NZ to decide on software patents

Date: 2012-10-03
Author: Karen Bentley

Four years after the New Zealand Patents Bill was first introduced, it looks like first light of a new Patents Act will soon be shining on to the land of the long white cloud. The Bill recently received its second reading on 12 September 2012 in the New Zealand Parliament. Among the debated issues is the controversial exclusion of computer software from patentability.


The Commerce Select Committee released a report in 2010 recommending, amongst other things, that computer programs be universally banned from patent eligibility[1]. This recommendation, along with the draft guidelines[2] and their explanatory memorandum issued by IPONZ on patentability of inventions involving computer programs, created a first wave of concerns from industry groups[3], such as Fisher and Paykel, who argued that the ban would unintentionally exclude embedded software or systems from being patentable.

Recent amendments

Amendments to the Bill have recently been proposed by the Minister of Commerce in a Supplementary Order Paper[4] to remove the not-so-well received proposal on the universal patentability exclusion of computer programs. Instead, a new clause specifically dealing with computer programs is proposed to be added to the new legislation as follows:

10A     Computer programs
(1) A computer program is not an invention for the purposes of this Act.

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

Subsection (2) as proposed effectively places a partial exclusion on patentability of computer programs and seeks to address the above concern of the industry. The “as such” proviso is borrowed from Europe, where computer-implemented inventions may be protected by patents if they exhibit an inventive “technical” contribution or effect[5] (as opposed to, for example, a method of doing business). This is especially true if the invention involves providing a technical solution to a technical problem.

Of course there is no guarantee that the European jurisprudence is to be followed in New Zealand. It may well be the case that the New Zealand courts will develop their own interpretation of the “as such” proviso quite different from that of Europe.

Opposing voices

Unsurprisingly, this latest proposed amendment has created opposing voices from industry groups including Orion Healthcare and Jade Corporation (which are said to collectively produce over 50% of software exported from New Zealand). In less than two weeks after the above amendments were proposed, more than 1000 individuals and representatives signed a joint petition[6] to the Minister of Commerce to push for alternative wording to the amended clause. Interestingly, the exact same wording was subsequently proposed by an opposition party in a Supplementary Order Paper[7], which was introduced one day after the petition is dated. Both the joint petition and the opposition party advocate an alternative to subsection (2) to read “[s]ubsection (1) does not prevent an invention that makes use of an embedded computer program from being patentable” (with our emphasis). 

It is not entirely clear what would be required of a computer program to be “embedded” and therefore be patent eligible under this alternative wording. Would a computer program need to be physically located within a piece of equipment over which it has control in order to be considered “embedded”? Could a computer program that is run remotely, say over a wireless link, yet physically separately from that equipment be considered “embedded”? Indeed, the joint petition itself acknowledges the term is not defined and is for the New Zealand courts to decide. A member of the opposition party conveniently commented that this alternative wording “leaves the boundaries of embedded software to be determined by the Government on a case by case basis, as is appropriate”.

It is one thing to determine whether a particular embedded system or a particular piece of embedded software would fall under the “as such” proviso. It is quite another to hard-code technical terms such as “embedded computer program” in legislation without clearly defining what they would or would not encapsulate. Based on our hypothetical questions above and the admissions from various parties, it does not seem the alternative wording provides any more certainty than does the seemingly more flexible “as such” proviso.

What happens next

The Bill is now being prepared for its third reading before it is passed as law. At this stage, there appears almost even support for the two alternatives of the wording in Clause 10A, with the numbers slightly favouring the “as such” proviso. Regardless of which side of the politics prevails, uncertainty will remain for some time for patent applicants and holders as to the patent eligibility of computer-implemented inventions.

(For interested readers, a recent discussion contrasting between the US and Australian positions is set out in US and Australian Computer Implemented Inventions)

[1] Patents Bill, as reported from the Commerce Committee
[2] Examination guidelines: Patentability of inventions involving computer programs
[3] Submissions on the draft guidelines for the examination of patent applications involving computer programs
[4] Supplementary Order Paper No 120
[5] T 0154/04, EPO Board of Appeal
[6] Letter to Minister of Commerce from Institute of IT Professionals NZ et al.
[7] Supplementary Order Paper No 123