Technology Patents

October 5th, 2012 at 12:00 pm by David Farrar

Judge Richard Posner has blogged:

I am concerned that both patent and copyright protection, though particularly the former, may be excessive.

To evaluate optimal patent protection for an invention, one has to consider both the cost of inventing and the cost of copying; the higher the ratio of the former to the latter, the greater the optimal patent protection for the inventor. The ratio is very high for pharmaceutical drugs. The cost of inventing a new drug, a cost that includes the extensive testing required for the drug to be approved for sale, is in the hundreds of millions of dollars, yet for most drugs the cost of copying—or producing an identical substitute—is very low. And so the ratio of the first to the second cost is very high, making it hard for the inventor to recover his costs without patent protection (and for the additional reasons that the present value of the revenue from sale of the drug is depressed because of the length of time it takes to get approval, and that the effective patent term is truncated because the patent is granted, and the period patent protection begins to run, when the patent is granted rather than, years later, when the drug can begin to be sold).

Pharmaceutical drugs are the poster child for patent protection. Few other products have the characteristics that make patent protection indispensable to the pharmaceutical industry.

I think Judge Posner articulates well why are so necessary in areas such as pharmaceutical. Without them, we would have far fewer drugs and vaccines.

The problem of excessive patent protection is at present best illustrated by the software industry. This is a progressive, dynamic industry rife with invention. But the conditions that make patent protection essential in the pharmaceutical industry are absent. Nowadays most software innovation is incremental, created by teams of software engineers at modest cost, and also ephemeral—most software inventions are quickly superseded. Software innovation tends to be piecemeal—not entire devices, but components, so that a software device (a cellphone, a tablet, a laptop, etc.) may have tens of thousands, even hundreds of thousands, of separate components (bits of software code or bits of hardware), each one arguably patentable. The result is huge patent thickets, creating rich opportunities for trying to hamstring competitors by suing for infringement—and also for infringing, and then challenging the validity of the patent when the patentee sues you. 

Just as patents encourage innovation in the pharmaceutical industry, there is a growing belief they stifle innovation in the software space. Hence why NZ has, in theory, decided not to allow software patents.

The Government has proposed a legislative wording which is effectively:

A computer program is not an invention for the purposes of this Act … to the extent that a patent or an application relates to a computer program as such

Labour MP has proposed an amendment, supported by many NZ technology groups, being:

A computer program is not an invention for the purposes of this Act … ]but] does not prevent an invention that makes use of an embedded computer program from being patentable

Guy Burgess has blogged that an opinion by QC has stated:

 the Government amendment, now incorporated into the Bill following the second reading, will effectively allow the patentability of computer programs except where these have no technical effect e.g. algorithms, schemes or plans

Andrew Brown is one of the leading intellectual property lawyers in NZ, if not the leading one, so his opinions carry considerable weight. His full analysis is here. It is worth noting that overall, he thinks the “as such provision” presents a workable set of criteria and signposts.

Personally I think the issue is not just a workable definition, but also whether you want software patentable at all. My view is that amendment by Clare Curran is superior as it clearly says software is not patentable, however protects inventions that have software embedded within them.

National no doubt has to vote in line with the Government decision. However United Future, ACT and the Maori Party do not. I hope they take the time to get to grips with this issue – which is an important one for many NZ technology firms, and that they back the Curran amendment. It is, in my opinion, closest to what the Select Committee unanimously recommended.

5 Responses to “Technology Patents”

  1. Fentex (3,332 comments) says:

    Without them, we would have far fewer drugs and vaccines.

    Many beg to differ.

    Incidentally while trying to find that link I stumbled over a Pirate Parties paper on the subject.

    I personally disagree as well. If the argument that a need to satisfy approval processes and reveal the contents of medication (so consumers can be assured of it’s safety and/or efficacy) demands recompense for the expense is accepted then it can be satisfied with temporary and limited guarantees that expire when the expenses are met and not some arbitrary much later date of absolutely withholding all opportunities from others – thus allowing by design of limited rights, for example, poorer nations to provide for their citizens health through generics without the concept of blanket monopoly.

    I think that patents simply aren’t needed as proven by the historical creation of pharmacy industries in their absence.

    Ben Goldacre also makes many salient points about the corruption and dangers in medicine caused by the pharmacy industries pursuit of these monopolies.

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  2. wreck1080 (5,020 comments) says:

    Just writing a program in using obvious methods can infringe someones patent.

    There are so many software patents out there it is hard not to accidentally infringe .

    If something is particularly innovative the sure, give a patent. A classic is the amazon 1-click purchasing. Never should have been given a patent as it was too obvious.

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  3. MH (985 comments) says:

    Patents or patients,it’s all in the i of the beholder.

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  4. Monique Watson (1,302 comments) says:

    I just can’t understand how you could take the blanket position that software is not patentable. Why would investors invest in a product if there was no ability to get a patent? That’s the real innovation stifler. You have to jump so many hoops to get a useful patent in place.
    It has to be patented in the USA for starters. there’s no way you can “accidentally” infringe someones patent by going through this process.
    If something is new it’s bleedingly obvious. It’s not just a copyright issue. I think Claire Curran rabbits on about how it should be copy writable but not patentable.
    It’s going to be patentable as a new idea regardless and any ruling out of “software”, as such doesn’t have a show in hell of getting round this.

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  5. lightweight (18 comments) says:

    @Monique, I’m afraid your statements are desperately uninformed. More importantly, the issue here isn’t whether or not software should be patentable.

    The decision on which everyone agrees, including Minister Foss, the Select Committee, and the NZ software industry, is that software should NOT be patentable. The issue is how to reflect that decision in the legislation.

    The approach that the Minister’s officials have advised him to adopt (SOP 120) is flawed because it achieves exactly the opposite of the Minister’s stated position: the “as such” wording will inevitably allow software to be patented despite the stated purpose of the legislation.

    For that reason, we prefer SOP 123 which is, in the opinion of many interested parties (e.g. leading kiwi software developers like Xero, Orion Health, Jade, and the thousand+ kiwi software developers who signed the No Software Patents in NZ petition), far clearer to lawyers and software developers alike and more certain to effectively ban future software patents being granted in NZ.

    I personally would be just as happy to see section 10A(2) (which features the notorious “as such” wording in SOP 120) dropped altogether as I don’t believe the clarification on inventions making use of embedded computer programs (in SOP 123) is necessary, although in the past (prior to Fisher & Paykel’s potential purchase by foreign interests) it seemed more important. The key from my point of view is that the legislation *effectively* excludes software from being patentable.

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