The software patent affair

Law firm Chapman Tripp has published an article criticising the Government’s decision to exclude software from patentability. While the article makes some valid points, it does not deal with some points fairly.

The article claims:

The [software patent] exclusion was the product of intense and successful lobbying by members of the “free and open source” software movement… In its April 2010 report to Parliament on the Patents Bill, the Commerce Select Committee acknowledged that the free software movement had convinced it that computer programs should be excluded from patentability.

I’m sure this assertion of mighty lobbying power (the ability to sway an all-party, unanimous recommendation no less) would be flattering to any professional lobbyist, let alone FOSS supporters – if only it were true (it is not evidenced in the Commerce Committee report). A range of entities made submissions against software patents, including the statutorily independent University of Otago, InternetNZ, a number of small businesses (and my independent self, I modestly add). There were also submissions the other way, though interestingly the most submissions in favour of retaining software patents were from patent attorney law firms. It is also notable that other organisations including NZICT, which is a strong supporter of software patents and engaged in heavy after-the-event lobbying, did not make any submissions on the issue.

The article adds the comment:

The Committee said that “software patents can stifle innovation and competition, and can be granted for trivial or existing techniques”. The Committee provided no analysis or data to support that proposition.

The fact that a Committee “provided no analysis or data” to support its recommendations is hardly noteworthy – that is not it’s job. Submitters provide analysis and data to the Committee, not the other way around. The material in support of the proposition is in the submissions.

The article sets up an unfair straw-man argument:

Free software proponents reckon that software should be free and, as a result, they generally oppose intellectual property rights. They say that IP rights lock away creativity and technology behind pay-walls which smother innovation. Most authors, inventors and entrepreneurs take the opposite view.

I don’t claim to know what “free software proponents'” views on all manner of IP rights are, but when it comes to software patents in New Zealand, the evidence strongly suggests that the “authors, inventors and entrepreneurs” of software (FOSS or not) are opposed to software patents (see my posts here and here). This includes major companies, including NZ’s biggest software exporter Orion Health (see Orion Health backs moves to block patents).

While the New Zealand Computer Society poll showing 81% member support for the exclusion is not scientific, it is at least indicative. In any case, opponents of the new law (mainly law firms) have consistently asserted a high level of opposition to the exclusion without any evidence to support that view.

The article leads to the warning:

If New Zealand enacted an outright ban on computer-implemented inventions we would be breaking international law. … Article 27(1) of TRIPs says that WTO members must make patents available for inventions “without discrimination as to… the field of technology…”.

The authors rightly point out that breaching TRIPs could result in legal action against the Government by another country. However, that conclusion is premised on the basis that software is an “invention”. A number of processes and outcomes are not recognised as inventions for the purpose of patent law in different countries, including mathematical algorithms and business methods. The question of whether software is (or should be) an invention was commented on by a Comptroller-General of the UK Patent Office:

Some have argued that the TRIPS agreement requires us to grant patents for software because it says “patents shall be available for any inventions … in all fields of technology, provided they are…..capable of industrial application”. However, it depends on how you interpret these words.

Is a piece of pure software an invention? European law says it isn’t.

The New Zealand Bill does not say that a computer program is an invention that is not patentable. It says, quite differently, that a computer program is “not a patentable invention”, along with human beings, surgical methods, etc.

Article 27 has reportedly rarely been tested (twice in 17 years), and never in relation to software. The risk of possibly receiving a complaint under a provision (untested) of a multilateral agreement is not new. The New Zealand Law Society notes this in its submission on the Patents Bill (which does not address software patents):

The proposal to exclude plant varieties under [the new Act] is because New Zealand has been in technical breach of the 1978 Union for the Protection of New Varieties of Plants (UPOV) treaty since it acceded to it in November 1981.

What’s 30 years of technical breach between friends? Therefore, in fairness I would add a “third way” of dealing with the software patent exclusion: leave it as it is, and see how it goes (which is, after all, what the local industry appears to want). As I wrote last year, “Pressure to conform with international norms (if one emerges) and trading partner requirements may force a change down the track, but the New Zealand decision was born of widely supported policy …”

If the ban on software patents as it currently stands does not make it into law (which is a possibility, despite clear statements from the Minister of Commerce that it will), it won’t be the end of the world. In fact, it will be the status quo. There are pro’s and con’s to software patents, and the authors are quite right that New Zealand will be going out on a limb by excluding them. The law can be changed again if need be. In the meantime, I refer again (unashamed self-cite) to my article covering the other, and much more popular, ways of protecting and commercialising software.

