Hon CRAIG FOSS (Minister of Commerce) : I move, That the Patents Bill be now read a second time. First, I would like to thank the Commerce Committee for its consideration of the Patents Bill. The committee’s report includes many sensible recommendations that will assist in ensuring that New Zealand’s patents system meets the objective of the bill: to promote innovation and economic growth while providing an appropriate balance between the interests of inventors and patent owners, and the interests of society as a whole.

A patent is an intellectual property right granted for new inventions. The grant of a patent provides the patent owner with the right to prevent others from commercially exploiting the invention for the term of the patent. This is intended to provide an incentive for innovation and its dissemination that might not otherwise occur. Although patents can benefit society by providing an incentive for innovation, they can also impose costs on society, as they are effectively a form of monopoly right. It is, therefore, important that the patent system be structured so as to ensure, as far as possible, that the patent system provides sufficient to offset the costs, so that there is a net benefit to society.

The bill will replace the Patents Act 1953, other than provisions relating to patent attorneys. It is an important step in modernising 60-year-old patent legislation. The Patents Bill is intended to deal with the deficiencies of the Patents Act 1953 by introducing stricter criteria for granting a patent than those required by the Patents Act 1953. This will reduce the likelihood of overly broad patents being granted and avoid the economic costs imposed by such patents. This is of particular importance in New Zealand, where most patents are granted to applicants from outside of New Zealand.

The bill will also ensure New Zealand’s patents legislation reflects local and international developments in technology, business, and business practice by providing criteria for the grant of a patent that are more aligned with those of other countries. It continues to promote innovation and competition, and encourages technology transfer to New Zealand by ensuring an appropriate balance between the interests of the patent owners and society as a whole, so as to maximise the benefits to New Zealand of the patents system.

During its consideration of the bill, the committee heard many submissions from groups opposed to the granting of patents for computer programs. The Patents Act 1953 does not mention computer programs. However, computer programs can be patented under the existing Act of 1953 if they produce a commercially useful effect, following a 1994 ruling of the Commissioner of Patents. Under this ruling, most computer programs can be patented in New Zealand.

Various submitters considered that the granting of patents for computer software can inhibit innovation and competition. The committee was also made aware that some New Zealand companies have made significant investments in embedded software. This is the sort of software that is used, for example, to control devices such as home appliances, digital cameras, and mobile phones. The committee accepted that although the patentability of computer programs themselves should be restricted, patent protection should still be available where an invention includes embedded software.

After considering the approaches taken in other jurisdictions, the committee decided and recommended that the bill provide that computer programs should not be a patentable invention. It is clear in the commentary on the bill that the committee did not intend that an invention should be ineligible for patent protection merely because it makes use of, or is implemented by, a computer program. Rather, the intention was that the granting of a patent should be prevented only where the novelty and inventive step lie in a computer program.

In order to make the committee’s intention clear, and to avoid any doubt as to what is intended, I propose that the computer program provision be amended so as to provide that only computer programs as such are ineligible for patent protection. In addition, I also propose that the provision be moved from clause 15 to new clause 10A, which would provide that computer programs as such are not an invention for the purposes of the legislation. I acknowledge that there has been discussion around the changes that I have introduced through Supplementary Order Paper 120, but I reiterate that there has been no change to the select committee’s intention that computer programs should not be patentable. Let me be clear: a computer program as such is not patentable. Let me be clear: a computer program itself, under the Supplementary Order Paper and this bill, is not patentable.

Another reason for this amendment is to ensure consistency with New Zealand’s obligations under the World Trade Organization Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS agreement). The amendments to this provision, which reflect the legislative provisions in the United Kingdom and the European Patent Convention, are contained in a Supplementary Order Paper that will be considered during the Committee stage. The proposed amendment also reduces the risk that the provisions could be challenged as inconsistent with our international obligations.

The bill provides that patents can be refused for inventions whose commercial exploitation would be contrary to public order or morality. The committee has recommended that the bill be amended to include a list of examples of inventions where exploitation is considered contrary to public order or morality and hence are not patentable. This will provide guidance as to the type of inventions excluded from patent protection under that provision.

The bill as introduced did not contain provisions for pre-grant opposition. Such provisions allow third parties to formally oppose the granting of a patent. Many submissions to the committee argued that pre-grant opposition be retained, as it prevents patent owners from asserting invalid patent rights. This provision is contained in the current Act but was not retained in the bill as introduced, as it was considered that the stricter criteria for granting a patent contained in the bill would largely remove the need for pre-grant opposition. The committee recommended that the bill be amended to include the provision for pre-grant opposition.

