New Zealand Ends Patents for Basic Software: Should the US Follow in Its Footsteps?

Do you feel like patent laws do more to stifle real innovation than protect it? That’s exactly the sentiment of the New Zealand government who just passed a law prohibiting patents for basic software, however, protection for major innovations and programs will remain protected under the country’s copyright law.

New Zealand’s government updated its 60-year old patent bill, according to the Wall Street Journal, with new legislation that acknowledges overseas influences, but perhaps controversially, prevents both local and international companies from filing software patents. The move brings the country in line with the U.K. and Europe, which already prevent the patenting of software applications. Companies like Apple have already been blocked in the U.K. from a number of smartphone patents, including one to unlock a phone by performing a simple hand gesture.

“By clarifying the definition of what can be patented, we are giving New Zealand businesses more flexibility to adapt and improve existing inventions, while continuing to protect genuine innovations,” said Craig Foss, the minister in charge of the bill.

The new law does allow for inventions that are built upon software, but don’t fully rely on the program. For example a computer chip in a treadmill could be patented under the law since its contribution isn’t fully associated with the computer application. No official date has been set for the laws’ enactment, but its expected to come to fruition in the next 12 months. The law is expected to severely curb patent litigation, where patent trolls have been tying up the country’s court system and often forcing companies to settle to avoid lengthy and costly trials.

“The way that I look at it, is a computer program and a processor are just raw materials like plastic, like wire, like wood and you are not patenting raw materials but you are patenting what you’ve made with those materials,” explained Matt Adams, a partner at intellectual property firm AJ Park.

“It might end up being a substantial change — a lot is going to end up being determined by either opposition proceedings or in court cases,” mentioned Earl Gray, an intellectual property lawyer at Simpson Grierson.

For major tech companies, much of their core software would continue to be protected, like a Microsoft Office.

“There are some areas where they (international firms) might think they had something pretty clever and they can’t protect the concept but ripping it off in terms of copying it will still be covered by copyright law.”
 

Patent Litigation in the United States

As you can see from the charts below, the number of patent trials in the US has spiked over the last several years and nearly doubled since 2009. Patent trolls sue companies for millions, who often prefer to opt out for extortion-like settlements, before challenging these bad actors in trial.

Do you think patent trolls are abusing copyright laws in America too? Should the U.S. join its overseas brethren and adopt more flexible patent laws to encourage more innovation?