However, it seems the Government is sticking by the unanimous Commerce Committee recommendation to exclude computer programs from patentability, as confirmed to me last week by Commerce Minister Simon Power:

“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.

Internet use has become so woven into everyday life that some technology experts say online access should be legally protected, even to the point of considering it a human right. “It’s a social inclusion question,” said Cyberspace Law and Policy Centre executive director David Vaile

Much of the debate premises that internet access is already a human right, or soon will be. That view has popular support – a recent survey showed “almost four in five people around the world believe that access to the internet is a fundamental right” (FWIW, New Zealand’s previous Culture Minister also thought so). That result should not be surprising though: the right to do non-proscribed things can usually be considered a human right in some form.

[ Update: current ICT minister Steven Joyce says "declaring that the internet is a human right is not a priority for the government". ]

The real question is whether internet access – which in the absence of any restriction already is a right – should be elevated to a “legally protected human right”, and what would that mean in practice? Internet access is already legally enshrined in some countries. But should it be? Do we need it to be? We all happily rely on access to water, electricity, sanitation, and food without the need to see these rights written into law. So why internet access?

The fact is, New Zealand already has strong free speech and anti-discrimination laws providing a very high level of protection:

• Under section 44 of the Human Rights Act, it is illegal for any person or company to refuse to provide service to any person on a wide range of discriminatory grounds, including sex, race, political & religious opinions, etc.
• Freedom of expression, including the rights to “seek, receive and impart information and opinions of any kind”, is enshrined in the Bill of Rights Act 1990.

In any case, there is no shortage of ISPs happy to provide access to anyone who’s willing to pay. Why would any ISP not want to provide service to a paying customer, unless they themselves were being harmed in some way?

If the right to internet access were “enshrined”, what would the practical result be?

• If a customer didn’t pay their bill, would the ISP be prevented from stopping their service?
• Would ISPs be unable to enforce terms of use?
• Would prisoners be able to surf the net all day?
• Would parents and schools be unable to prevent children from accessing certain sites?

If the aim is to prevent Government censorship or disconnection of user accounts (such as s92A of the Copyright Act), new legislation is not needed to achieve that. Instead, the repeal of the offending legislation is the answer. New Zealand does not have a constitution capable of striking down laws, so any specific legislation expressly providing the right could be limited by another law. Similarly, all rights protected by the Bill of Rights Act are subject to “reasonable limits“. Whether this is an acceptable state of affairs is another question – especially in our unicameral MMP system with a history (in the prior government at least) of ramming through constitutional changes, without a mandate, on a simple majority.

As regards the disconnection sanction of s92A, this is not about being “banned from the internet” any more than it is about banning free speech. Free speech itself has some limitations (even in the US), and certainly consequences in many cases (e.g. defamation). Does internet access need to be elevated above free speech? Besides, internet disconnection as a preferred strategy of some rights-holder groups is not likely to last long. It is more smoke than fire, and is easily avoidable. When the internet becomes the only means of distributing music, movies and other IP, disconnecting – rather than “reforming” – potential customers will make little sense.

In the end, the internet is simply a (very important) technological invention. It should no more need enshrinement in law as a “fundamental right” than the right to use a telephone. Besides breaking the desirable “technology neutrality” of law, this would also seem to be a case of  “rights inflation“:

Deciding which norms should be counted as human rights is a matter of some difficulty. And there is continuing pressure to expand lists of human rights to include new areas. Many political movements would like to see their main concerns categorized as matters of human rights, since this would publicize, promote, and legitimate their concerns at the international level. A possible result of this is “human rights inflation,” the devaluation of human rights caused by producing too much bad human rights currency (Cranston 1973, Orend 2002, Wellman 1999, Griffin 2001b).

Effort is better spent on protecting existing rights, and limiting the power of government. Upper house anyone?

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.

Last year, the Privacy Commissioner released  a guidance note on PSDs. Now, the Privacy Commissioner has provided an update:

Government agencies have generally improved security around ‘portable storage devices’ (PSDs) such as USB memory sticks – but there are still some key agencies that have less than desirable controls

This is based on a survey released this week (PDF, 4 MB) showing that two-thirds of government agencies have “adequate controls” compared to half last year. That there has been improvement is good, but it does raise the question: what are the other third doing? Controls on PSDs are common sense for government agencies, and not massively difficult to implement. There can be no excuse for not having 100% of agencies with measures in place next year.

