Law and technology

The Government has released a discussion document on the “biggest shake-up of fundamental securities law in a generation”. The main act governing securities, the Securities Act, was passed in 1978 and has been in dire need of a review for some time. One proposed change of interest to the IT industry (and others) is to relax the rules on offering shares to employees. Employee share plans are often a desirable strategy for many startups. As the document notes, employee share plans:

are … used as a partial substitute for cash remuneration (especially in young, rapidly growing companies that are “cash poor”), and to foster a sense of ownership among employees and participation in the company’s management and direction.

Unfortunately, New Zealand’s existing law makes them more complex to implement than they should be, in particular for small businesses (see my post Clearing the path for employee ownership). The review will hopefully change that:

The Ministry proposes to [allow] offerings of equity and equity options to employees of all companies (listed and unlisted), up to 15% of assets or 15% of the outstanding value of securities of the same class. An additional restriction that we are considering is to require that employee share schemes are offered as part of an employment contract, and would form a single, discrete offering not integrated with any other offers. This would focus the scheme on the employment relationship and its role in remuneration rather than allowing offers to all employees for fundraising purposes.

This would be a big improvement on the current regime. In my view, the restrictions on employee share schemes should be minimal. The idea of linking share schemes to employment contracts, while potentially slightly more onerous for employers, is a sensible way of providing protection for employees. Generally, people working for a company will have a better impression of its prospects and whether or not it is “dodgy” than the public. If they are offered the opportunity, and make an informed decision to invest, the law should avoid putting roadblocks in their way.

Peer-to-peer lending

The review will also look at peer-to-peer lending. The discussion document outlines the problem:

The Ministry is told that [peer-to-peer lending] services are not practical in New Zealand because the borrower is an “issuer” for the purposes of the Securities Act and Financial Reporting Act. The Securities Act states that for a debt security the issuer is “the person on whose behalf any money paid in consideration of the allotment of the security is received”. The borrower, usually a private individual receiving a relatively small sum of money, would have to register a prospectus, produce an investment statement, and file annual audited financial reports.

Peer-to-peer lending, driven by the internet, is experiencing rapid growth in other countries. It would be very unfortunate if New Zealand does not use the rare opportunity of this review to remove undesirable barriers to this new form of finance. This is especially important given the long-term tightening of credit availability since the global financial crisis, and the possibility that peer-to-peer lending and other forms of micro-finance could provide a critical source of capital for small Kiwi businesses.

The discussion document suggests that the service provider, rather than the individual lenders, could be regulated. That would provide a large piece of the solution, but still has the potential to impose an unrealistic or uneconomic burden on the service provider. To make peer-to-peer lending really feasible, the new securities law must not lump such services (and the people who will use them) in the same class as retail finance operations. Imagine, for example, if every casual Trade Me seller, or even Trade Me itself, was required to be licensed under the Secondhand Dealers and Pawnbrokers Act. A clear exemption should be made for “casual lenders” to participate in peer-to-peer finance, and service providers should be recognised as such – intermediaries, not active participants in any financing.

The Ministry of Consumer Affairs has released a discussion document on the proposed reform of New Zealand’s consumer law. One of the areas to be addressed is online auctions. Issues include whether online auctions should be regulated in some form, and whether the Consumer Guarantees Act should apply to goods and services bought via online auctions.

Regulation of online auction

A preliminary (and, lets be honest, entirely academic…) issue raised in the document is whether online auctions are presently subject to the Auctioneers Act. The document says no, on the basis that the Act only applies to auctions “by outcry”, which is defined as 6 people being physically present:

The reference to “outcry” in the beginning of the definition [of "auction"] applies to the various different auction methods referred to in the definition.

Based on that conclusion the documents goes on to say “the Auctioneers Act definition of auction only applies to auctions where it is possible for the bidders to be physically present with the auctioneer”. I take a different view from the good people at the Ministry. As I wrote previously, in my view “outcry” is not a necessary part of the definition:

there does not appear to be any reason … why the words “by outcry” must apply to the entire definition [of auction] while the other sub-clauses of the definition are read as alternates. Furthermore, to do so would limit the final key words “or where there is a competition for the purchase of any property in any way commonly known and understood to be by way of auction.” These final words are clearly a catch-all intended to prevent anything “commonly understood to be an auction” from being inadvertently excluded by the definition.

So my view is that online auctions are currently covered by the Auctioneers Act (which, as I said, is entirely academic). However, I also noted the craziness that online auctions should be “subjected to rules formulated decades ago and premised on a traditional, physical auction process”.