Another recommendation of the committee is that the grounds for pre-grant opposition, re-examination, and post-grant revocation be aligned. The bill as reported back contains provisions that allow New Zealand to become an exporting member under the terms of the protocol amending the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS agreement) to implement the Doha declaration on the TRIPS agreement and public health. New Zealand lodged its instrument of acceptance of the protocol in October 2011.

The effect of the provisions is that New Zealand will be able to issue compulsory licences for the export of patented pharmaceuticals to developing countries with little or no pharmaceutical manufacturing capacity of their own where the pharmaceutical is necessary to deal with a public health problem such as an epidemic.

The bill as introduced also contained provisions updating the regulatory regime for patent attorneys in New Zealand. The provisions have been split out of the Patents Bill into a new Patent Attorneys Bill. This will allow the Patents Bill to continue to proceed while work continues on developing a new trans-Tasman regulatory regime for patent attorneys. This work is part of the single economic market agenda announced by New Zealand and Australian Prime Ministers in August 2009.

I intend to move during the Committee stage the amendments contained in Supplementary Order Paper 120 in my name. The Supplementary Order Paper contains the amendments to the computer program provisions that I discussed earlier in this speech. The remaining amendments proposed in the Supplementary Order Paper are technical amendments, intended merely to clarify drafting, correct errors, and update consequential amendments. Let me be clear: under this bill and the proposed amendments a computer program as such is not patentable. Under this bill and the proposed Supplementary Order Paper a computer program itself is not patentable. I commend this bill to the House.

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 1,000 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.

JONATHAN YOUNG (National—New Plymouth) : I believe that the previous speaker, Clare Curran, has alluded to the fact that the previous Commerce Committee in the previous Government really grappled with this situation, and it is a very difficult situation—

Hon Trevor Mallard: Previous Parliament, same Government—previous Parliament.

JONATHAN YOUNG: The previous Parliament really grappled with this situation. It is one that is very difficult. I do recall the Minister of Commerce saying a number of times in his speech today that computer software is not a patentable invention. He made that very clear in a number of very strong statements. Obviously through this debate and through the Committee of the whole House, this will be the crux of the issues that we face. Indeed, through that process of the select committee, which I was a member of, it was the one issue that did consume a tremendous amount of our time to get some progress on.

The bill that we are looking at, the Patents Bill, replaces the Patents Act 1953, and it is time that we modernised this legal regime, especially since we as a nation are pushing far more strongly into innovation around the technology particularly around our foodstuffs, particularly around our manufacturing, and also around technology and electronics. Progressing the Patents Bill is one of the initiatives outlined in the Building Innovation progress report that was released about 2 weeks ago. It is the second in a series of six progress reports under the Government’s Business Growth Agenda. We know that for our inventors, our innovators, and our manufacturing companies, and in order to protect our intellectual property, to innovate, and to get the gains that we know this will bring to our country and our economy, having a very effective and modern and robust patent regime is incredibly important.

Probably about 3 years ago I visited the Central Taiwan Science Park, where a growing group of companies cluster to engage in fields such as information and communications technology, biotechnology, precision machinery, and optoelectronics. This Central Taiwan Science Park generated over $9 billion in 2008, with total revenue of all three of Taiwan’s science parks generating $58 billion revenue—in a nation that is approximately the same geographic size of New Zealand, and in a nation that is probably four times the size. But because of its innovation, because of its ability to take ideas and commercialise them to supply products to a world hungry for those sorts of products, it is able to bring a very significant level of quality of life to its people. In all of this the effective and modern patents system protects that innovation.

I understand that there is a balance between encouraging innovation and protecting the bounty or the windfall that comes from that innovation. We will get this right in our country. Recently it was announced that the Advanced Technology Institute is going to be set up and established. It will be named after Sir Paul Callaghan, one of our great scientists. He said that science could make New Zealand a better place, and that is such a true thing. We are focused on boosting growth and creating jobs, and you do not do that just by talking about it. You have to innovate, you have to invest, and you have to then commercialise those inventions and those products in order to get the financial gain from them.

