Software patent debate rages on
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The question of software patents looks unlikely to go away soon, with significant lobbies forming on both sides and a wealth of comment in live forums, letters to the Minister by InternetNZ and the NZ Computer Society, in Computerworld’s own online comment space and on Twitter and Slashdot.
Official bodies and individual commentators are not easily letting go of an apparent reinterpretation of a Select Committee’s wishes regarding a clause excluding software from patent in the Patents Bill. In some quarters the argument is sliding over into one of openness in the legislative process and who truly represents the local ICT industry.
Committee member and Labour ICT spokesperson Clare Curran is uncomfortable with what she calls the “revisiting” of the clause. At last week’s OpenGovt2010 “unconference” she cited the incident as a good example of how the lawmaking process is sometimes less than open or transparent. She referred to “how legislation gets made and the discussions that go on behind closed doors” – discussions that should, she said, “happen in a more transparent environment”.
When the Commerce Select Committee issued its report on the Patents Bill earlier this month, exclusion of software from patent protection appeared definite; even those, like the NZICT Group, who supported software patents, were under the impression they had been ruled out without exception.
The committee’s report mentions the possibility of an exception for “embedded” software – software whose only purpose is to control a machine – and says the committee found the concept too difficult to define. They decided not to put it in the bill, but to opt for a simple exclusion of all software.
The only evident qualification of that simple pronouncement was a recommendation that the Intellectual Property Office of NZ “develop guidelines for inventions containing embedded software”.
“We received advice that our recommendation to include computer programs among the inventions that may not be patented, would be unlikely to prevent the granting of patents for inventions involving embedded software,” the committee adds.
Now, following discussions between Ministry of Economic Development officials by members of the NZICT Group, the ministry has decided that the real intent of the committee, all along, was to treat machine-controlling software as a special class that may be patentable.
NZICT’s most prominent members are multinational ICT companies, like IBM and Microsoft – companies used to having their intellectual property stringently protected.
“What is clear from the [US-based] blog [that revealed the NZICT-MED discussions] is that NZICT is working for Microsoft and IBM lawyers against the interests of the New Zealand IT industry,” claims open-source champion Don Christie on the Computerworld website.
Coincidentally, the US Supreme Court last week handed down a decision keenly awaited in the international software community (the case of Bilski et al v Kappos) that a process for hedging against risk in the energy market is not patentable. However, this decision is not likely to be as influential as software-patent opponents would like it to be. Legal experts quickly pointed out that the Bilski decision is relevant to the particular circumstances of the case; it does not rule out all patents for business processes or their software embodiment.
Both the NZ Computer Society and InternetNZ have come out in favour of the unqualified “no software patents” stance.
Computer Society CEO Paul Matthews argues that “if software is viewed as a manifestation of ‘real world’ concepts, then the real-world concept can be patented without the need for a separate software patent.” Here he echoes the select committee’s view that software patent exclusion would not compromise patents for software-controlled machinery.
“If on the other hand software is considered as a separate concept from the physical world it must be considered an algorithm, in which case it would not pass the test of patentability in most jurisdictions,” Matthews says, in a letter to Commerce Minister Simon Power.
In its own letter to Power, InternetNZ has called for the “changes” in the Patents Bill on software to be referred back to the select committee, with an opportunity for further input by “those who originally made submissions”. Ironically, this would cut out NZICT, who did not make a submission. To get a representative point of view the committee may be forced to open submissions more generally.
One accepted way for a further amendment or clarification to be put through is by a supplementary order paper (SOP), produced in Parliament during a second or third-reading debate and voted on only by the MPs present
“SOPs can allow for useful improvements to the meaning of legislation, but they can also go horribly wrong,” says InternetNZ policy director Jordan Carter.
“The debacle of the section 92A amendments to the Copyright Act in 2008, also involving last minute changes through SOP, show the importance of careful and public scrutiny of any last minute changes,” he adds.
“A short delay of a couple of weeks would give the Committee time to assess any changes the Government may propose, and to work out in the bright sunlight of transparent scrutiny whether they meet New Zealand’s needs,” Carter says.
Here's the thing - the submissions we made had one purpose: to convey to the Select Committee that we, as software developers (as opposed to patent lawyers), do not want software patents.
We explained how the threat of litigation and inevitable poor quality of software patents created an intractable mine field for honest developers which will inhibit software development, and therefore defeat the purpose of software patents - to provide an incentive for innovators.
I'm not sure what you're arguing about, Matt. To me, whatever you might think is actually totally irrelevant. If I and my software developer colleagues believe that software will discourage us from doing what we're good at - and examples of inhibition are rife both here and overseas - then... it will. Case closed.
Now, on the topic of doing what you're good at, I encourage you to find and exploit a legal loophole somewhere. Preferable unrelated to software :)
Posted by Dave Lane at 12:31:56 on July 12, 2010
"Despite this inexcusable lack of preparation"
It is certainly remiss of us not to pay the fees of AJ Park to represent us in our democratic fora. Apologies. It would be nice if you could let us know who you are representing right *now* given your organisation's stated neutrality on the issue.
That said, it seemed pretty clear to all, except the EPO, that when Article 52 of the European patent convention said computer programmes were to be excluded from patentability that is what was meant.