The fact is that specific regulation of online auctions is not currently enforced. Nor is it not necessary. Practical enforcement would be difficult. The UK, New South Wales and Victoria (among others), get by quite well without special legislation covering online auction providers. Hopefully, our new law will clearly exempt online auctions and other forms of e-commerce from unnecessary red tape.

Consumer Guarantees Act

The reform will also address the perennial issue of whether the Consumer Guarantees Act (or whatever its replacement will be) should apply to online auctions. There is no doubt that, generally, the same rules should apply for online “buy now” sales as for bricks-and-mortar sales. But what about online auctions?

The document says that whether online auctions are presently covered by the Consumer Guarantees Act is a “grey area”. But in my view there has never been much doubt: online auctions, if they are in fact conducted as an “auction” with bids etc, are not covered by the Consumer Guarantees Act (Trade Me probably wisely leaves it open for now). However the document gives a strong indication (for a discussion paper) of the preferred view:

There would appear to be justification, accordingly, to clarify that Trade Me style auctions should not be exempted from the Consumer Guarantees Act.

That would be a very sensible proposal, and my bet is this will be an outcome of the review. There will likely be some push-back from Trade Me-exclusive dealers, but most medium/large retailers (who also operate bricks-and-mortar shops) will support it. They already have full consumer obligations for all goods and services sold in their stores and online (non-auction style). So does every corner dairy and most small mum-and-dad shops. There are too many stories of shonky internet-only dealers who are only too happy that they are exempt from the consumer protection obligations that all these other retailers have. Trade Me does a great job in helping out where it can, but the answer is simple: close this unintended loophole. And it doesn’t create more red tape – it simply levels the playing field between dealers and simplifies the consumer protection regime.

Note that the proposal is not to extend the CGA to private online sellers and auctions. As per the current law, it will only apply to sellers “in trade” – i.e. shops, retailers and dealers.

A New South Wales appeals court has ruled that downloaded software is not “goods” under that state’s Sale of Goods Act (not dissimilar to New Zealand’s act of the same name). Case link: Gammasonics v Comrad Medical Sysytems [2010] NSWSC 267. Interestingly, the ruling means that software bought over the counter would be included as “goods” (and be covered by statutory guarantees), but the same software downloaded over the internet would not be.

A while back I discussed the consumer liability of software developers in this country. In essence, New Zealand’s Consumer Guarantees Act has, since 2003, included “software” in the definition of goods, which means that (consumer) software receives the same consumer protections as other consumer goods. One thing I didn’t mention was that software is also “goods” under the Sale of Goods Act 1908. In fact, this change was implemented at the same time that software was expressly included in the Consumer Guarantees Act.

The New South Wales version of that act does not mention software, and the New South Wales Supreme Court ruled that downloaded software – not having any tangible element – could not be “goods” falling within the act. However, software provided on physical media would constitute “goods”, because the necessary tangibility is present.

This does result in an inconsistent and illogical state of affairs, but one which will soon be partially corrected. The Australian consumer protection laws (similar to New Zealand’s Consumer Guarantees Act) is soon to be overhauled, and as part of the update, software will be specifically included as “goods”.

One point of interest is that the New Zealand amendments in 2003 which expressly added “software” to the definition of goods, only added software “to avoid doubt“.  (The phrases “to avoid doubt” and “for the avoidance of doubt” are common in legal documents, although mildly controversial. I have encountered some lawyers who refuse to use it, which is a bit extreme – it’s fine if used sparingly). By adding software to the definition of goods only to “avoid doubt” (i.e. clarify the law – a common use of that phrase in legislation), parliament was saying that it considered software to be already included “goods”.

The judge in this case did acknowledge:

it is productive of injustice if consumers purchasing software in the form of CDs or DVDs, either sold in retail shops or via the internet, are protected by the statutory warranties in the Sale of Goods Act, whereas consumers who download the same software directly from the internet or from a supplier, (as was the case here), would not.

A simple law change in Australia will remedy this situation.

The Select Committee examining the proposed Patents Bill has recommended that software patents be excluded from patentabilty (full report, 1.6MB PDF):

We recommend amending clause 15 to include computer programs among inventions that may not be patented. We received many submissions concerning the patentability of computer programs. Under the Patents Act 1953 computer programs can be patented in New Zealand provided they produce a commercially useful effect. Open source, or free, software has grown in popularity since the 1980s. Protecting software by patenting it is inconsistent with the open source model, and its proponents oppose it. A number of submitters argued that there is no “inventive step” in software development, as “new” software invariably builds on existing software. They felt that computer software should be excluded from patent protection as software patents can stifle innovation and competition, and can be granted for trivial or existing techniques. In general we accept this position.