Software patents to remain excluded

The Government has cleared up the recent uncertainty about software patent reform by confirming that the proposed exclusion of software patents will proceed. A press release from Commerce Minister Simon Power said:

“My decision follows a meeting with the chair of the Commerce Committee where it was agreed that a further amendment to the bill is neither necessary nor desirable.”

During its consideration of the bill, the committee received many submissions opposing the granting of patents for computer programs on the grounds it would stifle innovation and restrict competition… The committee and the Minister accept this position.

Barring any last-minute flip-flop – which is most unlikely given the Minister’s unequivocal statement – s15 of the new Patents Act, once passed, will read:

15(3A) A computer program is not a patentable invention.

Lobbying

It is clear that the lobbying by pro-software patent industry group NZICT was unsuccessful, although Computerworld reports that its CEO apparently still holds out hope that “[IPONZ] will clarify the situation and bring this country’s law into line with the position in Europe and the UK, where software patents have been granted”. Hope does indeed spring eternal: the exclusion is clear and leaves no room for IPONZ to “clarify” it to permit software patents (embedded software is quite different- see below).

As I wrote earlier, it remains a mystery as to why NZICT, a professional and funded body, failed to make a single submission on the Patents Act reform process – they only had 8 years to do so – but instead engaged in private lobbying after the unanimous Select Committee decision had been made. It also did not (and still does not) have a policy paper on the subject, nor did it mention software patents once in its 17 November 2009 submission on “New Zealand’s research, science and technology priorities”. It is not as though the software patent issue had not been signalled – it was raised in the very first document in 2002. Despite this silence, it claims that software patents are actually critical to the IT industry it says it represents.

The New Zealand Computer Society, on the other hand, did put in a submission and has articulated a clear and balanced view representing the broader ICT community. It said today that “we believe this is great news for software innovation in New Zealand”.

Left vs right?

Is there a political angle to this? While some debate has presumed an open-vs-proprietary angle (a false premise) some I have chatted with have seen it as a left-vs-right issue, something Stephen Bell also alluded to (in a different context) in this interesting article.

Thankfully, it appears not. The revised Patents Bill was unanimously supported by the Commerce Committee, comprising members National, Labour, Act, the Greens, and Maori parties. It reported to Commerce Minister Simon Power (National) and Associate Minister Rodney Hide (Act). Unlike the previous Government’s Copyright Act reform, post-committee industry lobbying has not turned the Government.

What about business? NZICT apart, the exclusion of software patents has received the wide support of the New Zealand ICT industry, including (publicly) leading software exporters Orion Health and Jade, which as Paul Matthews notes represent around 50% of New Zealand’s software exports. The overwhelming majority of NZCS members support the change. Internationally, many venture capitalists and other non-bleeding-heart-liberal types have spoken out against software patents, on business grounds.

Some pro-software patent business owners might be miffed at a perceived lack of support from National or Act, perhaps assuming that software patents are a “right” and are valuable for their businesses. The reality is that only a handful of New Zealand companies have New Zealand software patents (I did see a figure quoted somewhere – will try to find it). Yes, they can be valuable if you have them but that is a separate issue (and remember, under the new Act no one loses existing patents). A capitalist, free market economy (and the less restrictive the better) abhors monopolies, and this decision benefits the majority of businesses in New Zealand. Strong IP protection is essential in modern society – including patents – (see my article “Protecting IP in a post-software patent environment“) but the extent of statutory protection when being reviewed will always come down to a perceived balance, not just for the minority holders of a patent (a private monopoly) but for the much larger majority artificially prevented from competing and innovating by that monopoly.

I have always taken pains to note, like NZCS, that there are pros and cons to software patents. And I am a fan of patents generally. Patents are good! But for software patents, the cons outweigh the pros. There are sound business reasons to exclude them. This specific part of the reform targets one specific area, has unanimous political party support (how rare is that?), and wide local business support. The last thing it can be seen as is an anti-business, left-wing policy (if it was, I’d have to oppose it!)

Embedded software

Inventions containing embedded software will remain, rightly, not excluded under the Patents Bill. Minister Power confirmed that IPONZ will develop guidelines for embedded software, which hopefully will set some clear parameters for applicants.

Software is essential to many inventions, and while that software itself will not be patentable, the invention it is a component of still may be. Some difficult conceptual issues can arise, but in most cases I don’t expect difficulties would arise. This “exception” (if it can be described as such) will not undermine the general exclusion for software patents.

Open source in government tenders

Computerworld reports:

A requirement that a component of a government IT tender be open-source has sparked debate on whether such a specification is appropriate.