The purpose of the Advanced Technology Institute is to help get New Zealand’s most innovative ideas out of the lab and into the market place more quickly. It is a one-stop shop that will help high-tech firms become more competitive by better connecting them with innovation and business development and expertise. Undergirding this is a modern and effective patents regime system. Even today the Government has announced it is injecting a further $92 million, which has been received very positively in the market place, into research that will help grow the high-tech manufacturing sector in New Zealand. This funding is for high-value manufacturing and services research. It is the second tranche of the 2012 science investment round of the Ministry of Business, Innovation and Employment.

The existing New Zealand patents system needs this updating. A patent is a right granted by the Commissioner of Patents, after examination by the Intellectual Property Office of New Zealand. In New Zealand a patent may be granted for an invention that is a manner of new manufacture and entitles the patent owner the right to exclude others from making, using, or assigning the patented invention during the 20-year term of the patent. The patent owner must make public a complete description of the invention so that once the patent expires, others will be able to use it. As we move through this bill, particularly through the Committee stage, we are going to get to the very nub of some of these issues that members have raised in this House. I believe that we are going to work through and have a system, a regime, that is going to serve the innovators and inventors of our country very well, and we will continue to see and reap the benefits of that great work. Thank you.

Hon CLAYTON COSGROVE (Labour) : This is an unusual circumstance that we find ourselves in. This bill, the Patents Bill, was introduced by the previous Labour Government. I was not on the Commerce Committee at that point, but, as I understand it, the committee exhaustively examined the issues surrounding this legislation. The bill had, in general, widespread and bipartisan support—I think unanimous support; I am looking at the former chair of the Commerce Committee. The committee reported back the legislation with a report that was supported unanimously. I know other colleagues were on that committee. Even, I am advised, the former Minister in charge of this bill, Simon Power, was in agreement with the position of the committee. Then, under the cover of darkness, the new Minister of Commerce, Craig Foss, some time later popped out a rather controversial amendment in Supplementary Order Paper 120, as articulated by my colleague Clare Curran, that, effectively, fired a torpedo into the consensus of the committee. We do not know who the Minister consulted with, if he consulted with anyone. We know that this is an extremely contentious issue, which was resolved by the previous Commerce Committee, as evidenced by the bill. It was unanimously resolved. I believe that basically it has widespread support.

The question I have, which I know we will delve into in greater detail in the Committee stage, is where this amendment has come from. My colleague Clare Curran used the colloquial term “stuff-up”, and it appears that this is yet another one from this Government. It is a different time and a different place, but this is a mirror image of the State-owned enterprises debacle. There was no consultation. It came out under the cover of darkness. Maybe the Minister went up to the office, had a couple of Beroccas, had a wee think, got out the pen and paper, and decided to fire this one in.

What this has created, to return to my first point, is a situation that we are faced with now as an Opposition. We are in the unusual position that we were supportive of this bill as it was, and now we are in a position where if Clare Curran’s amendment on Supplementary Order Paper 123 is not accepted, which would confirm the previous committee’s unanimous position, then we will be forced in future stages of this bill to oppose it. Although I want to make it clear that for many of the things that Jonathan Young, the current chair of the Commerce Committee, commented on, in terms of creating an environment for innovation, science, technology, IT, and other industries, I doubt whether there is anybody in the House who would be unsupportive of that stance—maybe John Banks, given that he is an honorary member of the Flat Earth Society, but I do not know. Apart from that, I think we all agree that, obviously, we want to balance the two aspects—

Mike Sabin: I think you’re referring to the people to your left there.

Hon CLAYTON COSGROVE: Well, there might be another couple of alumni over there, of course. We want to balance the dual interests—first, allowing innovators to profit from their inventions—

Hon Dr Jonathan Coleman: He doesn’t deserve to be treated so badly by Labour.

Hon CLAYTON COSGROVE: Oh, “The Maestro”. “The Maestro” would not have messed this up. “The Maestro” would not have messed this up. Oh, maybe he would. Dr Coleman, if he were the Minister in charge of this bill, would probably at least have had a couple of Beroccas, gone out, consulted his colleagues, and maybe gone and talked to Simon Power, the previous Minister, and said: “Simon Power, why was it that you supported the committee, which in a bipartisan way unanimously resolved this issue? Why were you supportive of that position?”. Why should the current Minister, or Dr Coleman if he were the Minister, change that? I suspect, given the large and long track record of political success that Jonathan Coleman has had in managing various campaigns and others, Jonathan Coleman probably would not have made the same mistake that Mr Foss has made.

