New Zealand the Field of Dreams for the Software Industry

Posted by: Ray Mihaere

Tagged in: Open Source

Remember the baseball movie “Field of Dreams” where Kevin Costner hears a voice in his head that tells him “if you build it, they will come”? He then ploughs up a productive cornfield to build a professional baseball field complete with bleachers in the middle of nowhere. Everyone thinks he has lost his marbles and his dream team of baseball players comes out of the corn fields and play on his field. Well, New Zealand (NZ), through its Open Source Software Society, has created the opportunity for the software industry’s ‘Field of Dreams’ for the World’s next generation software industry to exist here in NZ and it is all because it has banned software from being patented. New Zealand’s current position is that its copyright laws are sufficient for software and patent laws do more damage to innovation than encourage it. The issue at hand is that this all might be about to change with an amendment to the law being pushed through parliament at this moment. This would give up a huge advantage and has the potential to adversely affect NZ’s own successful software companies. 

While the NZ Government has mooted a desire to build a knowledge-based economy the business sector is still waiting for the detail of how the Government envisages achieving this. Support to the film industry could be categorized as a part of the knowledge-based economy with what Sir Peter Jackson and Sir Richard Taylor have been able to build in Wellington. Clearly any penetration into the world’s multi-billion dollar software market would be an attractive opportunity that would be a way of increasing this knowledge-based economy. NZ has created itself a huge advantage that has become a concern for the established US companies like Microsoft and others in the US as they seek to protect their market share by foisting protectionist policies on smaller nations. 

In protecting market share, companies have been known to use software patents as a way to stifle, inhibit and negate competition rather than protect their own works. Practices that are legal but not necessarily within the spirit of patent law are designed to stifle competition like broadening the scope of the original patent or registering new patents that are well outside the scope of the original software are common. This causes emerging companies financial issues that either require cost prohibitive legal fees or end up causing royalties to be paid to the established software companies for the innovation provided by new companies. NZ’s ban on patenting software concerns the established companies because it negates their ability to threaten or follow through with patent lawsuits. Evidence so far has shown that patent laws in the US have become overbearing and obstructive causing emerging software companies to seek protection and NZ is seen as a viable option to achieve this. All NZ has to do is keep its ban on software patents. Here is where it gets interesting: In Jun 2012 Microsoft renegotiated its, Office Suite, contract with the NZ government. Not long after that the Minister of Internal Affairs, Craig Voss, added an amendment to the current Patent Bill that added the words “as such”. Without going into the detail of it all the effect that this amendment imposes is that it has the potential to negate the patent ban and play into the US Companies hands.  

NZ software companies that already have Worldwide penetration and are leaders in their specific niches include: Jade, Xero , Vista Entertainment Solutions, Orion Health, Gentrack, Fingertapps, Booktrack, GreenButton, Car Parking Technologies, Infotools, KlickEx, Outpost Central, Vend, WhereScape Software, Enatel, Vesper Marine and Diligent to name a few. NZ’s innovation and creativity has been well recorded. You just have to look at its accomplishments from Ernest Rutherford, splitting the atom; to Richard Pearse powered flight pioneer, to Harold Gillies arguably the father of plastic surgery; to Bill Hamilton, inventing the impeller water jet engine to help power boats go up river; to Sir Brian Barratt-Boyes pioneering the first cardiopulmonary bypass (open heart surgery), to Alan Gibbs and the Aquada amphibious car that Richard Branson crossed the English Channel in; to AJ Hackett’s bungy jumping; to Arthur Lydiard the inventor of jogging as a pastime; to Peter Witihera’s power beat battery; to Martins Jetpack, to name a few. Needless to say that Kiwis have been at the forefront of invention and design since New Zealand was established as a Country in early 1800’s. NZ has always demonstrated a willingness to step outside the box and its innovation has been made possible by its pioneer heritage, its absence of tradition and boundaries that have been common factors in inhibiting creativity. 