It is great to see the committee has accepted the core arguments put forward by a range of submitters (including myself) and rejected the opposing views put forward against those arguments. The mention of open source is significant and quite likely the first time it has directly influenced policy.

The actual proposed amendment implementing the ban is straightforward:

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

The committee has not attempted to define “computer program”, which is sensible and consistent with the use of that term in the Copyright Act 1994. The amendment is not wide enough that it will necessarily prevent someone attempting to dress up what would otherwise be a software patent application as a business method patent. But it will be highly effective in most cases, and should prevent the worst examples of software patents granted (or threatened) overseas from being replicated in New Zealand (e.g. 1-click).

The House will need to vote on the proposed changes to the Bill.

The committee also discussed embedded software:

While the bill would provide adequate incentives for innovation, however, we are aware of New Zealand companies who have invested in a significant number of software-related inventions, involving embedded software.* We sought advice on the approach
taken in other jurisdictions such as the United Kingdom and the United States, and whether legislation that would enable “embedded software” to be patentable might be practicable. After careful consideration we concluded that developing a clear and definitive distinction between embedded and other types of software is not a simple matter; and that, for the sake of clarity, a simple approach would be best. 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.

Software in any form would likely be caught by the proposed section 15(3A), but the final sentence of the above quote reflects the fact that it will not be possible, or practical, in many cases to separate the embedded software from an invention. It is important to note that the proposed Bill does not expressly endorse embedded software patents, but as with business method patents each application will need to be assessed on its merits.

The Law Commission has released its latest report on privacy law, Invasion of Privacy: Penalties and Remedies. This report (part 3 of 4) specifically deals with matters such as surveillance, interception of communications, and criminal and civil law.

A key recommendation is that “the tort of invasion of privacy recognised in Hosking v Runting should be left to develop at common law”. It is worth remembering that the Hosking case was only decided in 2004, and then only by a 3-2 judge majority – a very clear reminder that privacy law in this country is still in its most formative stages.

The recommendation to leave privacy law “to develop at common law” is the equivalent of kicking for touch – and in the circumstances, the only realistic option for the Commission. It is clear that much of the “real” privacy issues that will affect New Zealanders on an everyday basis will not be decided by New Zealand’s courts or the government. Rather, where Europe and the US go, New Zealand will have to follow. The increasingly connected nature of the world makes it futile to attempt to chart a different course. And in any case, there are benefits in following the lead of others, with far greater resources and innovation, in this area.

Another recent report, this time from the European Union, highlights just how far advanced Europe is, compared to New Zealand at least, in defining and developing privacy rights. With the terribly exciting name “Study on Online Copyright Enforcement and Data Protection in Selected Member States” (PDF), the report examined 6 EU states (not including the UK) and tells us:

• “IP addresses are generally considered to be personal data” and therefore subject to privacy laws.
• “IP addresses are generally considered to be traffic data, which means that they may only be processed in a limited number of circumstances and for specific purposes (such as billing, invoicing, etc.), and that consent is generally required to process them for other purposes (such as online copyright enforcement).”
• “ISPs cannot store IP addresses for the specific purpose of online copyright enforcement (except in France, where retention for the purpose of making information available to the judicial authorities or to the Hadopi Commission [not dissimilar to NZ's s92A] is allowed).”
• “The processing of IP addresses by ISPs to pass on infringement warning notices is generally prohibited or subject to strict restrictions (e.g., in France if the Hadopi Act is complied with).”
• “The general monitoring of P2P networks by right holders resulting in the creation of a database of potential copyright infringers is usually prohibited.”
• “The disclosure of P2P users’ identities by ISPs to right holders for civil enforcement is generally restricted by data protection law. “

This is a level of detail and analysis not yet seen in New Zealand. Of course, privacy law around the world is a rapidly developing area of law, policy and social issues (e.g. see my post Changing expectations of privacy). The EU report itself acknowledges that “many of the legal concepts and questions examined have not been the subject of authoritative decisions by courts or data protection authorities” (such as NZ’s Privacy Commissioner). But the decisions, policies, research and jurisprudence being developed in the EU will ultimately determine (or at least, strongly influence) the direction New Zealand takes.

