A discussion paper released by the Ministry of Economic Development has again questioned the advisability of granting patents on software.
The basic question of the paper, released last week, is whether the cost of granting patents on software encourages innovation by affording the originator a period of effective monopoly as a reward for giving society something new, or whether it stifles innovation by preventing subsequent innovators from building on the original software.
Similar arguments apply to “business methods” — ways of managing a business or processing financial data. Patents on such methods are also raised for discussion in the MED document.
Software was held to be not patentable in New Zealand until 1993, when a shoe manufacturer was granted a patent on a method of digitally representing the pattern of a shoe for automated production. This was followed in 1995 by a patent for calculations relating to collision avoidance among aircraft. But patents are still not commonly applied to software.
The position in Australia is similar, but in the US patenting of software is much more common. In the European Community, on the other hand, it is specifically excluded.
Some commentators suggest, says the report, “that new computer software builds incrementally on existing software. If programmers are unable to use the ideas in this existing software because it is protected by patents, innovation will be stifled, especially given the short commercial ‘life’ of most software.”
There is also an argument that software is already adequately protected by secrecy of the source code and by the terms of licensing, and has no demonstrated need of patent protection. Copyright applies to software, but, as the report notes, that protects only against copying the specific code, not imitating the idea behind the software.
The patentability of software hinges on a vaguely defined criterion of an algorithm being applied in a manner that is “commercially useful”. An algorithm of itself is not patentable.
If software patents are to be commonly applied in New Zealand, this criterion may need to be clarified, the report says.
MED has requested submissions on the paper, with a closing date of July 26.