New Zealand: The computer programs affair

Last Updated: 22 March 2011
Article by Matt Sumpter and Jack Hodder QC

Most Read Contributor in New Zealand, September 2016

The Government has tied itself in knots trying to ban computer programs from the patent regime.  It has now sought help from the Intellectual Property Office – but they are struggling to untangle the mess.  We think it is time to cut the line and start again. 

This Brief Counsel explains how the problem arose and reviews the remedial efforts to date.  We propose our own solution. 

Computer programs and patent reform: unlikely opponents?

The Patents Act 1953 is way out of date.  The Ministry of Economic Development (MED) and the intellectual property (IP) community started talking about reform options in the 1980s.  That discussion culminated in the Patents Bill 2008, drafted to refresh New Zealand patent law and to bring it into line with our key trading partners. 

The Bill was mainstream in international terms until the Commerce Select Committee (the Committee) inserted clause 15(3A), which says that "a computer program is not a patentable invention".  The exclusion was the product of intense and successful lobbying by members of the "free and open source" software movement.  Free software proponents reckon that software should be free and, as a result, they generally oppose intellectual property rights.1   They say that IP rights lock away creativity and technology behind pay-walls which smother innovation.

Most authors, inventors and entrepreneurs take the opposite view.  They observe that IP rights like patents incentivise individuals and firms to invest in research and development (R&D) in the hope that the gamble bears fruit down the track.  Patents – which protect inventions and new ideas – have been front and centre in this incentive scheme since the 17th century.  Patents have driven the type of dynamic innovation which, for the last 400 years, has progressively made life easier, longer and more fun. 

The Commerce Select Committee tries a third way...

In its April 2010 report to Parliament on the Patents Bill, the Commerce Select Committee acknowledged that the free software movement had convinced it that computer programs should be excluded from patentability.2  The Committee said that "software patents can stifle innovation and competition, and can be granted for trivial or existing techniques".  The Committee provided no analysis or data to support that proposition.

The Committee did, however, get the wobbles when faced with the reality that computer programs play an integral role in an exponentially massive number of inventions.  Computer programs run cars, telephones, pacemakers, whiteware and all manner of other gadgetry.  Why would you exclude an inventive new camera, eftpos terminal or navigation system from patentability just because it is run by a computer program or used with a computer?  Well you wouldn't.  And even the Commerce Select Committee recognised that.  To meet the difficulty, the Committee asked the Intellectual Property Office (IPONZ) to draft "guidelines" to ensure that inventions containing "embedded software" continue to be patentable, subject of course to meeting general criteria for patentability.

That was a devilishly hard mandate.  For a start: 

  • IPONZ guidelines have no legal standing
  • there is no such thing as "embedded software" in patent law, and 
  • this is completely uncharted territory – no jurisdiction in the world has an outright ban on patenting computer programs like the one in clause 15(3A). 

How then do you take an apparently outright ban like the one proposed in clause 15(3A) of the Patents Bill and turn it into something which is not an outright ban?  It's tricky.  IPONZ's draft guidelines on the patentability of computer-implemented inventions reflect the difficulty of the job.  IPONZ is currently taking soundings on its draft document which reads like a discussion paper on some of the issues rather than a practice note injecting clarity and certainty into a thorny area of law.  

Ending the affair

We need to end the computer programs affair. 

If New Zealand enacted an outright ban on computer – implemented inventions we would be breaking international law.  Let us explain.  In 1994 New Zealand signed the Agreement on Trade Related Aspects of Intellectual Property (TRIPs).  TRIPs was a foundation agreement for the Uruguay Round which established the World Trade Organisation (WTO).  New Zealand has secured deep and enduring trade benefits from its WTO membership. 

TRIPs establishes mandatory minimum obligations of international IP protection.  Article 27(1) of TRIPs says that WTO members must make patents available for inventions "without discrimination as to... the field of technology...".  The proposed computer programs exclusion discriminates against computer technology and would therefore expose our country to litigation before a WTO Panel, which can authorise complaining countries to suspend WTO concessions or other obligations to New Zealand (such as favourable tariffs on our exports). 

The Commerce Select Committee's proposed expulsion of computer programs from the New Zealand patent system is a dilemma for inventors and a difficulty for the country.  There are only two ways to fix the problem: 

  • remove clause 15(3A) from the Patents Bill and keep the law as it is in keeping with the position in Australia and the United States, or
  • ensure that the Patents Bill and any IPONZ guidelines on the patentability of computer programs confirm that New Zealand law on the topic is intended to match and will follow the tolerably clear European position.  That position sets certain restrictions on the patentability of software as such, as opposed to banning the technical contributions which software can make to computers and computer output.3  

We see no workable "third way". 

Patents and productivity:  a New Zealand story

By way of conclusion, it is worth recording how and where IP fits into New Zealand's overall well-being.  In recent years our country has suffered a sustained and alarming decline in Multi-Factor Productivity (MFP).  MFP measures the contribution to economic growth made by factors like technology and organisational innovation. 

The WTO believes New Zealand's fall in MFP is, in part, a function of low levels of R&D.4   

While patent law is not a panacea for productivity decline, dynamic intellectual property law discourages free-riding off inventiveness and encourages investment in R&D and discovery.  Over time, we can expect well written patent law to lift productivity and enhance New Zealand's prosperity and competitive advantage as a trading nation.  As Nobel Prize winner, Paul Krugman, put it: "productivity isn't everything, but in the long run it is almost everything".

For further information, please contact the lawyers featured.


1. See, for example,

2. Patents Bill 2008 235-2 (select committee report) at 5.

3. The European position is set out in Symbian v Comptroller General of Patents [2009] RPC 1 (UKCA) and decision G3/08 of the Enlarged Board of Appeal of the European Patent Office.  The position is amplified in a recent line of British High Court authority running through Autonomy Corporation Ltd's Patent Application [2008] RPC 16, AT&T Knowledge Ventures [2009] FSR 19, Cranway v Playtech [2010] FSR 3 and Gemstar TV v Virgin Media [2010] RPC 10.  Strangely, none of these cases are discussed or cited in the draft IPONZ Guidelines.

4. World Trade Organization Secretariat, Trade Policy Review: New Zealand, WT/TPR216, 6 May 2009.  See too, OECD, Compendium of Productivity Indicators 2008, OECD, Paris, 2008 at p 11.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.