Commerce Select Committee Hearings - Patent Bill

Updated 10/8/2009 - Mike O'Connor has sent me his speaking notes. Now added to the files attached.

I thought I would write up some notes about my presentation to the Commerce Select Committee yesterday. These notes include my "talking points sheet" that I largely stuck to before the Q&A. Composition of the committee can be found here:

The running order for the morning was this:

1. Doors close, MED officials brief MPs
2. Public Session begins
3. AJ Parks present for what seems like a long time (more below).
4. NZOSS presents (me).
5. NZ Racing Board (the TAB to you and me)
6. Catalyst IT (Mike O'Connor and Daniel Spector)
7. Doors close and MED brief MPs again.

A feature of this process is the amount of briefing MED get to do behind closed doors. Given their abject failure to consider the needs of NZ IT needs in many fields of endeavour this gives me the jitters. Anyhoo...

The notes I detail below do not necessarily reflect the position of those speaking. If I get something wrong I am happy for that to be pointed out in the comments and will make corrections here.

They make a number of points but also spoke in favour of software patents. They claim that these are part of the landscape and the "status quo" should be maintained. The also state that the fact that software patents create a minefield that is simply a feature of doing business. They believe that "allowing" software not to be patentable would "elevate" it to a status that it didn't deserve. This claim was backed by the thought that software development is essentially a technical process and should therefore be treated as other technical endeavours and be patentable.

Under questioning it became apparent that 90% of patents registered in New Zealand come from overseas organisations. When asked about whether it was a good thing that patents stifled innovation AJParks replied that that was an unfortunate side effect but the whole system was about trade offs.

My speaking notes are included in full at the end of this article. Our written presentation was put together by Peter Harrison and it seems to have been read and appreciated. There was some mention of the fact that the Chair (Lianne Dalziel) had never heard the term "patent troll" before. I also introduced a paper written by two US academics which shows that patents have a significant negative impact on innovation, productivity and societal utility. I was asked by the chair and Clare Curren to explain more about FOSS and the process of development (not sure I answered all that well TBH). I gave examples of Moodle, Firefox, Google and the Canadian patent troll, DET.

The Racing Board were asking that the Patent Bill gave greater opportunity to review and oppose patents before they were granted. They gave some fine examples about how their (massive) business has been threatened by overseas patent trolls. One particular case they mentioned was where a legal firm with no interest in betting tried to extract huge royalties. They also told the committee that they have started to patent some of their processes. The chair pointed out that it did not seem as though these patents were being used to encourage innovation by the NZRB. The presenters said no, use of patents was all about risk management.

Catalyst IT
Mike O'Connor gave a stirring presentation about the process of software development, that 100s of companies in New Zealand engage in. He talked about how these compabies build on 100s of components that come pre-made, how they respect their licences and how they blend old ideas, with their ideas clients ideas to produce something of unique value. He said the idea that this process could be interrupted and halted because someone had a patent in a filing cabinet somewhere was terrible. He described how NZ's Chief Electoral Office had been threatened by a patent troll when it started investigating the option of electronic voting and how that troll had not written a single line of code or contributed a single new idea to the world.

Overall the two Labour MPs asked most questions and were most engaged. Lianne Dalziel has a mind like a steel trap. Nothing gets past her. The National MPs were attentive but quiet. It is National that have the final decision on what goes in and out of this bill and to some extent that will be a ministerial decision rather than one made in select committee.

My Presentation Notes:

Briefly summarise our submission.

NZOSS represent the interests of OSS users and developers. We commercial entities as well as individuals and end users. Open Source Software is ubiquitous. It drives the Internet, it forms the building blokes of Google's technology, it runs in banks, the media and government. The open source internet browser, Firefox has a world wide market share of 30%. Most Firefox development is carried out in Auckland, New Zealand. This forum is relevant.

We are opposed to software patents.

We see software authors as potentially being in a unique position of being able to benefit from *both* Copyright holders and Patent holders. We think the latter right is unnecessary and stifling for innovation, creativity and competition.

Writing software resembles creating other written works. It is possible to quite easily express 100s of ideas as algorithms in a very short space of time. The barriers to entry to this creation process are very low. The capital investments required are very low and the cost of the components that are nowadays used to create an end product are in fact free. So the rewards to recoup investment in software do not have to be excessively high and it would be fair to say that the rewards of working in our industry are high when compared to other knowledge workers.

With the automatic protection of Copyright there is no need for additional protections for the expressions of our ideas.

We are concerned that patents have become another tool used by companies bent on anti-competitive behaviour. These companies are making a land grab to try and capture and privatise the benefits that society is deriving from the use of software that these companies had no hand in producing. Patent lawyers have made an art form out of describing an invention in ways to obscure their application and in claiming invention where it does not really exists.

Our experience is that it is both competition *and* the ability to freely collaborate that drives progress, invention and innovation.

To back this experience up, we are today submitting a recently published research paper by two US academics which examines the impact that patent protection systems have on invention, innovation and productivity. This research paper confirms other research into the topic and concludes that, contrary to their stated objectives, patent systems lead to lower rates of significantly lower rates of innovation, significantly lower societal utility and significantly lower productivity.

We urge NZ to follow the European and UK recommendations and legislation, that we reference which excludes software as patentable works. Current legislation does not make this limitation clear enough and the new legislation should clarify that position.