As I say, and I return to this point, we all agree with balancing the two points—firstly, allowing innovators to profit from their inventions, and, secondly, ensuring that the monopoly rights that accompany patents are not unduly exploited. That was the position. It is a difficult position to reconcile at the committee. Sam Lotu-Iiga was a member of that committee, I believe. He voted in favour of this, as did Ms Dalziel and the Labour members. Consensus and peace broke out. I think amongst the industry generally—

Hon Lianne Dalziel: Always did when I was chairing it.

Hon CLAYTON COSGROVE: Well, the kūmara never says how sweet it is, but that is probably true. But now we have this amendment that has popped out and has not been consulted on, or if it has we do not know. I would have thought that that is a bad way—a bad way—to engage in the legislative process. Yes, of course there are always Supplementary Order Papers. Yes, there are always matters to be tidied up and to be fixed—things that did not hit the oversight of a select committee; they are a given. But this point goes to the centre and heart of critical issues in our economy, in our innovative sectors, and in our technological science and innovation sectors. We have a Minister who wanders along and says things, maybe because he got his arm twisted by a few big guys in the industry—maybe; I do not know. That could be uncharitable. Maybe he just believes that he should override the unanimous view of even his own parliamentary colleagues on his side, like the previous Minister, Simon Power, who did have a longstanding interest in these matters. Maybe he believes this is the best way to go, to just pop it out.

Usually in commerce legislation there is general agreement—Mr Jonathan Young nods; there is general agreement on the committee he chairs, and he chairs it well—that these are the right things to do. But this sort of smacks to me of the fiasco that we had on the Finance and Expenditure Committee when things sort of popped out of the ether around State-owned enterprises. And look at the stuff-up, to quote Clare Curran again, that has occurred in an appalling legislative process around some of New Zealand’s biggest assets. But those geniuses over there do not learn. Even though they are warned that these things could happen, they do not learn. They just trundle on to protect the pride and vanity of their leadership. They do not actually sit back and say: “Maybe we got it wrong.”

This is a very bizarre case, because, as I understand it, there was and is no politics in this. It was a unanimous position of the committee. The committee did a diligent job. It listened to the submissions. That is not to say that all submitters supported the view of the committee ultimately, but this was a position where Labour, National, and other political parties that were represented agreed on a position that was then supported by the Minister at the time.

Hon Lianne Dalziel: Someone went round the back door.

Hon CLAYTON COSGROVE: Well, someone went round the back door, my colleague said—yes. Then Minister Craig Foss simply had a rush of blood to various extremities of his person and came out with this amendment, and suddenly that political consensus is asunder. I would be very interested to hear my colleague Sam Lotu-Iiga’s view put on the record of Parliament, as he is one who supported this piece of legislation—supported it, as I understand it, wholeheartedly—and was convinced of the validity of the committee’s position. I would not mind an explanation from him, if the Minister will not give one, as to why the change has occurred. Does Mr Lotu-Iiga support the position of his Minister? And if he does, OK, what has changed his mind? What has changed the minds of the other colleagues who were on that committee, which reported back in a unanimous way?

There is a hell of a lot at stake for this. Clare Curran’s Supplementary Order Paper simply clarifies and makes crystal clear—crystal clear—in an unambiguous way the position that existed when the bill came out of the Commerce Committee, which is that computer programs are not patentable inventions. It clarifies that position. It restores to the legislation the position of the then Commerce Committee.

We would like some explanations. We are not seeking to change the rules or the position here; we on this side are seeking to restore that consensus. We have heard nothing, no explanation, from the Minister who has proposed this change. I see the Attorney-General has walked in—a learned, learned lawyer, I am told, even by him occasionally. I am sure he might be able to give, perhaps, an explanation as to why, as a member of Cabinet, the Minister Craig Foss has proposed this Supplementary Order Paper and this change. Somebody should explain, because if it is going to be rammed through by majority in this Chamber, then the innovative industries, those that support the Minister’s amendment and, more especially, those that oppose it, will want to know why they have been sold out. They will want to know why. There is a duty of care from a Government that abrogates, truncates, and puts the sword into the basic legislative process to give an explanation to the people of New Zealand and the sectors that it is going to negatively affect. We have heard no explanation. We were supportive of this bill, but we give notice that if Clare Curran’s Supplementary Order Paper is not supported, we will disengage support for the legislation.

