Trade deal threatens New Zealand software patent ban

Summary:US demands in Trans-Pacific Partnership negotiations include patent protection for software and even of "mathematical methods".

Trade ministers from nations around the Pacific are pushing to finalise the Trans-Pacific Partnership (TPP) trade agreement next month, but New Zealand has something on the negotiating table others do not: a brand new law effectively banning software patents.

With the US taking a hard line on intellectual property issues, that could set New Zealand negotiators on a collision course with their US counterparts.

A November leak of the draft intellectual property chapter of the TPP reveals the US is pushing a host of strict provisions covering copyright, trademarks and patents, including requiring patentability for software and even potentially mathematical methods.

US President Barack Obama has also made delivering a comprehensive TPP deal a cornerstone trade policy of his administration.

But New Zealand’s Patents Act was passed just this August with multi-party support in a vote of 117 to four. That could put the New Zealand government in a pickle.

Apart from the political damage backtracking now would cause, on current numbers in Parliament, the government would need support from at least one other party to pass any enabling legislation, such as an amendment to the Patents Act.

Opposition MP and Labour Party associate spokesperson on communications and IT Clare Curran says there are three possible scenarios:

The US could get its way on IP trade-offs and the New Zealand patent law would have to be reversed.

Along with that would come many other IP protections, such as the criminalization of personal copyright infringement, and a spike in the costs New Zealanders pay for legally accessing content online, including local content.

That, she says, would be embarrassing for New Zealand and would ignite a firestorm in the local technology industry and among online activists.

Another possibility is the New Zealand patent law, the newest among the negotiating countries, could be upheld as the standard across the TPP.

That might look good for New Zealand but could also be used as a political cover for other IP trade-offs which may have long-term impacts on New Zealand economy.

Thirdly, New Zealand and other countries could stand up to the US on the IP chapter and a stalemate could ensue.

Paul Matthews, chief executive of the New Zealand Institute of IT Professionals, says he has some confidence in the New Zealand negotiating team which to date has led opposition to US demands on IP.

He says the leaked chapter made it clear it was a case of the US versus the world.

While that might be the case, the pressure from the US is intense and a new government in Australia appears to be softening that country’s stance in some areas.

Matthews says, with the final round looming and no clarity about the outcome, concerns remain.

The institute understands there will be “give and take”, he says, but is has always been concerned the “take” will be for agricultural market access while the “give” would be in IP concessions that would damage innovation and the IT sector.

However, given the overwhelming support the new law received in August, Matthews says he would be very surprised if those that supported the law then were to backtrack now.

The TPP also goes farther than any free trade agreement of the past, he says. Even calling it a free trade agreement is something of a misnomer. The negotiation process also bypasses the World Trade Organisation.

The US is trying to achieve concessions through the TPP it was unable to win in the earlier Anti-Counterfeiting Trade Agreement (ACTA), he says. In the end, ACTA was heavily watered down.

Curran and Matthews agree that trade-offs are inevitable, but Curran says not enough work has been done by the government to quantify the cost of concessions on intellectual property.

She forwarded ZDNet some calculations made by a local technology company as an example of the sorts of costs that could flow should many of the draft IP chapter provisions make it into the final TPP agreement.

“Lorde's songs retail on Apple's iTunes to New Zealanders for $2.39. In the US the same song retails for $1.47, 99c cheaper. That means New Zealanders are paying a premium of 62% on an IP protected product.

“As circumventing these protections becomes a criminal activity, and extending the protections the norm, we can expect to be paying more than 62% extra for all IP related goods.

“That's computers, software, music, medicines, medical processes, seeds, fertilizers and so on. I hope there are enough economists in the Labour party to do some maths on that.”

Ironically, the pressure on New Zealand to ditch its software patent ban comes as debate over their value grows in the US and legislators there pass a law to rein in so-called "patent trolls".

Countries negotiating the TPP include Australia, Singapore, Malaysia, Brunei, Chile, Canada, Peru, Singapore, Vietnam, Japan and Mexico in addition to the US, Australia and New Zealand.

Topics: Patents, Australia, New Zealand, Software Development

About

Rob O'Neill is a writer for CBS Interactive based in Auckland, New Zealand covering business and enterprise technology for ZDNet. He has previously worked for IDG, The Sydney Morning Herald and Melbourne's The Age as well as various business titles, most recently editing the Business Sunday section of New Zealand's weekly national news... Full Bio

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