Software patents and venture capital

An argument often made against banning software patents is that doing so might discourage venture capitalists from investing in the industry. However, actual comments by VCs, as well as evidence from the New Zealand IT industry supports banning software patents.

Now another prominent US venture capitalist, Fred Wilson, has spoken out against software patents in unequivocal terms:

I believe that software patents should not exist. They are a tax on innovation. And software is closer to media than it is to hardware. Patenting software is like patenting music.

This aligns with the Government’s stated position (adopting the unanimous Commerce Committee recommendations) that software patents “stifle innovation and restrict competition”.

It may take a while yet for the US to overhaul its patent system and the status of software patents in it is unknown, but it appears that the New Zealand reform (if adopted) will provide a far-sighted alignment with industry and venture capitalist views.