressing the

problem or other issue in that manner.”

The court of commissioner is also asked to take into account “any other matters considered relevant”

InternetNZ and Open Source Society response

InternetNZ also welcomes the new form of the SOP “that makes it clear that computer software is not patentable in New Zealand” and “draws to a close years of wrangling between software developers, ICT players and multinational heavyweights over the vexed issue of patentability of software,” the organisation says in a statement.

Spokesperson Susan Chalmers says InternetNZ is happy to see the issue now resolved and “looks forward to the passage and implementation of the Patents Bill, a long-awaited and much needed update to a large component of New Zealand's intellectual property regime.”

Dave Lane, president of the NZ Open Source Society, says NZOSS is “very pleased that the minister has reconsidered the means of achieving his stated goal” and gratified at the extent of consultation there has been with the ICT and software industry to reach this position. The Society has had to accept the inclusion of ‘as such’ as consistent with international law, he says, “but the rest of the proposed clause makes it clear what that means."

Given the need to be consistent with international frameworks this is a better way of implementing the intent of the Select Committee than previous proposals, he says.”

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