Discussions at Foo Camp are under the Chatham House Rule (not to mention FriendDA), so generally what happens at Foo Camp stays at Foo Camp. However, it’s okay to share your own thoughts on a session you ran. So here are my points from a session I co-presented at this year’s Kiwi Foo Camp, “Clearing the path for Employee Ownership”:

• New Zealand companies want to be able to offer employee share ownership. Employee share schemes are an established part of industries (including the IT sector) in other countries. They are recognised as having a number of benefits, such as encouraging employee retention with minimal (if any) cash-flow cost to the firm.
• However, in New Zealand they are not common. New Zealand law does not encourage employee share ownership. In fact, New Zealand law puts a number of obstacles in the way of a small business trying to set up a scheme.
• The law that makes it difficult (or tries to make it difficult) for dodgy finance companies to rip off “mum & dad” investors, the Securities Act 1978, is unfortunately the same law that makes it difficult for small companies to set up employee share schemes.
• The Securities Act 1978 is outdated, complicated, and has been heavily amended over the years into its current messy state. Also, much of the detail is not found in the Act itself, but in myriad regulations with obscure names. This makes it hard for the average business person to do their own research and understand the various rules.
• There is no “safe harbour” provision, with bright-line tests and plain-English requirements, to enable companies to efficiently implement employee share schemes. In fact the opposite is the case.
• There are a number of tax disincentives and complications, for businesses and employee shareholders. Other countries have introduced tax advantages for employee share schemes.
• It would be a simple change for the Government to fix these problems and create an environment where employee share schemes are encouraged. There is a review underway as part of the Capital Markets Taskforce which may result in a new Securities Act being developed, but the review had not looked at incentivising employee share schemes. Furthermore, while the report discusses introducing clearer, broader exemptions in certain areas, given the great recession and the finance company collapses, it is possible there will be a tightening, rather than a loosening, of the overall regulation currently in the Act. What effect this will have on employee share schemes waits to be seen.
• This again reflects the problem of having employee share schemes governed by the same protective, prescriptive rules as actual offers of securities to the public, which are in reality very different.
• A simple solution would be to clearly separate the rules for offers of securities to the public from the rules for employee share schemes, with the latter being significantly streamlined.This could possibly be done in a separate act from any new Securities Act.

The Law Commission has published its report on name suppression. On the issue of name suppression on the internet it makes one recommendation:

Where an Internet service provider or content host becomes aware that they are carrying or hosting information that they know is in breach of a suppression order, it should be an offence for them to fail to remove the information or to fail to block access to it as soon as reasonably practicable. [7.16]

With regards to hosts, this is largely the status quo. It is less clear what an ISP that is “carrying” suppressed information is supposed to do. It would be impractical and ineffective, for example, to require ISPs to block access to sites it didn’t host. Of course, once a suppressed name has been communicated beyond our shores, any restrictions imposed by New Zealand law ceases to have any effect. If a major sports star had name suppression in New Zealand, and it was reported by Australian newspapers, would every ISP in New Zealand be expected to block access to those Australian websites?

The report’s findings on internet issues are brief, and don’t quite grasp the essential difficulties that the internet presents to the name suppression regime.  It states:

Where information as to the identity of someone appearing before a court is already in the public domain, it will not generally be appropriate to grant name suppression. The law will not undertake an exercise in futility, which would bring its own authority and processes into disrepute. [3.65]

Yet in many recent cases involving name suppression, that is precisely what has occurred. Twitter, Facebook and other local and international web sites are routinely used to blithely report (or more often, speculate on) the identity of the individual. An invariable side effect is the gross defamation of innocent persons unlucky enough to fit some “non-identifying” criteria not covered by the suppression order. There is every reason to think this phenomenon will become more and more common. In fact, the application of a suppression order, in many cases, simply has the effect of causing more speculation and breaches of the order – a manifestation of the Streisand effect.

The report noted that name suppression is generally more readily available in New Zealand than in Australia or the United Kingdom. One interesting statistic which the report did not appear to have considered, however, is how effective name suppression orders (in high profile cases) have been. Anecdotal evidence as well as personal experience suggests they are increasingly ineffective.

If the law is not to permit exercises in futility, this issue may need to be revisited again before long.

From October, the UK will be restricting access to the residential addresses of company directors on new registrations (and optionally for existing registrations).

At present – as in NZ – directors must disclose their residential addresses, although – unlike in NZ – a director may apply to have that information restricted on the grounds of possible attack. Soon, residential addresses will become “protected information” by default – only disclosable to credit reference agencies and certified authorities. There will also be an option to hide the residential address from even those authorities.