CLARE CURRAN (Labour—Dunedin South) : I seek leave to table the petition No Software Patents in NZ, signed by 1,078 New Zealand software companies and sole operators, including Xero—

The ASSISTANT SPEAKER (Lindsay Tisch): All right. [Interruption] No, we know what it is. Leave is sought for that purpose. Is there any objection? There is no objection. [Interruption] There is objection? [Interruption] There is objection.

STEFFAN BROWNING (Green) : The Green Party opposes this Patents Bill, and it opposes it for a number of reasons. It actually sees some merit in a number of aspects of it, but there are some glaring shortcomings with the bill.

I will start in terms of the interests of Māori. We have a problem here. Albeit the Commerce Committee in its report suggested that Māori interests are looked after or could be looked after later on with amendments as part of a Government response to the Waitangi Tribunal’s report on Wai 262, the bill is actually woeful in terms of support for Māori interests and for indigenous plants, which are very important for the whole of New Zealand.

If we look at the Māori advisory committee that is to be set up as part of this bill, the Commissioner of Patents appoints a committee called the Māori advisory committee. The commissioner may at any time appoint a person to the committee or remove a person from the committee, as the commissioner sees fit. I think that shows no sign of representation, or certainty that Māori interests are being represented. The function of the committee is to advise the commissioner on request, so the committee does not even get to get stuck in as it sees fit; it gives advice to the commissioner only on request. That is inadequate as well. The commissioner must consider, but is not bound by, advice given by the Māori advisory committee. Why not? What is the purpose of this committee, which is appointed by the commissioner, who may or may not even give it serious cognisance? The commissioner must consider its advice, but it does not necessarily give any effect to it. And the committee may regulate its own procedure, subject to any direction given by the commissioner. The Green Party sees this as woefully inadequate.

I have tabled Supplementary Order Paper 124 on the crucial issue of making sure that companies cannot patent life. This bill is very, very patchy in that area. We cannot afford, intentionally or not, to allow for the patenting of life forms. It would encourage biopiracy of indigenous resources. It would turn life forms into commodities to be used for profit. It would put up barriers to the free flow of scientific research.

Patents were designed to ensure that inventors could gain financial returns for their hard work and ingenuity, and that makes sense in terms of things—in terms of chemistry and physics—but not life. Living organisms were originally excluded from the patent system. They were a product of nature—that is what they were seen as, a product of nature—not a human invention.

But this changed in 1980 when courts elsewhere found that living organisms could be a human invention. What made this possible was genetic engineering. The tweaking of genes is now classed as an invention. There is very little invention about it. Most organisms—and my Supplementary Order Paper 124 talks of exclusion from the Patents Bill of organisms—have 30,000 genes, whether it is a human, a plant, or whatever. Genetic engineering changes just one or two genes, and butchers up a whole lot of others in the process, with little regard to effects further on. But because they have just done that—one or two genes out of 30,000-odd—then they say that they have got something significantly different and it deserves a patent. Rubbish!

Organisms and genetics are part of our global living heritage. They are part of our growing heritage. Allowing the passing of this bill without supporting my Supplementary Order Paper will lead to the continued blocking of pure research, of open research. Private profit-making from our collectively owned genes and resources will, importantly, continue the process of stealing resources, this time including the intellectual property of Māori—removing it from the commons for private gain. Instead of rewarding ingenious inventors, the patent system applied to living organisms is rewarding just big business.

These industries seek out organisms, draw upon the intellectual property of indigenous peoples, and then use laboratory techniques to isolate parts of those organisms and patent them. Teams are bioprospecting—we hear of them going into the jungles of South America, or the scrublands, forests, or wetlands of New Zealand, for that matter—to find plants and organisms that they will then try to claim some level of ownership over. Biopiracy is another issue. There are instances of plants that are absolutely used by full cultures, where big business has gone in to patent them that so that it can have control of any potential gain on an international level.

I have just toured this country with two Australian farmers to talk about the effect that genetic engineering has had in their communities. The important part of that is that the product of genetic engineering that affects them so much is so influential because it has a patent on it. They spoke to farmers and others all over New Zealand about the financial risks imposed on them by the patenting of life by others. What they have is a situation—and the best example was probably in parts of Western Australia and Victoria—where Monsanto and other companies have been allowed to let go a GE, genetically engineered, genetically modified, or whatever you want to call it, patented canola plant. Just a couple of genes were shifted in that plant out of 30,000-odd, and they have been able to patent it for resistance to a herbicide.