The report did not cover data loss disclosure – which the Privacy Commissioner had raised last year – but it did note:

In almost all occasions, agencies became aware of the loss or theft of a PSD through staff notification.

However, at yesterday’s Privacy Forum in Wellington Sir Geoffrey Palmer confirmed mandatory data loss disclosure was on the Law Commission’s reform radar. From his speech:

Another subject on which we are contemplating some changes is data breach notification. We have examined closely the merits of introducing a mandatory data breach notification requirement into the Privacy Act. Currently holders of personal information, both public and private sector agencies, are under no legal obligation to notify individuals or the Privacy Commissioner when an individual’s personal information is compromised – if, for example, it is lost or obtained by computer hackers. … This means that agencies are not required to notify individuals whose personal information has been compromised, no matter how sensitive the information and no matter how serious the risk of harm that could be suffered as a result.

This is clearly an unsatisfactory state of affairs. Data disclosure rules are a common feature in the European Union, and the United States (which is sometimes wrongly criticised as having lax rules). The rules apply not only to the public sector, but private companies too. The Law Commission is taking submissions on this subject as part of its ongoing review process.

• Lib Dem manifesto focuses on ‘better’ IT procurement

“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.”

• Tory manifesto: We will freeze new government IT spend

“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 manifesto’s IT pledges: A triumph of hope over experience?

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 …

• Election 2010: Pirate Party on tech (which deserves a mention as a tech-specific party!)

“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.

InternetNZ, the New Zealand Computer Society and the New Zealand Open Source Society issued press releases yesterday in support of the ban on software patents:

• InternetNZ agrees – no to software patents
• ICT Profession Supports Removal of Software Patents
• NZ Open Source Society Congratulates Government on Patents Bill Stance

The Labour Party also issued a press release supporting the decision and Minister Simon Power’s earlier endorsement:

• Software exclusion will encourage Kiwi innovators
• Power to delete software patents

Meanwhile law firm Chapman Tripp issued a press release criticising the decision:

• Excluding Software Patents Will Stifle Innovation

Privacy Commissioner slams Google’s “experiment”

New Zealand’s Privacy Commissioner, Marie Shroff, has criticised Google Buzz as being a “commercial experimentation on New Zealanders and other internet users, involving the release of significant personal information”:

[Google's actions] violated the fundamental, globally accepted principle that people should be able to control the use of their personal information.

The comments follow Ms Shroff’s signing of a joint letter to Google, stating:

It is unacceptable to roll out a product that unilaterally renders personal information public, with the intention of repairing problems later as they arise. Privacy cannot be sidelined in the rush to introduce new technologies to online audiences around the world.

These comments, including constructive requests that organisaions collects and process “only the minimum amount of personal information necessary” and create “privacy-protective default settings”, are admirable. Ms Shroff does a great job in standing up for New Zealanders’ privacy rights.

The difficulty, as I have written previously, is that people happily trade privacy for functionality. Millions of people willingly pour personal information into different websites every day. To what extent can Google be criticised for finding new, creative uses of information it has been willingly given, in accordance with terms agreed to by users? And to what extent is it necessary or right for governments to intervene?

Open standards in Government procurement

Earlier this year I commented that “the Government must properly mandate open standards and multi-vendor capable solutions for future state-sector IT procurement”.

European Union ministers have now called for “the introduction of open standards and interoperability in government procurement of IT”. This comes as part of an ongoing development of procurement frameworks.

The report states that some groups claim the proposal has been “so watered down due to intense lobbying by the proprietary software makers, to such an extent that the document will have no impact on the market”. Other industry groups have praised the proposals as “well balanced”.

ACTA negotiators have issued a statement that the agreement will not require participant countries to implement 3-strike internet disconnection laws. As it happens, the Government’s revised s92A bill (currently before parliament) still provides for disconnection in limited circumstances, but only as a Court-sanctioned remedy.

