Australia: Three Versions In A Fortnight - New Zealand Again Refines Its Proposed Software Patent Exclusion

Last Updated: 16 September 2012
Article by Mark Vincent and Gareth Dixon

When it rains, it pours. Following several years in which "progress" was a somewhat subjective term in respect of New Zealand's patent law reforms, the Government has again shown that they now mean business.

In our previous article (, we mentioned that the Patents Bill 2008 was finally being prioritised by the Government, seemingly as the result of an "innovation drive". We noted that in the previous week, it had advanced from #50 to #7 on the Parliamentary Agenda – and that it was expected to be passed before the year's end. As at the time of writing (11 September 2012), the Patents Bill now sits at #4 on the Agenda.

However, a further Supplementary Order Paper (SOP) has now been tabled (this is in addition to that reported previously The latest SOP serves to clarify New Zealand's proposed "software exclusion",which has proven to be easily the most controversial of all the issues addressed in the Patents Bill.

In essence, the previous SOP adopted the "as such" wording of EPC Article 52(3). However, in the short interim period, the anti-software lobby was again active – and was highly critical of the Government's apparent "about face". The latest SOP appears to be in response to such criticism.

Combining the wording of both SOPs, New Zealand's proposed "software exclusion" now reads:

  1. A computer program is not an invention for the purposes of this Act.
  2. Subsection (1) does not prevent an invention that makes use of an embedded computer program from being patentable.

As such, the "as such" wording of the EPC has been removed; it lasted less than a fortnight!

According to the Explanatory Note, this latest SOP serves "to ensure that an invention that makes use of an embedded computer program may be patented despite a computer program not being an invention for the purposes of the Bill"

These are dangerous times for the New Zealand Government. On the one hand, they have clearly signalled that passing the Patents Bill is a priority. However, on the other hand, they do not appear at all certain of what they want the new legislation to entail – especially as it pertains to software patents.

The concept of "embedded" software has been something that the Government struggled with throughout the Select Committee phase of the Patents Bill. We have reported on this previously ( – and noted that in charging the Intellectual Property Office of New Zealand (IPONZ) with developing guidelines that distinguish between "software" and "embedded software", the Government was asking IPONZ to succeed where others (most notably, Europe) had failed consistently. Indeed, draft examination guidelines, adopting the "intent" of the test set forth in Aerotel Ltd v Telco Holdings Ltd & Ors Rev [2006] EWCA Civ.1371, were published – and public submissions were invited.

Of the 36 submissions received and published, very few offered any support for the Government's position. Unsurprisingly, many of the submissions identified the apparent inconsistency between the proposed exclusion, the intent of the Select Committee proposing the exclusion and the guideline itself. Despite the fact that the Government had emphasised that the submission process was not an invitation to revisit the policy decision behind the exclusion, many nonetheless urged an about-face for the sake of consistency with New Zealand's major trading partners.

A submission was received from no less than the European Union; the New Zealand Government should have been at once flattered and embarrassed. The Directorate General of Trade identified and questioned the apparently selective use of UK patent law in the guidelines. The crux of the EU's submission is a cautionary note that UK law is based on and includes the EPO's abundant case law – as well as the EPC itself. It has evolved to where it is now as a consequence of this "bigger picture", rather than through convenient selection of legal principles.

Notwithstanding the practical difficulties associated with the revised exclusion, it is worth briefly considering some of the political motives that may have prompted such a change. On the one hand, Article 27 of the TRIPS Agreement requires signatories (of which New Zealand is one) to make patents available in "all fields of technology". Secondly, New Zealand is presently attempting to negotiate a Free Trade Agreement (FTA) with the United States. The US Government publishes an annual report entitled Foreign Trade Barriers in which it particularises laws and regulatory mechanisms in foreign countries that are considered "significant barriers to US exports". In this document, a ban on software patents has been identified as an impediment to trade.

Clearly then, a "blanket" exclusion on software patents was untenable. However, the Government's "compromise" position ("as such") proved unpalatable for the local software industry. As related above, the latest round of changes happened very quickly indeed.

Orion Systems and Jade are New Zealand's two largest software exporters. They, amongst others, urged the Government to re-think the previous exclusion. Despite nearly three decades of European case law shining light on the parameters of "as such", this industry lobby still considered the terminology to be problematic insofar as that it did not specifically state that embedded computer programs could still be patented.

Therein lies the Government's essential "Catch-22". On the one hand, the local industry demands a specific inclusion for embedded software. However, on the other hand, nobody really knows for certain what "embedded" software really is. When thrashed out in the various Courtrooms across the country, this is likely to get messy.

What the Government needs to now decide is whether pushing the Patents Bill though represents responsible governance. One could argue that whilst there is such spirited debate, the Bill is best left in the queue. However, this is likely to be one of those arguments that will never truly be resolved; one could argue that the Government needs to decide on a path – and stick with it.

As mentioned above, at the time of writing, the Patents Bill (as now amended by this latest SOP) should have its second Parliamentary Reading later today. Will we be writing another such article this time tomorrow?

For completeness, we should note that a third SOP was also tabled earlier today. However, it relates to the "living matter" exclusion, rather than computer software. This latest SOP is unlikely to cause too much of a stir, as it is widely accepted that patents should not be held over life. As previously drafted, the exclusions covered plant varieties and humans or animals in certain situations. This amendment removes any uncertainty by covering all organisms, micro-organisms, and their traits.

Shelston IP has an office in Auckland, providing New Zealand legal advice on intellectual property matters. In addition, each of Shelston IP's Australian Patent Attorneys is dual-registered in New Zealand, where we practice extensively. We retain an active interest in seeing New Zealand's present, outdated patents legislation modernised appropriately, to the expected benefit of all stakeholders.

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.

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.