Draft Guidelines for examining software patents under New Zealand’s new Patents Act

In August 2010, we reported that the latest iteration of New Zealand’s new Patents Act purported to now exclude computer software from patentability.

The proposed exclusion was not only a reversal of New Zealand’s previous position, it was also contrary to the stance taken by her major trading partners – especially Australia and the United States, who generally allow software patents subject to the invention satisfying what approximates to a mild “technical effect” criterion. We also noted that the proposed exclusion appeared to contravene New Zealand’s obligations under Article 27 of the TRIPs Agreement, which requires that signatories make patents available “in all fields of technology”.

The waters were muddied even further by the Government’s concurrent proposal to allow patents for embedded software. Moreover, the Government then placed the Intellectual Property Office of New Zealand (“IPONZ”) in the near-impossible situation of being asked to define the line in the sand between software and embedded software. These draft Guidelines have now been published – and are available from the Ministry of Economic Development (“MED”). The MED has invited public submissions on these draft Guidelines, the deadline for which expires on 11 March 2011. This invitation has likely flow-through consequences in that the Patents Bill, presently scheduled for its second Parliamentary Reading is now likely to be delayed even further.

In drafting these Examination Guidelines, IPONZ is charged with succeeding where other jurisdictions have consistently failed – both at Patent Office and indeed Court levels. Not only that, but they must hope the Guidelines stand up in Court, which will likely place greater emphasis on legislative intent and persuasive decisions from other jurisdictions than they would Patent Office Guidelines.

One immediate observation is that IPONZ has identified United Kingdom law as being that most applicable to the NZ Government’s proposed “pro-embedded/anti-software” stance. However, the wording of the Patents Bill does not replicate that of the UK’s Patents Act 1977. Instead, what IPONZ appears to have done is lifted the intent of the test set forth in Aerotel Ltd v Telco Holdings Ltd & Ors Rev [[2006] EWCA Civ.1371] as a means of assessing whether a claimed invention falls within an excluded area, the test being:

  1. Properly construe the claim
  2. Identify the actual contribution (ie what is the invention?)
  3. Ask whether said contribution falls solely within the excluded subject matter
  4. Check whether the actual or alleged contribution is actually technical in nature.
  5. To this end, as noted in the draft Guidelines, “…the elements within the steps as they are set out in Aerotel appear to be useful and appropriate in forming the basis of an approach to assessing whether or not something is excluded”. Of course, any test based on determining the absence of a negative quality as opposed to the presence of a positive quality is eminently arguable and stands to give rise to years of debate at both Patent Office and Court levels before New Zealand law is settled – or even consistent – in this regard.

An arguably better approach to the no-win situation in which the Government appears to have placed IPONZ may be simply to adopt the wording of the European Patent Convention which excludes computer software “as such”. This qualifier has been interpreted to mean that an invention which makes a non-obvious technical contribution or solves a technical problem in a non-obvious way is patentable even where that technical problem is solved by running a computer program. Such wording is significant in that it would give the Courts legislative basis through which to create their own distinction between what is and is not patentable; this may be preferable to the Government’s proposed scenario in which the ‘tail wags the dog’.

We fear the New Zealand Government may have somewhat rushed into this important policy decision without giving due consideration to both sides of the software patenting debate. In part, this may be due to a desire to quickly pass the new legislation given that it has now been gestating for more than seven years. On the other hand, the issue of software patents has only recently come under consideration and further debate certainly seems justified in this instance.

Each of Shelston IP’s Australian Patent Attorneys is also dual-registered in New Zealand where we practice extensively. We retain an active interest in seeing New Zealand’s present, outdated patents legislation modernised appropriately, to the expected benefit of all stakeholders.