Protecting IP in a post-patent environment
Subscribe now for $100 (23 issues) and save more than 37% off the cover price!
Get the latest news from Computerworld delivered via email.
Sign up now
Recently the Government announced its intention to adopt a select committee’s recommendation to “exclude software from patentability” – that is, to ban software patents. Where will the ban — if implemented — leave local software developers’ ability to protect their intellectual property?
How will the removal of software from patentability, if confirmed, affect the ability of local IT firms to protect the intellectual property in their software?
Putting aside the pros and cons of the software patent debate, let’s start with four key facts:
First, relatively few firms pursue software patents in New Zealand, and the majority will therefore not notice any difference (except the welcome removal of a significant source of risk). Likewise, firms that currently own New Zealand software patents will not lose those patents.
Second, New Zealand firms will still be able to apply for software patents in countries that continue to allow them. This is no change from the current law and simply reflects that patents are territorial — a New Zealand patent only provides rights in this country.
Third, excluding software from patentability will in no way leave software “unprotected”. Software currently has the luxury of being one of the few endeavours to receive “double coverage”, from both copyright and patent law. If patentability is indeed removed, software will continue to be protected by copyright (as it is around the world), which has long been regarded as its primary means of protection.
Fourth, many countries, including those in the European Union, similarly do not allow software patents (or business method patents, in some cases) or significantly restrict them, and continue to have thriving IT industries (indeed, New Zealand didn’t grant software patents until 1995).
So the short answer is that the change would have a minimal effect for most developers in this country. Nor would it “tilt the playing field” in either direction in terms of local versus foreign firms – the change applies to both equally. In addition, existing software patent holders can take comfort from the prospect that no new, potentially competing or challenging software patents would be granted in New Zealand.
Assuming the proposal is implemented, how can local developers protect new IP in a post-software patent environment?
The answers are a mix of legal and practical considerations.
Orion Health CEO Ian McCrae, who backs the proposal, summed up the practical side well: “Our best protection is to innovate and innovate fast” (Computerworld, 15 April 2010). This reflects the fact that most New Zealand firms either choose not to attempt to patent their software, cannot afford the potentially high cost and uncertain outcome, or recognise it does not meet patent requirements.
For start-ups in particular, the argument can be made in many cases that limited funds are better spent on staff, development and other key requirements, than on a potentially costly, time-consuming and uncertain software patent application (which, in New Zealand, would only grant rights in a small market).
Patents require detailed disclosure of the invention – to obtain a New Zealand patent, the successful applicant discloses the workings of their invention to the world. While a New Zealand software patent could serve as the basis of applications in other countries and provide a priority date, the time, expense and disclosure required may not be conducive to an “innovate fast” strategy for small firms in a rapidly changing environment.
Of course, software patents can remain an important strategy when foreign markets (particularly the US) are targeted for a software product – and in such cases, foreign software patents may still be applied for.
On the legal side, New Zealand developers have two key non-patent methods of protecting the IP in their software: Copyright and contractual protection.
These have been the cornerstones of protecting IP in software since its earliest days. But how do they compare with the rights granted by a software patent?
Copyright is the primary manner by which IP in software is protected around the world. Copyright protects original works (including computer programs), but does not protect the “idea” or purpose behind the work. For example, the source and binary code of an original program is protected by copyright, but the purpose or functionality provided by the program is not — someone else is free to write a program that performs a similar function, as long as they do not copy the first program’s code (or another aspect protected by copyright).
This differs considerably from a patent, which (in general terms) grants a monopoly over the underlying invention.
In New Zealand, original computer programs and related works are automatically protected under the Copyright Act 1994 from the moment of creation – there is no need to register copyright or add a copyright notice. And thanks to international treaties, the automatic copyright in a New Zealand work can be recognised and enforced in many countries around the world.
A patent, on the other hand, must be applied for (typically with specialist assistance). If granted, the patent is only effective in New Zealand. Additional patents must be applied for in each country for which patent rights are sought.
Intellectual property is also commonly protected via contracts. Parties are generally free to negotiate whatever contract terms they want (there are some exceptions), including specific IP restrictions and protections.
Contracts can therefore provide patent-like protection of “ideas” and other commercial interests that may not be capable of protection under copyright. To give a common example, if an entrepreneur wants to disclose an idea (such as an idea for a program or new technique) to a potential investor, but wants to prevent the investor from either making use of the idea for themselves or disclosing it to others, a confidentiality agreement including those terms could be entered into (the law provides additional, non-contractual protection for confidential information). The agreement can also contain an indemnity, providing a direct means of seeking damages and lost profits if the recipient breaches the agreement.
Contracts can also bolster protection of copyright works and are typically essential in protecting trade secrets (which can include software code and processes).