The change is apparently in response to increased privacy concerns and threats of violence against directors.

In New Zealand, the law requires that company directors disclose their residential address (e.g. section 215 of the Companies Act 1993 among other sections). There is no provision for withholding an address. Interestingly, our Companies Act also requires that founding shareholders provide a residential address (section 12(2)(c)), but not subsequent shareholders (section 87 only refers to “the latest known address” which, in the case of a person, could be a non-residential postal or even electronic address. Many companies I have dealt with and managed use a non-residential person-shareholder address).

It is probable that New Zealand will eventually go the way of the UK, although there has not been any call for it yet. Australia has a provision for suppressing directors’ residential addresses which would also be a possible model to adopt.

Is this a good idea? It depends on the purpose of showing a director’s residential address. Why do we really need to know that information? If the answer is to serve documents on a director, that can be easily achieved by allowing directors to be served:

1. At an alternative “address for service” specified by the director (the new UK model); or
2. At the company’s “address for service” which all companies must have anyway.

Provided we have one of the above options, the residential address isn’t really needed and should be able to be suppressed. This would be consistent with the UK and Australia, and also the approach under the Electoral Act 1993. The electoral roll is open for public inspection (though not electronically) and can be used to find a residential address, but with the ability for individuals to request suppression under section 115.

The Privacy Commissioner has guidelines suggesting a model similar to Australia’s, allowing suppression on request, although for some reason its report does not mention the Companies Act at all.

In the meantime, all company records including director addresses are open to full public inspection. Is there some other reason why it should stay? Openness and transparency are always good things, but if it is not necessary to disclose this personal information, should we?

The proposed reformulation of s 92A of the Copyright Act, which gives the Copyright Tribunal the responsibility for deciding if users should have their internet access terminated, is a much improved proposal over the original. The key problem with the original, poorly drafted and poorly thought-out proposal was that it put the responsibility of whether or not to terminate, on the ISP. This would have been unfair to every ISP caught in the middle of a dispute between their customer and any number of third parties (who, in the case of international copyright holders, would most likely be legally represented).

The new proposal removes that responsibility from ISPs. It gives the responsibility to the Copyright Tribunal, which has (or will have) the necessary expertise and resources to deal with complaints. As a state agency, it is bound by the Bill of Rights Act 1990, which guarantees natural justice (s 27(1)). Its decisions are subject to judicial review (s 27(2)). The proposal to allow the Tribunal impose fines (quite different from “damages” that a Court could award) means that a person who is fined (even for a modest amount) could not be sued in Court for the same infringement (in addition the proposal is that the Tribunal have exclusive jurisdiction of s 92A matters) . Tribunal members are, to some extent at least, accountable to the democratically elected Government. It has statutory reporting obligations.

This not only solves the primary complaint about the original proposal, it should (subject to some changes – see below) also provide strong procedural safeguards for the web-surfing public.

So why is there still fuss about the new proposal?

A central complaint of the original proposal – the unfair burden it put on ISPs, and the real potential for “guilt by accusation” that followed – has now been resolved. The focus of critics has now shifted to the purportedly “disproportionate punishment” of terminating an internet account and the assault on “human rights” that entails.

The Creative Freedom Foundation’s position remains that termination is “disproportionate punishment“. Similarly, Keith Davidson of InternetNZ is reported as saying of the new proposal: “the termination of a household or business internet account is simply out of proportion to the alleged offence”.

How can termination be “out of proportion” to an offence that hasn’t happened yet? How can termination be “out of proportion” given the 3 stage, 3 month process, the first step of which requires notification and a right of reply and the right to mediation? How can termination be “out of proportion” when an ISP would be within its contractual rights to terminate a user’s account without notice for any number of reasons, which may or may not be less serious than copyright infringement?

The “human rights” line of argument also misses the point. Internet access through a particular ISP is not a human right. Every ISP in New Zealand provides their service subject to terms and conditions, including prohibiting copyright infringement. If you breach those terms and conditions (or your ISP believes you have), they may terminate your account. ISPs can impose whatever (lawful) terms and conditions they like. Most ISPs even reserve the right to change those terms and conditions at any time without your knowledge.

The revised proposal does not stop a terminated user from immediately signing up with another ISP. In fact it does not even stop a terminated user from opening a new account with the same ISP. It does not ban a person from the internet. The human rights argument falls flat.

Don’t get me wrong – there is a global war being fought by the major IP rights holders over the future of intellectual property and human rights are certainly one of the many factors at stake. The issue of software patents in this country (which should be banned) is one small battlefront in that war.