So what is a level playing field for software development? In essence it is an environment where software developers feel confident that they can can compete on an equal basis with their potential competition without being picked off by the effects of patent lawsuits that are cynically being used to limit, constrain and stifle competition. Established companies and Patent Trolls, (i.e Companies who only reason to exist is to use the law to gain an advantage and have innovative investment in the industry whatsoever) are the other problem. The US has realised the negative affect that patent trolls are having on a number of industries and it at a loss of how to nullify their operations (The Numbers don't lie: Patent trolls are a plague.

New Zealand already has a strong Open Source Software Community that have been active in building an open minded culture of innovation and creativity in the local software industry. This has been championed by the New Zealand Open Software Society (See article on how the current ban came into force) and the Institute of IT Professionals New Zealand. So all New Zealand needs is its burgeoning software entities, many of whom are world leaders in their niche fields of expertise, to unite in protecting the NZ’s advantage.

The exodus from the US and Canada has already begun. The ClearFoundation, a company whose software is in over 150 countries, was an early mover (See full article for moving to New Zealand), and moved here in 2011 to take advantage of the Ban on Software Patents and the business friendly environment. As an open source advocate, ClearFoundation was also impressed with the calibre of the Open Source Software Community here in New Zealand. While there may be others who preceded ClearFoundation we know that there are more lining up from the extensive networks that the ClearFoundation has in the US. These companies have a minimal carbon footprint, create jobs and revenues and are a potential benefit for New Zealand. 

In June this year we came across this article Bringing Innovation to New Zealand by a Canadian software developer explaining his perspective as to what is going wrong with the US and Canada, and why he is in the process of moving to New Zealand. His article spells everything out in simple terms and essentially what he is saying is this: New Zealand offers a number of benefits as pull factors, i.e first world country, english speaking, good connectivity through high speed broadband and the education system is world class and the lifestyle outstanding. These factors and the trickle through of developers already could mean the time is ripe for actively luring the best and brightest emerging software companies and entrepreneurs to New Zealand. 

At the moment there have been just a few companies moving to NZ but as they have good experiences and tell their friends how good it is in NZ the potential for the flood gates to open is only a push or pull factor away. The US and Canada realise that they have a problem with their Patent laws and are moving to see what they can do about them. This article explains the issue. (Patents.) 

The issue for New Zealand is to have the courage to stay the course and keep the field of dreams alive by maintaining its patent ban on software. As alluded to above, there is a move to change the law with Minister Foss referencing the move as falling into line with the European Unions Patent Law. The NZOSS regards this as a backward step and deems that this amendment will negate the Ban. So it is all in the hands of the Parliamentarians and the word is that the numbers are sufficient for the bill to pass with the amendment. The best way to defeat the amendment will be for the Minister to withdraw his amendment. If he doesn’t then for either Peter Dunne, United First Party or one of the Maori Party to vote against the amendment to the bill.  

The final reading of the bill will take place sometime after 29 Jan 2013, once parliament resits in the New Year. If the amendment is upheld all is not totally lost because there is an opportunity to shape the interpretation of the amendment once a patent lawsuit is submitted and in the courts. Unfortunately, this will cost thousands and in reality will be a reflection of what software developers will have to put up with in future if the shaping objections are unsuccessful. The shaping will be be focused on influencing the court to support “specific invention software patents” and not “general obvious software patents”. 

The aforementioned Canadian Software developer sums it up nicely. “I hope that New Zealand does not succumb to external pressures to abandon its plan to eliminate software patents, because without such a ban the future of software innovation is rather bleak. New Zealand now has the opportunity to lead the world with enlightened laws that foster true innovation, rather than encourage legalistic oppression. Besides, New Zealand is a beautiful place with excellent wine and friendly people - a place I would love to call my home.” For the short 18 months that the ClearFoundation has been in New Zealand it has found the business environment to be supportive, innovative and creative. The people are friendly and accommodating.

So the Field of Dreams for the Software industry has been built in NZ and it is worth protecting to build a solid knowledge based economy by attracting those brightest and innovative from the US and Canada to create businesses here. Combine them with NZ’s existing software companies that already have a worldwide market presence by creating the opportunity to collaborate and NZ will have set the conditions to potentially have its own Silicon Valley that creates jobs and revenues. So if you have any influence with Minister Foss, United First or the Maori party now is the time to act to keep the dream alive.

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