ICT finance regulation

Computerworld has an article on the upcoming financial services reform and its possible impact on ICT finance providers:

It is not clear which financial providers in the IT industry will be affected. The MED says that, in general, if an organisation is providing credit under a credit contract, then they are offering a financial service and the registration requirement will apply, meaning they have to join a dispute resolution service.

Consumer finance customers (i.e. those obtaining finance for personal or domestic purposes) already receive a good measure of protection under the Credit Contracts and Consumer Finance Act 2003. The new reforms are still being refined; the extent to which they will affect finance operators remains to be seen.

Government indemnities

The Government recently amended clause 4 of the Public Finance (Departmental Guarantees and Indemnities) Regulations 2007 to permit Government departments to agree to:

any guarantee or indemnity contained in the standard terms and conditions for the purchase, licence, or use by the Crown of—

(i) an Internet site;
(ii) software;
(iii) information technology tools, products, or services.

Many websites include indemnities in their standard terms (for example, by even reading the New Zealand Herald you agree to an indemnity). This change makes it more practicable for the Government to use common online and software applications, without having to obtain internal sign-offs.

The “Immortal Soul” clause

On the subject of website terms, a website recently added an “immortal soul” clause to its terms and conditions:

By placing an order via this Web site on the first day of the fourth month of the year 2010 Anno Domini, you agree to grant Us a non transferable option to claim, for now and for ever more, your immortal soul.

While this was an April Fool’s Day prank, it’s purpose was to highlight the fact that very few people actually read website terms. In any case, something tells me this would not be an enforceable website term!

• The CEO of the New Zealand Computer Society, Paul Matthews, says “on balance the evidence is clear that software patents are simply too harmful to our sector, and in fact all of New Zealand, to support. We were very happy to see Software Patents removed from the Bill and will be making it very clear to Government that we would be very disappointed to see them make an unwelcome return.”
• IP lawyer and former president of the New Zealand Software Association, Wayne Hudson, says that most of NZSA’s members can’t afford to “play the patent game”, and most members are “probably apathetic” to the issue.
• The CEO of Orion Health, New Zealand’s leading software exporter, Ian McCrae, supports the ban on software patents, saying the negatives outweigh the positives (Computerworld print edition, 12 April 2010).

Add to that the New Zealand Open Source Society (which has been the leading voice against software patents), other leading firms such as Catalyst IT, and numerous others, and it is clear that a very large part of the industry is either happy or apathetic about the ban on software patents.

The cross-party Commerce Committee (chaired by former lawyer, and opposition MP, Lianne Dalziel, and deputy-chaired by National MP Peseta Sam Lotu-Iiga, also a lawyer) unanimously recommended the ban, accepting the submissions in favour. The Commerce Minister, Simon Power (another former lawyer) says “the Government believes the committee has dealt with the issue in a sensible manner and has found a reasonable solution”.

So who is actually unhappy about this decision?

• Microsoft New Zealand, which says it is “concerned”, although it acknowledges it doesn’t actually do software development in this country;
• Microsoft partner Intergen (a leading NZ firm), which says it damages the industry [see comments section], although it was (by its own account) not interested in putting in a submission to the Select Committee (Computerworld print edition, 12 April 2010), and according to IPONZ does not hold any patents in its name or its parent company’s name.
• NZICT (whose Tier 1 members include major patent-holders Microsoft, IBM, and HP), though it appears not to have a policy position on this apparently critical issue, did not make a submission to the Select Committee, and did not mention software patents in its 17 November 2009 submission on “New Zealand’s research, science and technology priorities”.
• Patent attorneys AJ Park and Baldwins, both of which have filed software patents on behalf of international patent holders.

So, in the main, it appears that those unhappy about the decision are limited to the local subsidiaries of major international patent holders, their association (NZICT), and their local business partners. Their opposition is understandable. There are certainly some advantages to software patents to existing holders – but there are more disadvantages and other reasons not to allow them.

Banning software patents will align New Zealand with the European Union and remove a significant threat to the local industry. The general unavailability of software patents in the EU does not seem to have held back the IT sector in that region (or indeed the development of the internet itself). No compelling arguments have been put forward to indicate that New Zealand will somehow have a different experience after the new law takes effect. Instead, as the Select Committee unanimously found and the Government has agreed, the removal of software from patentability is a positive move, and one that has support across New Zealand’s IT industry.

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.