However, unlike a patent, contractual protection only applies to the parties to the contract. A non-party will not be bound to the contract, whereas a patent can provide rights against the public at large (within its territorial scope).
Is the ban a bad thing?
There are certainly two sides to the software patent debate. However, after an eight-year review process (lengthy by any reasonable standard), public consultations, and submissions from all sides of the debate, Parliament’s Commerce Select Committee unanimously recommended they be banned. This has since been endorsed by the Government, and received cross-party support. Perhaps most significantly, it has also received strong support from the local IT community.
My view is that the arguments against software patents outweigh those in favour.
There is no doubt that banning software patents in this country reduces a source of risk for all New Zealand software developers. Everyone from professionals to hobbyists, from major corporations to small businesses, from proprietary to open source developers, benefits from a reduced threat of software patent liability in New Zealand.
Meanwhile, New Zealand developers can continue to seek software patents in countries that allow them. In other words, firms that see software patents as essential to their international strategies or attracting investors will still be able to seek those software patents, where available.
Whether or not a software patent can or will be sought, it is essential for firms to understand the options for protecting valuable IP via robust copyright and contractual measures, supported by appropriate business processes.
This article provides general information and does not constitute advice. Professional advice should be sought on specific matters.
Here are two examples... one claim to cover election systems, and a second the sequencing of text messages so that you could tell what order they were sent and received in...yes, a count.
I am a bit surprised that the anon commenters here who on the one hand claim that patents are needed but then on the other try to claim they have no impact. Why have them is they have no impact?
Finally, yet another anon patent lawyer asks why we don't educate ourselves. As someone involved in a 2 year process trying to overturn a software patent I consider myself reasonably versed. That said, I have issued two invitations to AJ Park to talk to the NZOSS about software patents and have been turned down. I one communication it was claimed they had no view on the issue...
Posted by Don Christie at 18:44:37 on May 26, 2010
A common tactic is to claim someone is infringing your patent, without saying what patent they're are referring to. Microsoft do this from time to time.. claiming linux infringes their patents, but won't tell us which patent. It does stifle innovation. It means New Zealand software companies don't get business contributing to and supporting Linux operating system due to some unspecified patent danger. No, the support work for Microsoft OS doesn't make up for this loss. New Zealand can do better than just basic support on the OS level and the apps on top. We can build the OS itself. We can shape the direction the whole OS goes in.
I can attest, that the potential for something i write to inadvertantly infringe on a patent does stop me writing a lot of code - mostly in the import/import of formats or in making free versions of apps. It's not just the fear I'll infringe a patent, but becuase someone with enough funds for a lawyer thinks i infringed. The fear of a patent lawsuit is stronger than what patents really are.
Patents are used to stop competition. We're not competing with the foreign companies, within NZ, because the larger foreign companies have large patent portfolios. They're used like nuclear weapons, as a deterent against competition. When someone threatens you with a patent lawsuit, you gotta hope you can find a patent in your own arsenal to threaten them back with.
I want them gone. Copyright prevents me copying someone's code without permission. The code is the implementation, and that's the real innovation. Protect that.
Posted by Brenda at 12:12:01 on May 26, 2010
I have been fascinated by the discussions. Particuarly as a patent attorney who, I emphasise, does not work with software patents at all so it would make no difference to my practice whether the law changes or not.
The debate is a good one and I can see both sides. I think on balance the pro-exclusion arguments are a bit weak and I haven't yet seen anything to convince me as to why the law should change. That is my view.
I believe the software community does need to learn more about patents. Some of the comments I have seen here do show that it is misunderstood and ill-founded arguments are being used to make a potentially far-reaching law change. I would encourage them to go and talk to a patent attorney (but one who knows more about software than I do!). Most will give general advice at no charge and are happy to educate.
Whatever happens this will be a talking point for a while. I just hope whatever decision is made it is based on justifiable evidence for the good of the country. At the moment I am not convinced.
Posted by Mr P Attorney at 11:24:36 on May 26, 2010
1. Is unable to provide a single example of a patent that has stifled innovation in New Zealand
2. Clearly does not understand the situation in Europe, where there _are_ software patents
3. Repeatedly resorts to simple-minded insults.
Is this what convinced the Select Committee?
Posted by Anonymous at 7:53:05 on May 26, 2010
Posted by Dave Lane at 19:35:56 on May 26, 2010
Posted by soap byte at 23:49:41 on May 25, 2010
Posted by Mark Harris at 19:27:39 on May 25, 2010
Posted by Anonymous at 21:55:59 on May 25, 2010
Posted by Dave Lane at 22:22:24 on May 25, 2010
Posted by Anonymous at 22:29:09 on May 25, 2010