New Zealand: Software patents in New Zealand: Still no clarity

Last Updated: 7 August 2011
Article by Jonathan Lucas

An updated set of guidelines on how patent applications involving software will be examined under the new Patents Act has been published. The much-needed clarity is still lacking.

In June of this year, we reported the unanimous rejection of the draft guidelines issued by the Ministry of Economic Development (MED) for examining patent applications for computer-related inventions in New Zealand under the new Patents Bill.

The MED has now released an Explanatory Note which seeks to clarify the examination approach previously outlined in the draft guidelines.  It improves marginally on the draft guidelines in providing a small amount of clarity but there seems to have been little consideration of the vast majority of the feedback provided on the draft guidelines.  As a result, much of what was criticised in the draft guidelines is still present in the Explanatory Note.  The result is a continued lack of clarity for New Zealand innovators and businesses.

Focus on clause 15(3A)

The Explanatory Note improves on the draft guidelines in that it is solely focused on explaining the extent of exclusion to patentability under clause 15(3A), which says that "a computer program is not a patentable invention".  This is what the MED was tasked to do.  The draft guidelines tried to go further and lay out what will fulfil the "manner of manufacture" requirement as well, but feedback was received to the effect that this was not appropriate given the wealth of established case law in this field.

No solution to fundamental problems

In the Explanatory Note, the MED has failed to address the key issues identified by most of the parties who filed submissions to the draft guidelines.  Firstly, most of the submissions wanted clause 15(3A) to be removed because of the adverse effect it will have on New Zealand's innovators and economy.  Secondly, there was much concern that any guidelines would be disregarded by a court in the face of an exclusion in the form of clause 15(3A).

But those issues stem from the proposed wording of the legislation and only the lawmakers can alter this.  The MED has tackled the task it was set, which is to come up with examination guidelines within the context of clause 15(3A).  Unfortunately, the draft guidelines and Explanatory Note have led to even less clarity.

No adoption of European approach to examination

Most of the submissions on the draft guidelines argued that the approach of the European Patent Office (EPO) to examining patent applications would provide the clearest position in the event that an exclusion to patentability for software inventions remains in the legislation.  Some submissions pointed out that the law in the UK has developed since Aerotel and therefore New Zealand courts are likely to look to the most recent UK decisions when issuing rulings.

The MED has chosen to overlook this feedback and the Explanatory Note maintains the use of the Aerotel test for examination.  MED's justification for this is that the UK developments since Aerotel move its law closer to that of the EPO but European law is fundamentally different to New Zealand law in that it requires a "technical contribution" for patentability; a concept not present in the Patents Bill.  This distinction seems somewhat flawed and results from the decision to maintain the "manner of manufacture" requirement in the New Zealand Patents Bill.  Such wording aligns New Zealand's legislation with that of Australia, but causes problems when New Zealand attempts to impose an exclusion not present in Australia.

Unclear example

In an attempt to clarify the position proposed in New Zealand, the Explanatory Note provides examples of inventions that would and would not be patentable under clause 15(3A) of the Patents Bill.  Regrettably, one of the examples seems only to muddy the waters further.

The example in question is an invention which improves the operation of a computer by providing a way of indexing library functions to ensure the computer operates reliably following changes to the library.  According to the Explanatory Note, such an invention would not be patentable in New Zealand because the contribution to human knowledge is no more than a computer program, so is excluded under clause 15(3A).  There seem to be two problems with this conclusion.

Firstly, paragraph 38 of the Explanatory Note sets out a number of questions which can be used to help determine whether the actual contribution to human knowledge made by the invention is just a computer program (in which case it would fail step three of the Aerotel test).  One of these questions is: "is the computer program merely a tool adapted to achieve efficiency or something similar?"  If the answer is yes, the invention is unlikely to be excluded from patentability.  In the example in question, the invention has the effect of ensuring a computer continues to operate reliably.  Surely this constitutes a tool to achieve efficiency or something similar, so how can it not be patentable according to the questions in paragraph 38?

Secondly, the Explanatory Note does not seem to apply the modified Aerotel test to the example.  If it did, the conclusion would be that the invention was patentable.  This example is essentially the invention that was the subject of a UK patent application by Symbian Ltd.  The UK Court of Appeal applied the Aerotel test and held the invention to be patentable.

The Explanatory Note recognises that the conclusion differs from UK (and European) practice, explaining that this is because the UK requires a "technical contribution" for patentability.  However, the requirement that an invention is technical is tested by the fourth step of the Aerotel test, which has been dropped in the revised version of the test in the Explanatory Note.  Applying the first three steps of Aerotel to the example should result in the conclusion that the invention is patentable, just as was the case in the Symbian decision of the UK Court of Appeal.

The crucial point made by the judge in Symbian is that a computer operating by way of the claimed method is a better computer because it is faster and more reliable than it would be without the method.  Saying that the invention is simply a better computer program gives no credit to the practical reality of the effect produced on the computer itself.  As such, the contribution to human knowledge is more than simply a program for a computer.  There seems to be no reason why the same consideration would not make such an invention patentable in New Zealand in view of clause 15(3A).

Over to the lawmakers

The MED was faced with a very difficult task of coming up with guidelines for examining patent applications involving computer-related inventions in the face of clause 15(3A).  Unfortunately, the draft guidelines and Explanatory Note have not resulted in a position that leaves New Zealand innovators clear as to what is patentable and what is not.

There is no formal procedure for providing feedback on the Explanatory Note but, even if there was, the feedback would be more of the same.  It seems that it is now back to the lawmakers to try to resolve the problems identified in the submissions.  Hopefully a solution will involve re-examining the basis for introducing clause 15(3A) in the first place, but otherwise by looking to align the wording of New Zealand's legislation more closely with that of the UK and Europe so that the wealth of case law in those jurisdictions can give New Zealand innovators and the software industry some confidence as to what a New Zealand court is likely to consider patentable.  Clarity is key.

This article was written by Jonathan Lucas, an Associate in our Auckland office.  To contact Jonathan, please email him on jonathanl@jaws.co.nz or phone 09 914 6740.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

James and Wells is the 2010 New Zealand Law Awards winner of the Intellectual Property Law Award for excellence in client service.

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