Curran Clare: Patents Bill — Second Reading 
Text is incorporated into the Bound Volume 
Curran Clare: Patents Bill — Second Reading 
[Sitting date: 12 September 2012. Volume:683;Page:5158. Text is incorporated into the Bound Volume.] 
CLARE CURRAN (Labour—Dunedin South) 
: 
 I want to start with a story. It is a story about opportunity potential and Kiwi ingenuity. But it is at risk of being stopped in its tracks and being stuffed up by a poorly conceived badly worded amendment to the Patents Bill that will only stifle innovation and promote litigation. 
Yesterday we heard that Kiwi video games studios in New Zealand released 73 commercial video games in the last year primarily selling them digitally on iPhones on websites and on Android smartphones. And that local industry has nearly doubled in the last 2 years. It employs 380 fulltime-equivalent game developers. It is a high-tech high-growth industry. The chair of the New Zealand Game Developers Association said: “We’ve learnt how to make money from business models like digital distribution freemium virtual goods and crowdfunding. Exporting and acting global from day one have been key to the industry’s growth.” Ninety-seven percent of Kiwi games were digital downloads with low distribution costs and high margins. Ninety-nine percent of sales revenue came from exports with the USA and Europe being the largest markets.  
I want to make two points here. The first is that very few—I betcha—of the members on that side of the House understood half of what I just said or understand how successful this industry is and how it got to where it is. The second thing is that it is at risk because of the amendment that the Minister of Commerce Craig Foss has put in front of this House and because of his lack of understanding of how the software industry works and its importance to the New Zealand economy—not only to the New Zealand economy but also to the future of our children’s jobs in this country.  
The game development industry is a software industry. Software is an integral part of the technology sector which was identified in the  
TIN100 Report 
 as being worth more than $7 billion in revenue and $5 billion in export revenue. In 2011 this industry grew by 13 percent and its employees by 6 percent. It relies on its ability to innovate. Software—for the Minister’s benefit—is lines of code like music is lines of notes and books are lines of text. Software is a collection of mathematical algorithms and mathematical equations. In order to create new software you have to build on existing software. It cannot be patented because that would stop it in its tracks. That is what this bill tries to do and that is what that amendment that the Minister is putting in front of this House today will stuff up. There is an important principle that underlies this bill and that is that innovation is good and litigation is bad. 
 When the Patents Bill was sent back to the House from the Commerce Committee in 2010 it was a major accomplishment. I know that patent law is not everyone’s cup of tea. It happens to get me a bit excited but I know it does not get a lot of other people excited. But at the heart of this bill and the changes to this bill is a commitment to provide a real incentive to help grow the New Zealand economy through its software industry and through its weightless economy. It is a major opportunity and it should be a major priority for all of us every single member in this House. 
An awful lot of work went into this bill at the Commerce Committee which was chaired by the Hon Lianne Dalziel who did a very good job of working us through the very complex issues that were brought before us. I would like to acknowledge the extraordinary lengths gone to by the officials on this bill. They were sent back on several occasions by the committee to do more research and they did a good job of it. It was exhaustive. We thought long and hard about how to propose a responsible balanced piece of law that updated patent law from 1953. My concern is about the advice that has been given to the Minister subsequent to the select committee reporting the bill back to the House and where that advice has come from because it is not sound. 
What this bill seeks to address is that New Zealand’s existing patent law is too generous to those people seeking patents. Too many corporations get monopoly rights and many are multinational corporations that can get patent rights to inventions inside New Zealand that would not be protected overseas. That discourages innovation and growth which is the last thing that we want to do as a nation—to have more software companies being taken to court and tied up for years and to stop those companies from inventing new software because of the threat of patent lawsuits. 
Many of New Zealand’s most successful software companies are coming up against nuisance software patent claims now and that is what this bill is trying to address and trying to stop. Unfortunately the prospect that we are facing today because of this Supplementary Order Paper is more litigation and as I have said I am very disturbed at the wording of this Supplementary Order Paper. I challenge the Minister to reveal to the House where the wording of that Supplementary Order Paper came from and who is meant to benefit from it. 
Yesterday I released another Supplementary Order Paper another amendment that is— 
Hon Trevor Mallard 
: Very well drafted. 
CLARE CURRAN 
: It is very well drafted and it does attempt to fix this up. We hope that the other parties in this House will take the time to understand and consider the implication of Mr Foss’ amendment because we think that with such a significant amendment there should have been wider consultation and now that it is tabled the Committee stage will be the first time that this House will have to grapple with the implications of it. 
The amendment that has been tabled by Labour provides very simple language and a clear definition of what the committee actually intended. The bill actually as it stands simply says: “A computer program is not a patentable invention.” That is the intent of the select committee. Our Supplementary Order Paper clarifies that by saying that it does not prevent an invention that makes use of an embedded computer program from being patentable. 
I want to tell you what lies behind that and why that is important. The select committee said—and the Minister should listen very carefully—that “While the bill would provide adequate incentives for innovation however we are aware of New Zealand companies who have invested in a significant number of software-related inventions involving embedded software.” Embedded software for those who do not know is computer software that plays an integral role in the electronics it has supplied such as cars pacemakers washing machines and telephones. 
We sought advice on this approach taken in other jurisdictions in the United Kingdom the United States and Europe and we got advice back saying that the best thing that we could do for the sake of clarity and the lack of litigation was to have a very simple approach. We received advice that our recommendation would include computer programs on the inventions that may not be patented and that would not prevent the granting of patents for inventions involving embedded software. We recommended that there be regulations provided by the Intellectual Property Office of New Zealand guidelines around that. This Government claims its amendment is based on the European system. We discovered that the European system is not that crash hot either. Europe has not worked it out. It has different jurisdictions in different countries that all conflict with each other. 
Labour has stood up for the innovator. We are unashamed about that because our nation’s future relies on creative people who have ideas and use technology to build new products and services that can build our skills and our export industries and make New Zealand a desirable place for investors and provide careers for our kids. Mr Foss’ amendment will stuff this up. The software and information and communications technology industry knows this; it got motivated and developed a petition that provided a sensible and cleanly worded alternative which is what my Supplementary Order Paper is based on. More than 1000 small software companies and sole operators signed it in just a few days showing the strength of feeling. 
We need to innovate. This bill is a good bill. Let us not put our new industry at risk. Let us innovate and not litigate. Today we support the second reading of this bill but we will not be able to support it at the Committee stage or the third reading with the Minister’s amendment as it stands. My amendment will fix that situation. It makes the intent of the bill clearer and I hope it will gain the support of the House.