The relevant part of the RFP (for the State Services Commission) puts the requirement as follows:

We are looking for an Open Source solution. By Open Source we mean:

  • Produce standards-compliant output;
  • Be documented and maintainable into the future by suitable developers;
  • Be vendor-independent, able to be migrated if needed;
  • Contain full source code. The right to review and modify this as needed shall be available to the SSC and its appointed contractors.

The controversy is whether this is a mandate of open source licensing (which it isn’t). The government should not mandate open source licensing or proprietary licensing on commercial-line tenders. More precisely, it should not rule solutions in or out based on whether they are offered (to others) under an open source licence. The best options should be on the table.

The four stated requirements are quite sensible. As the SSC spokesman said, there is nothing particularly unusual about them in government procurement. These requirements (or variations on them) are similarly common in private-sector procurement and development contracts. In the public sector in particular though, vendor independence and standards-compliance help avoid farcical situations like the renegotiation of the Ministry of Health’s bulk licensing deal.

Open standards and interoperability in public sector procurement is gaining traction around the world. Recently, the European Union called for “the introduction of open standards and interoperability in government procurement of IT”. And in the recent UK election, all three of the main parties included open source procurement in their manifestos.

So why the controversy in this case? Most likely it’s the perhaps inapt use of the term “open source” in the RFP (even though the intended meaning is clarified immediately afterwards). The term “open source” is a hot-button word that means many things to many people, but today it generally means having code licensed under a recognised open source licence, many of which are copyleft. Many vendors simply could not (or would never want to) licence their code under such a licence, and it would be uncommercial and somewhat capricious for a Government tender to rule out some (or even the majority of) candidates based on such criteria.

However, it is clear that the SSC did not use the term in that context, and does not intend to impose such a requirement. An appropriate source-available licence is as capable of meeting the requirements as an open source licence (see my post on source available vs open source). The requirement for disclosure of code to contractors and future modification can be simply dealt with on standard commercial IP licensing terms.

A level playing field for open and proprietary solutions is the essential starting point, with evaluation – which in most cases should include open standards and interoperability – proceeding from there.

UK election 2010 – the technology vote

Technology policy and law is featuring prominently in the UK election campaign currently underway, with issues such as cloud computing, open source procurement and data protection finding their way into manifestos:

“The Liberal Democrats’ election manifesto published today (14 April) called for improved government IT procurement, including the use of cloud computing and open-source software.”

“The Conservative party has reiterated its plans to freeze major new IT spending and make changes in government procurement in its election manifesto… The Tories also pledged to create a “level playing field” for open source IT in government procurement, and to break up large IT projects into smaller parts to enable SMEs access to contracts.”

Labour repeatedly highlighted the importance of IT in its election  manifesto, which was launched today, but made few new IT-related promises.
The Labour Party stands on strengthening the digital economy, using open source in government IT …

“Despite the name, the Pirate Party isn’t just about file sharing. Yes, it wants to ensure a right to file share, as well as format shift – such as moving songs from CDs to iPods, which is currently technically illegal. It also wants to cut copyright from 70 years to 10 and put labels on products to warn of the “defect” of DRM… On top of that, the party would ban spying on communications, end “compulsory ID cards” and toughen up data protection laws.”

More links on tech policies from: the SNP and Plaid Cymru, and the Greens.

Clearly, IT is figuring much more prominently in the upcoming UK election than in New Zealand’s last election in 2008. One reason is that the UK has suffered a number of major IT project blow-outs in recent years (such as the disastrous £12.7 billion NHS National Programme for IT) that have basically become minor election issues.

There are signs that technology is featuring more prominently in New Zealand’s political scene, though hopefully this will not be due to scandals over failed government IT projects.

However, the cynical last word must go to the Inquirer:

In short if you want to vote for someone on the basis of their enlightened IT policy you would be better off spoiling your ballot.

The Affero General Public Licence

The AGPL arose from a perceived loophole in the GPL and other licences regarding software used across a network. (I’ll refer to this as software as a service for the purposes of this article even though, like “cloud computing”, I find the name rather inapt sometimes).

The latest version of the AGPL, version 3, essentially replicates the GPL version 3, but with an extension specifically applying to SaaS – that is, programs providing “remote network interaction”. The Free Software Foundation, publisher of the GPL and AGPL licences, says examples of programs meeting this criteria are web and mail servers, interactive web-based applications and online games servers (here).

Under the GPL, when software is distributed, the source code must also be distributed, thus allowing modification or incorporation into other software. But in the case of SaaS, it is not the software itself which is being distributed, but rather some functionality of the software. Continue reading