Law and technology

IT industry supports ban on software patents

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”.

The New Zealand Computer Society has written to the Minister of Commerce, Simon Power, in support of the planned removal of software from patentability. From the letter:

We are of the view that there are significant advantages and disadvantages to removing patentability of software, and there are a number of significant considerations and issues that need to be addressed. However on balance, the Commerce Select Committee’s recommendation is one we support.

The letter goes on to give good reasons for the position. It concludes:

NZCS represents a broad church of ICT professionals and no doubt some of our members have different views on software patents (as with all things). However … the evidence certainly appears clear that software patents are simply too potentially harmful to our sector, and in fact innovation in New Zealand, to support. … People should have the option of commercial exploitation of their creations, however we believe this protection is inherent and appropriate in Copyright.

The word “potentially” is important here. While it is easy to point to the odd success story that might be linked to a software patent, it is much harder to justify the potential harm. The NZCS can be commended for taking a balanced position on this subject. As it takes pains to point out, there certainly are some benefits in software patents, and few people would argue otherwise. However, there are greater disadvantages.

NZCS has also conducted a survey of its members, showing “around 97% support for NZCS taking a stand, and approximately 80% in favour of us supporting the Commerce Select Committee’s recommendation that software patents be removed.”

Meanwhile, another industry group NZICT has issued a press release expressing concern about the proposal. Unfortunately, the press release does not set out any evidence in support of its position. It also makes the extraordinary claim that “the software industry has not been consulted sufficiently on this change”, despite an extensive consultation process running for over eight years, including the first round of industry submissions on software patents reported in November 2002.

The Government’s decision to ban software patents has been harshly criticised as likely to damage investment and “suck the lifeblood” out of the New Zealand software development industry (Computerworld print edition, 12 April 2010). What evidence is there to support these contentions? Certainly none have been put forward. Here are comments from a trio of industry-leading organisations who know a thing or two about the industry:

• 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.

Government confirms ban on software patents

Commerce Minister Simon Power has confirmed that the Government will adopt the recommendation to ban software patents in New Zealand. The speed of this announcement is somewhat surprising, as lobbying against the ban had been signalled.

The Economist on shorter copyright terms

The Economist says it is “time to tip the balance back” on copyright terms:

Largely thanks to the entertainment industry’s lawyers and lobbyists, copyright’s scope and duration have vastly increased. In America, copyright holders get 95 years’ protection as a result of an extension granted in 1998, derided by critics as the “Mickey Mouse Protection Act”. They are now calling for even greater protection, and there have been efforts to introduce similar terms in Europe. Such arguments should be resisted.

In New Zealand, the copyright term is generally the life of the author plus 50 years – meaning that the period often cannot even be determined while the author is still alive.

Website operators: edit comments at your own risk

The Register reports on a recent case highlighting the defamation risk of editing website comments. A key issue in New Zealand is whether the website operator “assumes responsibility” for another person’s potentially defamatory comment. As I say in my article published here:

If your website publishes third-party content (e.g. forums, search results of other sites, user ratings, etc), ensure that you are not seen as “assuming responsibility” for that content. In practice, this can include not exercising editorial control over articles and comments. This will not always be possible or appropriate on some websites.

Proposal to ban software patents irks patent attorneys…

Two patent-specialist law firms have criticised the Commerce Committee’s recommendation to ban software patents in New Zealand (read here and here). Both express surprise that the Committee appears to have accepted submissions by open source proponents, as if that alone is reason not adopt the report. The articles do not accurately represent this arguments, in my view, and the New Zealand Open Source Society has now provided a response.

While another says “stop wasting money on patents”

US intellectual property lawyer Erik Heels writes:

In most cases, filing a patent application is a waste of time and energy. Especially for startups. Your money and time would be better spent hiring programmers, marketers, and a sales force.

This is good advice for New Zealand businesses, especially tech start-ups. As Erik says, it can make sense in some cases, but at least consider the definite immediate opportunity costs versus the possible future benefits (and hidden costs to attain those benefits) of seeking a patent.

Historical legislation online

The Parliamentary Counsel Office has begun digitising historical legislation dating back to 1841, to be provided free online. Historical legislation doesn’t only have historical interest value, it can also have practical uses – such as providing a comparison to assist interpretation of current laws. While the first step involves simply scanning the old legislation (including the “shattering statutes“), longer term the plan is to OCR the documents into the excellent New Zealand Legislation website.

More on NZ’s proposed software patent ban

Computerworld and Slashdot cover the Select Committee proposal for a ban on software patents in New Zealand.

Meanwhile, the United States Supreme Court is expected to rule soon on the ‘Bilski‘ case on whether software and business methods are patentable in the US.

Novell defeats SCO

A jury has ruled that Novell owns copyright in the Unix operating system, defeating SCO in a long running battle over the ownership of Unix.

