New Zealand and the Changing Definition of an Invention

By Jared Pottruck

After nearly five years of debate, New Zealand’s legislature voted during the last week of August 2013 to adopt the Patents Bill, which will no longer permit the granting of patents for computer software.[1] While software that currently holds patent protection will be untouched by the new law, going forward, new computer software will not be able to receive patent protection from the New Zealand government.[2] However, new software will be able to receive patent protection if it is simply providing a means to “implement a patentable process” or is part of a piece of improved hardware and the software is the means to achieving that improvement.[3] The Patent Bill accomplishes this by stating that software is “not an invention” and therefore not patentable.[4] This redefinition of what constitutes an invention under New Zealand law, provides the nation with a way around the language of the Agreement on Trade Related Aspects of Intellectual Property Rights, a treaty which they are a party to and would require that they make patents “available for any inventions, whether products or processes, in all field of technology.”[5]

New Zealand officials have stated that they hope the Patent Bill will allow the nation’s technology industry to experience a boom by removing the burdens of costly litigation and licensing on companies.[6] Additionally, the nation sees patents as a means to stifle competition, and believes that moving them on software will make investment in high-tech industry more attractive.[7] In essence, some hope it will create a “safe haven from litigation” where technology companies can thrive.[8] And this goal may be realized sooner than later as New Zealand officials have claimed that some United States technology firms have inquired about moving to the island nation.[9]

However, there are some significant shortcomings to the Patents Bill.  First, there is nothing to stop multinational entities from patenting software in other countries, like the United States, and bringing suit against New Zealand companies abroad.[10]  New Zealand technology companies could be driven to severely limit their potential markets to prevent establishing personal jurisdiction in foreign nations.  This would undermine the bill’s goal of expanding New Zealand’s technology industry.  Secondly, with previously patented software retaining its protection, many basic computer applications are likely already protected.[11] This will likely make it easier for older, more established technology firms to stifle competition by enforcing these patents that relate to fundamental computer code.[12]

New Zealand is not the only nation addressing patents on software, as there has been a debate going on for ten years in the European Union as to whether software should be afforded protection.[13] The United States has also been trying to address this issue.  The Government Accountability Office recently completed a study on software patents and concluded that they are ineffective.[14] At least six bills have been introduced in Congress that would limit patent protection within the last year, all of which have failed to gain traction.[15] This is likely due to lobbying by large technology companies that benefit from large patent stockpiles, such as Samsung and Apple.[16]

Since it seems unlikely that software patents will be banned by statute, the courts will certainly be looked to as a mechanism for change.[17] Currently software meets the requirements for patentability based on the decision in the United States Court of Appeals for the Federal Circuit case of In re Alappat.[18] Therefore, a successful attack on that case in the Supreme Court would cause the more restrictive standard regarding the patentability of software from Parker v Flook to resurface.[19]

It is imperative that the situation in New Zealand be monitored.  Until the dust has settled and the repercussions of New Zealand’s decision are understood, it seems unlikely that any substantial change will come to the United States patent system, regardless of the method by which it is challenged.  This is simply due to a lack of solid information that a politician or court can hang its hat on, and be comfortable that they are making the correct choice.