NZ, Don't Make Our Mistake on Software Patents As Such
February 6, 2013 3:03 PM
by Glyn Moody
A couple of months ago, an MEP asked the European Commission an interesting question:
The intellectual property rights associated with ICT standards can apply to patents covering computer programmes granted by the patent offices of some non‐European countries, for instance the USA. The application of these standards on the basis of the FRAND (fair, reasonable and non‐discriminatory) obligation may require the purchase of licences for patents not recognised in EU Member States.
Is it not the case that these standards will act as a sort of first step towards the EU's formal recognition of software patents?
This is something that has worried me too during the increasingly heated discussion around open standards, and whether they should require FRAND or RF licensing. That's because FRAND implicitly accepts the validity of patents as applied to software - otherwise there would be no need to get a "fair, reasonable and non-discriminatory" licence.
Here's what the European Commission replied:
European Standards do not act as a first step towards the recognition of software patents.
In the EU, programs for computers are not regarded as inventions and are thus generally not patentable.
European ICT standards are used worldwide. This allows industry, including EU firms to achieve economies of scale and enter international markets more easily.
Conversely, patents are valid only in a defined territory. In the US, contrary to the EU, software is patentable. If a standard includes a technology covered by a software patent in the US, the implementer of such a standard will need to license it to sell products in the US. If the implementer wishes to market in Europe, no such licence will be required.
Industry selects the technologies included in standards. It may lead to inclusion of technologies protected by software patents in the US, but not in Europe.
These patents, like any other relevant patents, need to be declared before the conclusion of the standard. Industry is then able to take informed decisions to include or not technologies protected by software patents in the US.
The Commission ensures that standardisation participants can take decisions with the best possible knowledge of the technology availability included in the standards. The Commission announced in the latest industrial policy communication, the intention to check if the current licensing conditions may require policy adjustments.
In the bilateral discussions with the US, the Commission has reiterated Europe's position that software is not patentable. The debate is on-going in the US on the pros and cons of software patents. Ultimately, it will be up to the US legislator to see if they believe changes to their legislation are necessary.
I think that's a reasonable answer: computer technology standards are indeed worldwide, so it's not just the patentability in the EU that needs to be considered. However, in another respect, the answer is deeply unsatisfactory, because of the following sentence:
In the EU, programs for computers are not regarded as inventions and are thus generally not patentable.
Although it is perfectly true that in Europe programs are not regarded as patentable, patents are still being granted - in large numbers - by the European Patent Office, and by some national patent offices, because of the way the European Patent Convention lays down patentability. Here's the relevant section:
European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application.
The following in particular shall not be regarded as inventions within the meaning of paragraph 1:
discoveries, scientific theories and mathematical methods;
schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers;
presentations of information.
Paragraph2 shall exclude the patentability of the subject-matter or activities referred to therein only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such.
This looks pretty clear-cut - "programs for computers" are clearly named as falling into the "shall not be regarded as inventions" - but then everything goes pear-shaped with the last two words: "as such".
These must, by now, be some of the most famous - and pernicious - two words in modern law. There is no agreement at all on what those two words means, and that, of course, has allowed the clever, highly-paid lawyers to twist them to mean whatever they want. And so it is that we now have thousands of patents on computer programs that are not patents on computer programs, but only patents on their non-"as suchness". In 2010, the European Patent Office issued a press release on the subject.
You might think this is now all water under the bridge, since the words are there, and have been used and abused to allow software to be patented even though the European Patent Convention specifically says it shouldn't be ("as such"...). But the damage caused by those two little words threatens to spread to New Zealand, thanks to some heavy lobbying by US computer companies who are keen to abuse it there just as they have abused it in the EU. Here's the background.
When the New Zealand government decided to update its laws on patents, its asked a select committee to produce a report on the proposals. The committee had the following interesting things to say about software patents:
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 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.
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.
Although arguably embedded software shouldn't be patentable either - it's still just software - this was at least a reasonable and reasoned position. But then something happened: a meeting took place between New Zealand's Ministry of Economic Development (MED), Microsoft and IBM. A report from a participant summed up the outcome of the meeting as follows:
The end result of our meeting was extremely encouraging. While section 15 (3A) ["A computer program is not a patentable invention."] will not be removed, (our ideal outcome), Hon Simon Power [NZ minister] has asked MED to work with the Parliamentary Counsel's Office to redraft the section along the lines of the European Patent Convention.
Commerce Minister Craig Foss changed the wording of a clause within the bill which could have huge ramifications for New Zealand's fledgling software industry.
His amendment has changed some crucial wording in the bill that some say has the government moving away from excluding software from being patented (as per select committee recommendations), to parts of the bill being sufficiently vague that software may indeed become patentable. Clause 10a of the supplementary order paper 120 was amended to read: "..prevents anything from being an invention for the purposes of this Act only to the extent that a patent or an application relates to a computer program as such"
It might only be two words, but from a legal standpoint the addition of "as such" makes all the difference and could see kiwi companies being locked into protracted legal battles against multinationals whose lawyers are likely to emerge as the only real victors, whilst New Zealand could end up on the losing side.
It's pretty extraordinary that a New Zealand minister should ignore the recommendations of not only the government's own select committee, but of the indigenous computer industry, which is overwhelming against allowing software patents, and meekly acquiesce to pressure from Microsoft and IBM to execute an embarrassing policy U-turn. After all, the vast majority of those software patents will be granted to companies outside New Zealand, who will use them to make home-grown software companies pay licensing fees, or to stop them from competing at all. It's hard to see how the New Zealand public benefits in either case.
However, all is not lost. The patents bill has not yet been passed, and so there's still a chance to get those dangerous two words removed. One person fighting to do that is the New Zealand MP Clare Curran, who is Labour spokesperson for Communications and Information Technology. Here's what she said in the New Zealand Herald article quoted above:
"Those two words are fatal for Kiwi innovation. It's not too late for [the Commerce Minister] Mr Foss to change his mind and listen to our Kiwi software innovators. If not then his legacy will be one of massive failure for our local software industry.... What Mr Foss is pushing through is complete madness, is anti-kiwi innovation and shows a lack of digital ambition."
Let's hope Mr Foss listens, and New Zealand programmers can continue to focus on creating great software, rather than needing to look anxiously over their shoulders all the time for fear that they might accidentally infringe on a software patent that has been granted to some deep-pocketed software company or - even worse - a predatory patent troll.