Similarly, and to be equally clear, when we argue now that computer programs, whether actually executing on your PC or sitting on a print out, should not be patentable...that is what we mean.
I think it is inexcusable that you and others contrive to twist and bastardise words in such a way as to produce the exact opposite of what was intended. But then again, that is probably one reason we want fewer lawyers in our industry, not more.
Posted by DonChristie at 11:33:30 on July 12, 2010
Shifting to the economic justification for patents (and in particular patents for software inventions) is to be welcomed. This is the real issue. I recommended InternetNZ focus on this issue way back at the time I gave them and their members assistance in relation to the infamous DE Technologies business method patent. Unfortunately they did not.
The patent system exists to correct a flaw in classic free market perfect competition economics. As soon as an innovator puts his inventive product/process on the market competitors are free to copy without the same investment - whether of time, intellect or money. This was seen as a disincentive to innovation or investment in it. The patent system grants a temporary monopoly to inventors - who can secure patents - to allow them time to recoup investment and make a profit.
If there is economic evidence that the software industry, as as opposed to other industries, suffers a net detriment rather than a net benefit due to patents then NZ's current law would require investigation. No such evidence was presented to the Select Committee and neither its justifications for its recommendation nor any of the advice given to it by officials addressed the fundamental economic issue.
No data was given as to the increased costs of working acrss the industry since the law changed in 1995. No one gave evidence of being sued for infringement of a software patent, whether the patent was valid or not.
Mention was made of threats made by DET, but nothing came of those. In all technologies some bad patents slip through and that was one of them. The answer is to conduct stricter examination at the patent office. This is exactly what is provided for in the new Bill.
My arguments here, to the Ministry and at the Select Committee are aligned with one client, F&P Appliances, and the other NZ companies facing the same issues concerning protection of embedded systems. They do not accept that if you and your colleagues "deem software patents to be a net deterrent to innovation then the government has a duty to remove their market distortions". Especially when a large offshore competitor having reverse engineered the software providing market winning features threatens to introduce product incorporating that technology into NZ.
For companies developing embedded systems the economics are pretty clear - as the Select Committee understood, but failed to act upon. In this area software (plus a processor and interface of course) is directly equivalent to hardware. It would be ludicrous if the patent system forced manufacturers to choose more expensive and less flexible pure electronics rather than software if they were to a have any chance of obtaining a patent. Always assuming they had something patentable in the first place, that is, something new and non-obvious of as required by the new Bill and for that matter the current Act.
Posted by Ken Moon at 15:38:56 on July 9, 2010
Posted by DonChristie at 23:18:58 on July 9, 2010
Posted by Dave Lane at 20:57:51 on July 10, 2010
Posted by Dave Lane at 20:58:54 on July 10, 2010
You might want to go back and re-read the evidence given to the select committee. There was economic evidence of net harm caused by patents shown, there were cases of being sued and threatened shown and I know your colleagues were there to hear and read that evidence.
I think you need to avoid re-writing history here because it is weakening your case.
Posted by DonChristie at 22:56:00 on July 9, 2010
> free market perfect competition economics.
There is no such flaw. All the patent system achieves is a distortion of free-market economics. A patent is a monopoly, and monopolies are inherently anti-competitive.
If you want to see some detailed economic research into this, a good place to start is Boldrin & Levine, "Against Intellectual Monopoly", which is available online here.
Posted by Lawrence D'Oliveiro at 16:21:48 on July 9, 2010
Evidence of litigation is absolutely unnecessary to determine net detriment. Now that the software industry is becoming increasingly well versed in the perils of patents, we recognise the massive liability we're incurring simply by writing software.
The mere *possibility* of a patent infringement lawsuit *regardless of the validity of the patent* is an inherent inhibitor to software developers to enter new markets and invest their time/energy in innovation.
Given the extraordinarily poor quality of many, if not most, software patent applications both in NZ and abroad - most subject to prior art and failing the "obviousness" test, and the shocking lack of rigour applied by patent assessors who grant patents, software patents become an unavoidable minefield which every software developer crosses every time s/he writes a line of code.
The *perceived risk* of being forced to fight a patent lawsuit - regardless of the validity of the patent in question or the alleged infringement - is every bit as inhibiting as actual lawsuits. Overseas, Microsoft among many other software patent holders (both large and small) engage in frivolous lawsuits.
As I'm sure you are aware, an entire new class of parasitic business has emerged, existing not to develop software but merely to act as "patent trolls", seeking out likely candidates for frivolous infringement lawsuits. Those suits are generally settled before a determination of patent validity is even reached because of the astronomical cost and time burden of full litigation. Software patent trolling is very profitable business... but it's utterly unethical, and certainly doesn't add to the GDP.
While such litigation might suit AJ Park's agenda quite nicely, I see it as a huge potential cost and a drain on the actual productivity of this country, and something which I am willing to work quite hard to avoid.
Posted by Dave Lane at 16:20:24 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 comprehensive survey of NZ business and its findings are conveniently ignored by the anti patents group who seem to think the Commerce Select Committee was the only Government consultation forum around patents and 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 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 11:39:21 on July 9, 2010