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Software patents: ignore them at your peril

01 Oct 2010

Many business people are now aware of proposed legislative changes relating to software patents. What will these changes mean for you? This article outlines the current situation, explains some practical issues, and explains why New Zealand software and electronics businesses will still need to consider patents as part of their business planning.

The current New Zealand Patents Act dates back to 1953. A new Patents Bill was introduced to Parliament in 2008, and earlier this year, the Commerce Select Committee drafted amendments to the Bill. The amendments stipulate that computer programs will not be patentable, but the Select Committee acknowledged that patents might still be granted for inventions with embedded software (ie: software designed to run on a particular device which is not a computer). Subsequent actions by the Minister of Commerce indicate that the new legislation, when passed into law, will prohibit patents for all non-embedded software.

Irrespective of whether you believe software should be patentable, the facts remain that there are many software patents which will remain in force in New Zealand for some time and that software patenting will continue to be permitted in some of New Zealand’s most significant export markets. Therefore, every company operating in this field needs to be aware of its options and responsibilities in relation to software patents.


1. Software is still patentable at present

Providing that it meets the criteria set down in the Patents Act 1953, software remains patentable until the new legislation is enacted by Parliament and comes into force. That is not scheduled to happen until December 31st 2012. Even then, the 1953 Act will continue to apply to any patent applications which have a complete specification filed before the new legislation comes into effect.

2. Why patent software – isn’t it covered by copyright?

Copyright does subsist in original source code and certain original compilations, but copyright does not restrict anyone from writing original source code which performs the same function. A patent, on the other hand, protects an idea or function. Therefore a carefully worded patent can restrict anyone else from making, using or selling the invention described in the patent.

3. Software patents will continue to exist

New Zealand software patents granted under the 1953 Act will have a maximum life of 20 years, so many will exist for many years to come. There will also be plenty of companies testing the boundaries as to what can be patented under the new legislation. This means that even if you don’t want to patent software yourself, you will still need to be vigilant about making sure you don’t infringe a patent owned by someone else.

4. Software is patentable in other markets

Software remains patentable in many countries which are key markets for New Zealand companies, including the United States and Australia. If you are planning to manufacture or market in any of those countries, patenting can be a very valuable way of gaining competitive advantage. A New Zealand patent application is presently, and may continue to be, an inexpensive way to obtain a priority application for those countries. Another option would be to file a patent application directly into those countries without filing first in New Zealand, but you may need to obtain a foreign filing licence first. Also remember that if you are planning to market your product in any country, you should first ensure that doing so will not infringe someone else’s patent.

Whether software should be patentable is a contentious issue, but the fact remains that patenting is a tool that many software and electronics businesses use to gain competitive advantage. Many of these companies will continue to push the boundaries as far as possible after the new legislation comes into force, in the same way that companies do in every other sector. Therefore, software businesses need to take the same steps as any other business to make sure that they don’t infringe patents owned another person, preferably before time and money is expended on new developments.

Shona Foster is a lawyer at James & Wells Intellectual Property, a specialist firm that assists clients with the protection, registration, enforcement and commercialisation of intellectual property rights.

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