The difficulty, as I see it, is that some critics of s 92A (and critics of copyright/IP in general) only see the issue in terms of the big, wealthy, multinational companies suing mothers of young children for millions of dollars for sharing US$24 worth of music. Through my work as a lawyer, I have recently witnessed a situation where a semi-retired New Zealand man had spent many years painstakingly creating certain written works. For the past couple of years he had managed to make a reasonable amount of money selling these works to hobbyists in his particular field – not enough to live on, but enough to pay for his hobby and help him in his pending retirement. All that changed when one particular individual – lets call him Mr X – publicly (and illegally) republished all of those works online for free. Mr X admitted doing so, but refused to take the works down, claiming that in his view authors didn’t deserve copyright in these sorts of works, and they should be freely shared with everyone. Obviously, this was devastating to the New Zealand man. While in this particular situation Mr X’s website was hosted overseas, a s 92A-style notice-and-takedown procedure would have provided a reasonably efficient first-step remedy against this blatant theft and destruction of one man’s years of hard work and creative effort by someone ideologically opposed to the idea of copyright.

There is no doubt that heavy-handed, excessive enforcement has backfired and been a PR disaster for major rights holders. It is precisely that “overkill” that the ISP account termination approach seeks to alleviate, and that the revised s 92A proposal provides a reasonable balance against. Whether this is the “thin end of the wedge” remains to be seen – no doubt for some it is the first step in a larger strategy – but misrepresenting the current situation as a human rights issue is (at best) jumping at shadows.

The new proposal is obviously not yet complete. Whether or not the final proposal does turn out to be “fair, efficient and workable” as Policy Proposal Document promises remains to be seen. Some specific areas that need to be addressed are:

1. Protection against the making of frivolous, vexatious or bad-faith (e.g. abuse of process) complaints (this sort of protection is a good way of dealing with the false complaint issue).
2. Onus and standards of proof (the Policy Proposal Document talks about the balance of probability – which is usual for civil actions – but more detail on the types of permissible evidence will be important).
3. Clarification over who a “subscriber” is in a shared-access environment.
4. Requiring the Tribunal to take into account the rights of other users of the particular internet account in question.
5. Clarification over the status of non-ISP organisations caught by the Copyright Act’s very wide definition of “ISP” under the new proposal.
6. Clarification of jurisdiction (territorial limits, maximum fines, matters that may be taken into account, etc).

Submissions to the Select Committee on the Patents Bill closed on 2 July 2009. My submission on software patents is here:

• Select Committee Submission (PDF)
  

This submission is deliberately “narrow”. The current hearing is the 3rd stage of a review that’s been going on for 9 years, and the Patents Bill, introduced by the former Labour-led government has already had its 1st reading in the House by the current National-led government. It appears unlikely that the Committee will consider major changes to the Bill at this stage. There had been concerns expressed earlier in the process about leaving controversial issues such as software patents to the final stage of the review (which is when a Select Committee review occurs). However, that is the current situation.

Therefore, the Committee should be given very tight, focused, narrow reasons to change the Bill to exclude software patents (as opposed to broad and wide-ranging reasons). Much of the debate focuses on democracy/human rights, free expression, economic/anti-competitive issues, “unfair” tactics by multinational corporations, trade issues, etc. In my view, the committee will not want to get anywhere near those sorts of issues at this late stage. I have no doubt that attempting to tie all of those concerns in with software patents will make the whole issue “too hot to handle” and the committee will simply kick for touch and maintain the status quo.

At this stage the Committee will most likely:

1. Want to do as little work as possible to finish the review; and
2. Avoid any potential political risks for a Bill with bipartisan support (i.e. not rock the boat).

I have deliberately focused on two specific points: the purpose of the Patents Bill, and the apparent legislative incompatibility of the language in the Bill. These are issues that Select Committees are comfortable looking at. If it can be shown that there is a problem/inconsistency with the actual Bill itself (e.g. purpose is inconsistent with operation), they are much more likely to make a change to the Bill than on grounds that requires the Committee to take what they may see a bold step.

I did not mention TRIPS, partly because of time constraints, but it is a valid issue and I have seen a couple of good submissions on that point.

It is also important to suggest an amendment that is very specific and “safe” for the Committee (or more probably the Parliament Counsel Office) to introduce without introducing “regression errors” into the Bill at this late stage. My proposal is to add the following clause:

15 (6) An invention is not patentable to the extent it is implemented in software.

It will be interesting to follow progress.