NZICT - unwarranted influence on Software Patents?

As a FOSS software developer in Christchurch, I have a strong interest in software patents - specifically their exclusion from patentability in New Zealand. What's more, I think that the NZICT Group Inc might be overstepping its authority...

A few weeks ago Minister Simon Power came out in support of the Commerce Commission select committee's recommendation that, based on the evidence presented by a number of submitters (including my company, Egressive), computer software should be excluded from patenting. As you can imagine, I was overjoyed, as were most (if not all) of the members of the NZOSS.

Given the minister's statement of support and the open, consultative, and transparent process undertaken by the select committee in reaching its recommendation, it struck me as bizarrely incongruous to read the subsequent ComputerWorld NZ piece entitled "NZICT says patents 'integral' to software protection: Vendor group says move is a major policy change and calls for wider consultation" in which NZICT Group CEO, Brett O'Riley, stated (emphasis mine):

"Software patents, while acknowledged as a less than perfect solution in some areas, are none-the-less integral to an individual or company’s right for commercial protection and essential for competing globally. We believe that it is very important that companies retain the option to protect their innovations under patent law, if that is their choice."


"Abandoning software patents is a major policy change. NZICT is concerned that the software industry has not been consulted sufficiently on this change and recommends the Government be cautious to ensure that it is acting in the interests of the industry as a whole."


Questions for the NZICT Group

The article, mysteriously authored by "Computerworld Staff" (no journalist willing to take responsibility?) leads to a few pointed questions:

  1. Who are the NZICT, who do they represent, and why is their opinion worth an article on ComputerWorld NZ or anywhere else?

  2. Did the NZICT make a submission supporting their pro software patent position to the select committee?

  3. How strong was support among NZICT members for the Group's stance in favour of software patents?

  4. What evidence does the NZICT have for its pro-software patents assertions and dire predictions with regard to international trade?

  5. What influence does NZICT have on Government Ministers?

First-hand insight into the NZICT Group

Last week, I had the opportunity to attend an NZICT Group event here in Christchurch, which essentially amounted to an opportunity for NZICT CEO Brett O'Riley to introduce (and be visually associated with) Department of Internal Affairs (DIA) Brent Chalmers (Director Supply Management) who presented the new Government Technology Services initiative being undertaken by DIA to an audience of about 25 people at the posh Canterbury Club in conjunction with the Canterbury Development Corporation-run Canterbury Software Cluster.

Following the talk, I was able to talk to both Mr. O'Riley and to another NZICT board member who attended (but asked not to be identified). I asked them about the NZICT position on software patents, how they arrived at it, and how they justified their position - and their apparent ability to gain a national profile as a group representing the wider NZ software industry - essentially the questions above. Here are their responses, paraphrased by me:

  1. Who are the NZICT, who do they represent, and why is their opinion worth an article on ComputerWorld NZ or anywhere else?

    The NZICT, an incorporated company, formed approximately 12 months ago, has 90 corporate and business members - 10 Tier One, 24 Tier Two, and 66 General members. The board consists of 12 people selected from the 3 Tiers. All but two of the board members represents either a foreign-owned multinational corporation (e.g. Microsoft, Cisco, IBM, Dell) or is a Microsoft Gold Partner or otherwise directly affiliated to Microsoft (Gen-i, Simpl, Kinetics Group, and ACE Training).

    The initial CEO of NZICT was Kevin Ackhurst, who is also Managing Director of Microsoft NZ. He in turn hired and turned over the CEO role to Brett O'Riley in an attempt (in my opinion) to soften the obvious multinational corporate direction of the organisation.

    Interestingly, the thing that both Brett O'Riley and the board member wanted from me was suggestions of how could entice more small kiwi-owned IT businesses into joining. I pointed out to him that for me to join with my business, they'd have to

    • Alter the constitution to removed the tiered membership system, and to remove the tiered voting system which favours richer larger corporate members. One organisation, one vote.
    • Engage their constituency transparently (even to non-members) on any important positions, e.g. on software patents, via online surveys, with full disclosure of results
    • Ensure that representatives of multinational corporations and their formal kiwi partner organisations represent a minority of the board
    • Place a large notice on their website front page (and an accompanying press release) stating: The NZICT would like to earn the right to represent New Zealand IT firms. To do so, we need more independent kiwi-owned and run IT firms. At present we primarily represent the interest of multinational IT corporations and their kiwi partner firms.