But there is a problem with that for farmers. Not only do they have to pay a lot extra for the seed, because they have been told all sorts of stuff—that it is going to be better for them—but there is contamination of neighbouring farms. Those farmers have no choice in it. Their farms are contaminated. But because there is a patent on the seeds, Monsanto is able to claim royalties off them. So when the plants grow again the next year, and there is contamination, Monsanto can get end point royalties, it can charge a fee for the seed, and it can do all sorts on that. That is just unethical. It can happen only because of a patent on the seed.

There is an increased cost of seed with a patent, and not only that; sometimes farmers are obliged to follow particular agronomic instructions on how they are meant to grow the seeds and what sprays they are meant to use. There is an issue, then, that there is actually ownership. So Monsanto, in this case, actually owns the plant, the material, that is in the paddock of someone who did not want it. The company also then controls the supply chain. It says where to get something better than $50 less per tonne than normal for the end product, and even where farmers have to deliver it if they want to get only $10 less a tonne.

Patenting life is not the way forward, and so I ask all the parties in this House to support at the Committee stage my Supplementary Order Paper to protect living organisms from being able to be patented. In New Zealand we have another vision. It is “100% Pure New Zealand”, a clean, green New Zealand, and the Greens do not see any need for this sort of patenting in there. Thank you.

Peseta SAM LOTU-IIGA (National—Maungakiekie) : It is a privilege to stand and speak to the second reading of this, the Patents Bill, and may I commend the Minister of Commerce, the Hon Craig Foss, for continuing on the fine work of the last Minister. Also what has been mentioned here tonight has been the work of the Commerce Committee under the last Parliament in terms of bringing together the quite difficult issues around patents. The bill actually updates a statute that is 59 years old. With such an archaic statute, the bill really is about bringing the reform process to bear on some of the important statutes on our book. It complements the economic growth agenda that this Government is running in terms of promoting science and innovation, and in terms of promoting economic growth and jobs and opportunities. Intellectual property is an important part of it, because, as we have already heard today, it is balancing research and development and innovation, and the rights of those who put an investment of resources and funds into those things, and also with the rights of those who want to get on and do business. So this is about making a balanced approach to what are important issues around intellectual property rights.

It is about removing some of the impediments that were in the old legislation. How that works is that we considered what patents are, so the bill looks at novelty and inventive step. All countries consider information made available anywhere in the world when they look at patents, and applicants are not generally given the benefit of the doubt in any dispute. But under the old statute, novelty is determined on the basis of what is known in New Zealand. So from that you can get quite distorted outcomes around how patent rights are granted in New Zealand. Those rights can often be broader than what would be available in other countries—

Hon Trevor Mallard: Was this speech written in New Zealand?

Peseta SAM LOTU-IIGA: —and Mr Mallard knows that. So it has the potential to disadvantage New Zealand businesses and consumers, as technology that is covered by these patents is freely available elsewhere.

Much of our innovation, as has already been stated—and I see a lot of this in my own electorate of Maungakiekie—is incremental, and it builds on what has gone on before. We certainly grappled with a number of issues around computer software and computer programs, but on this side of the House we are committed and determined to focus on boosting growth and jobs, so this bill in its entirety is about updating our patent laws and providing incentives for innovation. We have got to balance that with those who are taking on new inventions and adding to them. So I commend this bill to the House. I certainly support the recommendations that were made by the Commerce Committee; I sat on that select committee in the last Parliament. I certainly commend this bill to the House. Thank you.

DENIS O’ROURKE (NZ First) : With only a couple of reservations, New Zealand First supports and welcomes the Patents Bill, which was introduced in 2008. It is clearly a bill a long time in gestation, but it is good to see a bill to replace the Patents Act 1953, which is obviously outdated and not compatible with some overseas legislation, modelled as it was on the earlier UK Act of 1949. The 1953 Act has a low threshold for patentability compared with other countries. Therefore, broader patent rights were available here than elsewhere. So technology freely available elsewhere might not be available here in New Zealand because of coverage by patents. This could, of course, damage New Zealand business innovation, damage business growth and productivity, and also restrict consumer choice.