Website “authorised” copyright infringment

The English High Court has ruled that Newzbin, a UK-based usenet indexing site, is liable for “authorising” copyright infringement.  The judge said (emphasis added):

I have found that [Newzbin] well knows that it is making available to its premium members infringing copies of films… It operates a site which is designed and intended to make infringing copies of films readily available to its premium members. The site is structured in such a way as to promote such infringement by guiding the premium members to infringing copies of their choice and then providing them with the means to download those infringing copies.

Central to the ruling is the judge’s view that there was active assistance, and even encouragement, of copyright infringement. These findings contrast with the recent iiNet ruling in Australia. Both cases highlight the importance of the ISP /website being very careful not to be seen as authorising or promoting infringing behaviour, and having appropriate policies in place.

Newzbin is considering an appeal.

Computerised medial record privacy concerns

Leading New Zealand software developer Orion Health is pushing for more progress on computerised medical records, as computerisation of medial data is gathering pace around the world, particularly in the US where President Obama campaigned on it. At the same time, serious privacy concerns are being raised. Medical / health information is the key area where privacy law will probably most keep up with developments in technology, and is already reasonably advanced in New Zealand.

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.

IP dispute leads to Court order to seize source code

Computerworld reports on an Auckland High Court injunction requiring Codeshed, a software developer, to hand over the source code of its software to a customer. The injunction is an interim measure in a wider dispute between Codeshed and its customer, centering on the ownership of the intellectual property in the code. The customer obtained the injunction on a without-notice basis (previously known as an ex parte application) which meant the customer has to give an “undertaking as to damages” – i.e. once the final dispute is heard, if it turns out the customer is wrong, the customer must compensate Codeshed for having the injunction served on it. An ex parte injunction requiring the handing over of valuable IP is a relatively extreme remedy (it can include lawyers turning up on your doorstep with a court order in hand!) but the judge decided it was justified in this case (pending final resolution of the dispute).

According to the article, the matter is now being arbitrated, which usually means it will not be publicly commented on (by the parties) any further.

No iMonopoly for Apple

In Australia, Apple has been told that it does not have a monopoly on the letter “i” for technology products. The Trade Marks ruling said:

“[Apple] has not therefore demonstrated to my satisfaction that the person of ordinary intelligence and memory would be caused to wonder, or be left in doubt, about whether the Goods come from [Apple] merely because the Trade Mark terminates in the letter “i”, however that letter may be presented. Nor do I think the fact that the Trade Mark is made up of the letters of [Apple's] IPOD trade mark in reverse order would cause a significant or substantial number of relevant consumers to wonder whether the Goods were those of [Apple]“.

Amazon’s 1-click patent confirmed – with a Kiwi connection

Amazon’s infamous 1-click patent has been confirmed by the US Patent & Trademarks Office. To refresh, this patent is “A method and system for placing an order to purchase an item via the Internet” and, on the face of it, covers much of e-commerce. It has been rejected in the EU, and was not applied for in New Zealand. It has been widely criticised (rightly so) since first being granted. In 2005 New Zealand actor Peter Calveley filed a formal challenge to the patent with the USPTO. After some wrangling in the re-examination, Amazon was forced to make some very minor amendments to the patent in 2007. The amended patent has now been re-examined and affirmed by the USPTO.

While this highlights the need for reform of the patent system, a major development may occur next month when the US Supreme Court is expected to rule on the Bilksi case, involving the patentability of business methods.

An Australian version of the Peer-to-Patent initiative was recently launched in conjunction with IP Australia (official site). From the official announcement:

Peer-to-Patent Australia opens part of the patent examination process and invites the public to review patent applications volunteered for the trial… The process is designed to tap into the expertise of the public to help assess whether a particular application is eligible for a patent.

The system is currently being run as a 12 month pilot programme, limited to business method patent applications.

The original Peer-to-Patent initiative completed a 2 year US pilot in June 2009. While the US Patent Office has yet to report on its results, the first year report from the New York Law School was positive (some criticisms are listed at Wikipedia). The US pilot was not limited to business method patents, although interestingly the patent application which received the most user interaction was such a patent – “Method, apparatus and computer program product for providing status of a process” (hmm, maybe they could also give it a unique name like ps or top?).

It is a good idea for the Australian pilot to be limited to business method patents, which covers most manifestations of software patents. It appears that IP Australia is giving good support to it. Let’s hope that IPONZ watches this closely – IPONZ (like the MED) has good IT systems and has been quite progressive with IT. If the pilot works, it will be a major improvement to a currently in-need-of-improvement system.

Of course, as with any community-driven system, its quality will only be as good as the community supports it. For open source, could it be a case of “many eyes make bad software patent applications unsuccessful”?

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.