    He just looked at me and said (quite seriously): "Any other suggestions?".

  2. Did the NZICT make a submission supporting their pro software patents position to the select committee?

    No, they did not make a submission. The board member said they "received bad advice" from an inside government source, telling them wouldn't need to... and implying that they are on an inside track with at least one of the five ministers with IT-related portfolios keeping them appraised of relevant developments. Those five ministers are Bill English, Jerry Brownlee, Tony Ryall, Simon Power, and Stephen Joyce. I'm not convinced that this is true, however. I believe that the NZICT and its members simply weren't sufficiently organised or knowledgeable about software patents to make a submission. I'm not aware of even a single NZICT member company making a submission. I suspect, based on the way I was told this, that it was bluster from a multinational representative on the back foot.

  3. How strong was support among NZICT members for the Group's stance in favour of software patents?

    Both Brett O'Riley (who admits that he is not well informed on the software patents issue - he had his PA prepare his briefing on it) and the board member admitted that they did not survey NZICT members before stating their position in support of software patents. They did assert that they'd only received positive feedback from members since that time, however, but when pressed, could not provide any indications of the numbers of supporting members.

    I pointed out to him that 81% of NZCS members who responded to a survey voted against software patents. The NZCS has about 2000 paid members, as well as 70-90 organisational affiliates. I suggested to Brett that this compelling show of support for the contrary position to that of the NZICT indicated that either there was a substantial division between NZICT's representation and NZCS's, or that NZICT was actually representing a very small subset of NZ IT firms, namely those owned or affiliated to overseas owned multinationals. He tentatively accepted this statement.

  4. What evidence does the NZICT have for its pro-software patents assertions and dire predictions with regard to international trade?

    Short answer: they have none.

    The board member offered an explanation as to why he thought NZ needs to retain software patents, despite the fact that he agreed the current patent system was utterly broken: He stated that multinational IT corporates were considering investing large amounts in NZ, and if the patent "landscape" shifted, he felt they would shift their investment elsewhere... but he followed this up by saying that the multinational he represented was pulling much of its presence out of Europe and instead investing in the Asia/Pacific region. He sees multinational investment in NZ as the only way to benefit the local IT industry. I asked him what would happen to the profits generated by those external investments... and suggested to him that they probably wouldn't be staying in NZ or benefiting the NZ market in any way. He had no comeback.

    He didn't seem aware that most of Asia also has no software patents, but this does not seem to be inhibiting multinational investment there. He didn't seem to have any explanation of how no software patents in NZ would somehow put off multinational investment, either - this was just a "gut feel" based on his experience.

    Furthermore, both he and Brett suggested that, without software patents, NZ software companies would disadvantaged going into export markets. This, of course, is also spurious because NZ-based software patents would not have jurisdiction in foreign markets, and many don't recognise software patents anyway. For those that do, like the US, the NZ software companies could apply for patents through the US system (broken though it is).

    Initially, Brett was adamant that NZ firms must be able to "protect their IP" or they wouldn't succeed or grow. I asked him which NZ companies he knew of which had NZ software patents, and how it had benefited them. He couldn't really think of any except the one Chris Auld mentioned in this recent hysterical article. I pointed out to him that several of my colleagues had evaluated that patent, and had found it both obvious and subject to prior art, despite the fact that IPONZ awarded it patent status, further underlining how broken the NZ patent process is. This would probably lead to it being overturned in court. I pointed out to him that, internationally, Google appeared to be eschewing "IP protection" in favour of operational superiority and faster innovation than its competitors, and it was doing ok. He agreed... and appeared to change his mind on the necessity of software patents for success on the spot.

  5. What influence does NZICT have on Government Ministers?

    When asked whether they thought the Government would go through with the recommendation, he assured me (with a knowing smile) that "they'll definitely reconsider their position, and reopen the issue for discussion". When asked how this could be achieved given Simon Power's strong statement in support of excluding software patents, the board member admitted he was surprised by that as well... and said that it would certainly make their eventual reversal more troublesome (but he didn't doubt that the Government would reconsider their position and make the "right choice", i.e. retaining software patents).

    Their apparent access to ministers through private channels seems somewhat dubious, as does their (perhaps misguided) sense of their ability to influence government officials. This is disturbing and warrants further exploration.