Assessment of a pro-software patent submission

Evaluating submissions on software patents*

The Ministry of Economic Development recently made submissions on the software patents restrictions publicly available. The submissions to however provide a useful glimpse at the arguments used. This article examines one of those submissions.

Assessment of a pro-software patent submission

The Airways Corporation (Airways) is a state-owned enterprise which operates New Zealand’s air traffic control systems. It spends many millions of dollars and long time periods developing software. Its submission contains a few statements which I feel are worth examining. Their submission sheds light on a few aspects of the purported benefits of software patents.

Airways’ views on software patents generally

Paragraph 17 contains Airways’ two purported benefits to software patents. The first is that

[Software patents allow] New Zealand businesses to see a return … without fear of overseas or

local competitors in effect stealing their research and selling a competing product  [emphasis added]

Patent law does not restrict itself to cases of theft. A software patent would prevent every third party from independently developing and commercialising that software. Other intellectual property rights are much more suited to the case of theft. Trade secrets and copyright are much better placed to deal with this case.

The second purported benefit is that

[software patents allow] the New Zealand developer to get an early assessment of the patentability

prior to incurring significant overseas patent applications (sic) costs.

A cheaper alternative would be to seek advice from a registered patent attorney. They are perfectly capable to providing an early assessment of patentability. Moreover, New Zealand patent law is not directly comparable with overseas jurisdictions.

In order to realise these two purported benefits, require software patents are not required. In the first instance, other intellectual property rights are satisfactory. In the second, creating monopolies in New Zealand so that it is easier to determine patentability overseas is backward.

Airways’ views on the impact of patents on their business

A summary of Airways’ position is provided on paragraph 15:

Inadequate patent protection in New Zealand is a significant risk for our business because it
allows overseas competitors to locate their business operations here.

Airways has its origins as a state-run monopoly. This statement implies that despite its market dominance, that patents are the reason why others have not entered the market. The reality is that there are other factors involved, such as the large amounts of capital required to develop an air traffic control system in a tiny market.

Airways is telling the government that they should insist on monopolistic practices rather than innovative ones for keeping our airspace safe and efficiently run. If another provider can offer the service in a more efficient and equally safe manner to Airways Corporation, then we as a country should not be preventing that.

Reading deeper

Airways’ submission implies that their first use of software patent prosecution was in 2007. This means that Airways was operating profitably for many decades without software patents. In paragraph 12, it compares this with its competitors, one of which has over 1,500 software patents. An assertion is made that Airways needs to catch up in order to be competitive. However, disallowing software patentability in New Zealand would eliminate any impact that those software patents would have in the New Zealand market place. That is, it would level the playing field and free Airways from the threat of litigation in this juridiction.

Removing software patents thus saves hundreds of thousands of dollars. As well as prosecution costs, it saves enforcement costs. Enforcing intellectual property is extremely expensive. That money could be spent of developing software to gain a competitive edge.

Where does this lead us?

I strongly believe in an empirical basis on the law. However, I disagree with Microsoft New Zealand, about where the burden of proof lies. Microsoft asserts that opponents of software patents must prove harm. I disagree. I feel that supporters of the monopolies provided by software patents must demonstrate the value of that system on the whole economy. Most areas of human endeavour and business involve inventiveness and innovation. Applying patents to our endeavours is the exception, not the rule.

Any analysis should also recognise that there are many business models which produce software, but which do not involve selling of software. For example, hundreds of thousands of software developers worldwide use the JQuery JavaScript library, but do not sell it. A software patent that impacts JQuery would impact all of those downstream companies.

New Zealand software developers should compete on the basis of the value they bring to their customers. They should not compete on their ability or willingness to legislate. By preventing software patents, the Select Committee has insulated local companies from the threat of litigation. The new status quo levels the playing field. It allows companies to prosper that deliver the best service.


Airways submission

Microsoft NZ position (See comments from Waldo Kuipers, Microsoft New Zealand’s spokesperson in intellectual property)

* Note, this analysis was submitted to me by an NZOSS member.