In Opposition most days are a battle. Every now and then there’s a victory which makes it all worthwhile. It might be a constituent’s battle against inequality and injustice in our system. Or it might be a moment when there is a shift in industry direction which you just know will have a positive, even profound impact.
Last Thursday such a moment occurred. It was a David and Goliath moment for New Zealand and it’s worth celebrating.
In the hub-bub of the week’s emotional tributes to (our) Pakekura Horomia, the blinding spotlight on (their) Aaron Gilmore, David Shearer’s framing of the Budget as being one “for the boardroom, not the smoko room” and the introduction under urgency of two draconian and frightening pieces of spy legislation which will reverberate on our justice system and our telco industry, there was a relatively under-reported but likely momentous outcome to a three year battle to protect New Zealand’s burgeoning software industry. An outcome which will protect an important export industry for New Zealand’s economic future.
This is no small victory. It is, in effect, a signal to the world that New Zealand is a good place to grow a software business. And in time it may stimulate our tertiary education and training sector to wake up and realise what potential we have for significant growth in the weightless economy and in weightless exports.
But what a journey it has been. One which has pitted the might of the multinational software companies led by Microsoft and IBM and the bloated patent attorney sector against New Zealand’s innovators who united (90% +) to oppose what they saw as one of the biggest threats to their future.
The National Government, blind to the local economic potential, and despite a unanimous select committee recommendation, sided with the multinationals and the out-dated advice from MFAT.
Thankfully they were over-ruled. Thanks must go firstly to the plucky ICT sector, led by Paul Matthews at the NZ Institute of IT Professionals and the software innovators who formed an industry group called NZ Rise to push the case for software innovation in New Zealand. Internet NZ, and the NZ Open Source Society too.
Thanks should also go to Peter Dunne, who, under our MMP system essentially had the casting vote which forced the government into revising its position.
And to the Greens, who consistently backed the local industry and Labour position, NZ First, the Māori Party and Hone Harawera and Brendon Horan. This was a moment when every vote counted.
Dunne’s vote forced Craig Foss into the embarrassing position of having to re-write and re submit an amendment unravelling the position he had in-advisedly and belatedly pushed due to pressure from the multinationals.
His back down last Thursday now allows the Bill to pass with likely support from most parties and giving our local Kiwi innovators the opportunity to innovate, build new software without the threat of patent suits from big companies which could stifle them or threaten them and pay them off.
If New Zealand is to build an economic future based on our thinking power, then our creativity must be allowed to flourish.
I knew that. The industry knew that. Labour backed me for three years on this issue. Finally it has paid off.
There is a real story to tell about this Bill. One that has seen very big foreign companies place sustained pressure on New Zealand to influence its domestic laws. And lose. This is good news.
Three years ago, the Commerce Select Committee undertook a much needed review of New Zealand’s patent laws which hadn’t been looked at since 1953. A substantial review which considered and recommended modernisation to an important plank of our intellectual property regime ranging from inventions to medicines, traditional knowledge and indigenous plants and animals to software programs.
The Bill sought to modernise and simplify the procedures for obtaining a patent and that our patent regime would not inhibit innovation or discourage technology growth and exports.
The Commerce Select Committee, strongly led by former Commerce Minister Lianne Dalziel (with my keen input) considered these issues carefully and heard numerous submissions. We sent officials back several times to reconsider particular issues and provide international comparisons.
This is what we concluded:
Under the Patents Act 1953 computer programs can be patented in New Zealand provided they produce a commercially useful effect.3 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.4 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.
We recommend that the Intellectual Property Office of New Zealand develop guidelines for inventions containing embedded software.
We knew that this recommendation was ground-breaking, but the select committee felt assured that we had looked carefully at the issues and reached the right conclusions.
There are varying views on what happened next. No doubt some will disagree but here’s my view, most of which is backed by evidence.
When the Select Committee reported back to the House in 2010, the big software multinationals (via the patent attorney companies which submitted on the Bill) either under-estimated the grasp that the committee would have of these issues, or were caught napping.
There was an immediate and sustained round of lobbying of government Ministers. As I understand it, the Ministry of Foreign Affairs and Trade became involved.
The Commerce Minister at the time was Simon Power. When the legislation sat on the table and wasn’t moved to the next reading for months (and then more than a year) Labour began to ask questions in select committee hearings and even in the House about the reason for the delay. Power publicly confirmed on two occasions that the select committee’s position would stand. This gave hope to the local industry that the legislation proceeding as was intended but still it sat in parliament. But I wasn’t convinced and repeatedly warned that the industry should remain vigilant.
Simon Power announced his resignation in March 2011 and left parliament that October. The Bill went into abeyance. The new Minister Craig Foss had no grasp on the underlying issues and was ripe for the capture of the foreign software lobby and the influence of MFAT.
Sure enough, in August last year, as the Bill finally returned to the House, Foss introduced a last minute amendment which contradicted the will of the select committee and allowed software patents under the guise of this phrase:
“… 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“
The two words “as such” tacked on at the end are precisely the same as those that are found in Article 52 of the European Patent Convention that also excludes software patents, BUT which has allowed lawyers to obtain thousands of software patents in the EU on the grounds that they weren’t software patents “as such“. In other words, legal speak for allowing something to occur which doesn’t appear to be allowed.
Craig Foss had given in to patent lawyers and multinational software players and sought to impose a software patents system on our IT sector. He over-rode the advice of the Commerce Select Committee that patenting software would smother innovation.
It caused an uproar in our innovative IT industry, that knew it would be stifled by constant threats of law suits from multinationals. My personal view is that he didn’t understand what he’d done. Fortunately, we have a local industry with legal minds and guts which recognised the critical importance that this seemingly small law change could make to our local industry.
Interestingly, I spent a month in the US in October last year where the debate about excluding software from being patented is growing. People should be aware that a huge legal industry has grown around patent software wars and that banning software patents would significantly affect the litigious community. I’d rather back growth in weightless exports and jobs for our kids vs an industry based on litigation any day!
Why should lawyers profit from running cases which ultimately stifle new innovators inventing the next software programme?
The clamour in New Zealand opposing the Craig Foss amendment grew late last year. I put up a counter amendment which was backed by the industry A petition by the local Kiwi software industry gathered more than 1200 signatures from software developers in just a few weeks.
Again the legislation stalled. Some media began to take an interest the wider backdrop of the influence of foreign companies on New Zealand’s domestic law and economic interests began to gain some traction.
It has taken more than 8 months, but finally a compromise has been reached. I understand that more than one Government Minister was required to sign off on SOP 237. Importantly, it is backed by the Kiwi software industry and to my mind that is what counts.
It’s extraordinary that it’s taken so long and is a strong indication that the National Government has not understood the importance of:
1. The growing importance of software to development of the NZ economy
2. How intellectual property laws can be used as a tool to stifle innovation (and shouldn’t be)
For those who watch intellectual property issues and their impact on our economy, pay attention. The law excluding software from patentability can apply to other sectors such as pharmaceuticals and other types of IP such as copyright.
Perhaps the penny may drop as we move along the path towards an outcome on the Trade Pacific Partnership Agreement (TPPA) and the absolute importance of the intellectual property regime being negotiated in New Zealand’s interests.
Our software industry now has a future. Let’s keep our eye on the ball.