The bill will modernise and upgrade patents law in New Zealand. Part 5, as we know, has been split away from this bill and will now form part of the new Patent Attorneys Bill. The new Patents Bill being now considered will be good for New Zealand business for the reasons I have already mentioned and it will align the New Zealand law with international practice, and so it should. It will strengthen the criteria for granting patents in New Zealand to an absolute novelty standard, so that a patent applied for here will be examined for usefulness and for the presence of an inventive step. So although patents will not be available according to the broader regime previously available, the new standards applicable will ensure, we believe, better patents, better products, and therefore a better outcome overall for New Zealand business.

It is a very large and comprehensive bill developed since at least 2008 and we think that the Commerce Committee has done a great job with it over that period of time. For those reasons the bill fundamentally deserves support, with only a couple of reservations, which I will come to in a minute.

The main changes recommended by the select committee, as I say with a couple of exceptions, are supported by New Zealand First. They add value to the bill, as presented. These include some important exclusions from patentability in relation to public order and morality by adding some examples, which I note are a process for cloning human beings, a process for modifying the germ line genetic identity of human beings, an invention that involves the use of human embryos for industrial or commercial purposes, an invention that is a process for modifying the genetic identity of animals that is likely to cause them suffering, and so on. Those are very good examples, and are good additions to the legislation, as recommended by the committee.

Then there is a very clear requirement in clause 37(1) for the description of inventions, using the words “disclose the invention in a manner that is clear enough and complete enough for the invention to be performed by a person skilled in the art;”. Further, the recommendations preserve pre-grant opposition rights, which we agree with, and in clause 138A they provide for protection against infringement proceedings where a person had been continuously exploiting an invention immediately before the priority date. Such a person would be allowed to continue using the invention, even if another person or company obtained a patent for the invention, without being subject to infringement action. We think those are all very sensible additions to the legislation.

However, coming to the reservations that we have, we also believe, as the Labour representatives have stated, that new clause 10A(1) and (2) in Supplementary Order Paper 120 is problematic, as recommended by the Minister’s amendment, which, frankly, seems to me to be complete gobbledegook. I believe that Supplementary Order Paper 123 provides for a much better alternative, in that it states: “Subsection (1) does not prevent an invention that makes use of an embedded computer program from being patentable.” When you compare that with the amendment recommended in Supplementary Order Paper 120—which says: “Subsection (1) prevents anything from being an invention for the purposes of this Act only to the extent that a patent or an application relates to a computer program as such.”—to me that is very problematical, in that it is capable of a number of different interpretations. I think I know what it means, but I am sure that there will be others who would have totally different interpretations. So from a completely clarity point of view, I think the amendment in Supplementary Order Paper 123 is much better.

New Zealand First also supports Supplementary Order Paper 124, which was introduced by the Green Party, concerning the non-patentability of organisms whether genetically modified or not. We think that is a useful addition, which should be incorporated into the bill. We will therefore support that amendment for those reasons.

Otherwise, the recommendations of the select committee are supported by New Zealand First, as is the bill as a whole. As I said at the beginning, I think this will update and improve New Zealand patent law, make it compatible with overseas countries, and be a good template going forward for people in this country who rely on patent rights for their business, for the economy, and therefore for the country as a whole.

CLARE CURRAN (Labour—Dunedin South) : I seek leave to table the petition “No Software Patents in NZ”, signed by 1,078 New Zealand software companies and sole operators, including Xero, Jade, and Orion Health.

Mr DEPUTY SPEAKER: Leave is sought for that purpose. Is there any objection? There is no objection.

• Document, by leave, laid on the Table of the House.

MARK MITCHELL (National—Rodney) : I am pleased to take a call on this, the second reading of the Patents Bill. I would just like to acknowledge the hard work that was put into this bill by the previous Commerce Committee. Some of its members are sitting on the present Commerce Committee, and I look forward to getting their input on this bill. This is an important bill that modernises New Zealand’s patents law. The bill reflects the Government’s commitment to aiding economic growth through innovation. As we have heard previously, our system was established under the Patents Act back in 1953, and based around the United Kingdom Patents Act 1949. The UK went on and replaced its statute in 1977, but we have made no substantial changes since 1953. It is time to bring this Act into the 21st century. Intellectual property is critically important to the future of many countries, including New Zealand. This bill ensures that New Zealand intellectual property legislation takes into account international changes and developments. It is important that as a country we do not get in our own way by relying on old legislation that dates back to 1953.

