Demands for New Zealand online retailers to pay licensing fees to a North American company may not be the only computer-related patents granted that could be used against local businesses.
“There’s a lot on the books that we know of that are potential problems,” says John Terry, a Wellington partner at law firm Baldwin Shelston Waters.
The current furore surrounds DE Technologies' patent claims over trans-border electronic commerce, contained in a letter sent to local e-tailers by a Hamilton law firm. But other patents open the way for potentially similar challenges.
The Hughes decision in 1994 made clear that software patents were allowed in New Zealand, Terry says. “That one set out a very generous and broad test for software patents.”
In 2000 the Haddad decision declining a patent application said an algorithm could not be patented, but made clear that computer-implemented methods could. “If it’s computer-implemented, there’s not really too much problem with it, it’s allowable,” Terry says.
“However, these decisions were simply patent office decisions. The High Court’s never looked at these and given an opinion.”
New Zealand’s patent act dates from 1953. Although patents can be challenged on the basis that they are not new or are obvious, the Intellectual Property Office, which receives patent applications, legally cannot determine whether a patent describes an obvious invention.
“Our act is way out of date,” Terry says.
“The patent office doesn’t have the teeth to block these sufficiently because the law hasn’t been changed. There's been incredible delays in effecting any change of the act."
Instead, the inventiveness of a patent can only be challenged before the patent office or the High Court. “It just passes on a cost to business.”
Auckland IT lawyer Clive Elliott cautions against overreaction to the patent claims. “The view that this is the end of the internet — I’ve heard it before,” he says.
Even if the patent were found to be valid it wouldn’t destroy internet commerce in New Zealand, he told Computerworld. “I’m not sure that it’s going to be the death knell. At the same time, it doesn’t mean that it is a good patent or valid.”
The existence of the patent suggested that similar patents would be granted, Elliott says. “My understanding is that there are a number that are coming through now.”
Elliott notes that if DE Technologies makes widespread claims against local e-tailers, the patent will “inevitably” be scrutinised by the courts, which would then be asked to rule whether the patent contains any “form of genuine innovation”.
The small size of the New Zealand economy protects local business from more patent claims, John Terry says. “It’s just a contingent liability sitting there, if you like.”
Elliott and Terry will be addressing the patent issue at NZ Computer Society meetings in Auckland on Tuesday and Wellington on Thursday. Michael Wigley, the president of the Technology Law Society, says the society is interested in hearing from companies affected by the patent claim.