No patents is a no brainer for New Zealand

Why spend all those years in the garage developing your wonderful software if some cheat is to come along and rip-off your creation?

For an industry that relies on innovation, the development of new products and processes, you might think the IT sector would be keen to protect its intellectual property.

But in an about turn yesterday, the New Zealand government decided that patents would be unenforceable for software. And the country's software industry applauded it.

It seems that patents are more trouble than they are worth. Registering patents and enforcing them is such a costly process, especially for the smaller firms that New Zealand tends to have.

In the United States, we see the costly effects of patent law. There is a huge battle going on between Samsung and Apple over who copied what on their smartphones, and no-one is benefiting bar the lawyers who are earning millions of dollars in fees.

Governments also say that this legal stoush is damaging to consumers, and I am sure both parties would be better off spending money on innovation and creation than in legal bills.

More significant is the effects of so-called patent trolls, organisations that buy up a patent, and then use that patent to extract a demand from a company doing something similar to what your patent covers.

Thus, we hear that patent law stifles development, and no wonder there are efforts in the US to tackle patent trolls and make it easier for firms to challenge patents in the software sector.

New Zealand software companies have said that existing patent laws act as a deterrent when they are conducting research.

Removing patent law will remove this legal uncertainty.

Overseas, one study has claimed that patents in the software industry have cost the US economy half a trillion dollars since 1990.

A US book called Patent Failure said that in the late 1990s, patents resulted in payments to software patent holders of $100 million a year, but the litigation costs were $3.88 billion.

Of course, there still needs to be some protection of intellectual property.

It appears that copyright law will be sufficient, as it is more clearly defines what is actually copied, compared to the more conceptual basis typically used by patents.

And that is the view of New Zealand's IT companies, who are doing quite nicely, recruiting staff and exporting more.

IT lawyer Guy Burgess highlighted a comment from Orion Health. It says that the best way to protect your intellectual property is to innovate, and innovate fast.

New Zealand has many innovative companies, such as Orion Health, Jade Corporation, and Xero, who are investing millions, innovating fast, and keeping ahead of the game, fully aware they effectively have no software protection.

But they can still apply for it in overseas markets should they ever feel the need for it.

Furthermore, New Zealand will also benefit from software companies migrating from Canada and elsewhere to our country for what I dare say is a patently freer and easier environment for them.

Looking at all these benefits, it certainly seems that having no patents was certainly a no brainer of a decision from the New Zealand government yesterday. It is surprising that it took them so long.