One of the changes that I feel is critical is that the bill strengthens the criteria for granting a patent to ensure that patents are granted only for genuine innovations, defined as a manner of manufacture, and that they are novel, non-obvious, and useful. This change brings us into line with international best practice. It will simplify the procedures for granting a patent, including removing the current requirement for local applicants to seek permission to file a foreign patent application if they have not filed an application in New Zealand. It will also streamline the procedures for challenging the granting of a patent. This is a very good bill. I congratulate the Minister of Commerce, Craig Foss, and am pleased to be able to commend this bill to the House.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I am finding it difficult to follow why the Government is adopting the line that it is adopting on this particular bill, the Patents Bill. We are so close to having, I believe, not unanimity, obviously, with some parties opposing it altogether, but an overwhelming majority in this House in support of the bill that it seems crazy we have ended up in the situation where we are debating over a single clause in what is a substantial rewrite of patents law—which is, of course, well overdue. This bill was reported back from the Commerce Committee 2 years ago, and, as others have commented, I was the chair of the select committee that considered this bill, and we did put a lot of time and effort into this particular matter. To find such a substantial change introduced by the Minister by way of Supplementary Order Paper 120, simply notified to the other side of the House without any consultation or any engagement with us over why the Government has adopted this position, I do not believe makes for very good governance of an issue that is of such major importance.

I have to say that I had a really good working relationship with the previous Minister of Commerce on this matter when I was the spokesperson. I consulted with him all the way through the select committee process. Indeed, when we were dealing with this very issue it was the subject of quite a substantial conversation. I think my colleague Clare Curran joined me on that occasion, and we really nutted through the issues. We felt, both of us on this side of the House, that we had been well received and that we had reached a good outcome.

Unfortunately, what seems to have happened is that there seem to have been some discussions behind closed doors, which this side of the House has not been privy to, but which were the subject of quite a substantial blog post. I want to comment about this blog post, and I am going to table it in the House, because it actually raises some serious questions. I do not have a specific date on this blog post, but it looks like it was just after the bill was reported back in June 2010. What it does is it reports on a meeting. I understand that this blog post has now been taken down from the patents4software website, so there is an element of a sense of cover-up around this, which I think people ought to be aware of. It quotes an official who is still working in the competition, trade, and investment part of the new “Mobie”, I think it is called now—the Ministry of Business, Innovation and Employment, formerly known as the Ministry of Economic Development. I also understand that the person who wrote this particular communication that is the subject of the blog post, one Brett O’Riley, is now also working for the Ministry of Business, Innovation and Employment. Not that the two factors necessarily show a conspiracy, but it is ironic that in fact the very person who wrote this is now working for that ministry in this particular field.

The opening statement is: “New Zealand looks like its reversing course on software patent protection.” That is the opening statement. So that means that there is a very clear understanding that the Government, straight after the select committee had reported back to the House, in good faith, with very explicit wording—the bill stating “A computer programme is not a patentable invention.”—we have the statement: “New Zealand looks like its reversing course on software patent protection. On June 9 there was a meeting between representatives of the NZ Ministry of Economic Development (MED) and representatives of NZICT group.” The NZICT group, the New Zealand Information and Communication Technologies Group, are the big boys. They are the big players in this field.

Hon Trevor Mallard: Microsoft.

Hon LIANNE DALZIEL: This is Microsoft and the rest of them.

Hon Trevor Mallard: Are any of them owned in New Zealand?

Hon LIANNE DALZIEL: None of them are owned in New Zealand, as far as I am aware. The blog post goes on: “It appears that New Zealand is likely to ultimately adopt an approach to software patents that is consistent with the EPO’s position. My thanks to”—and he mentions two people, one from a company called Schwegman, Lundberg and Woessner and the other from IBM—“for relaying this information. Here is the summary of the meeting provided by Brett O’Riley CEO of NZICT: Our representative delegation met with MED in Wellington yesterday. This was to discuss the formal submission we had made to Hon Simon Power last week covering our concerns about the proposed draft legislation. The end result of the meeting was extremely encouraging. While section 15 (3A) will not be removed (our ideal outcome),”. Excuse me, is section 15(3A) removed by this Minister? Yes, it is. So, actually, the Government has gone further than they thought they were going to get, back then.

The blog post continues: “Hon Simon Power has asked MED to work with the Parliamentary Counsel’s Office to redraft the section along the lines of the European Patent Convention. He has informed the Commerce Select Committee that Crown Law will be undertaking some redrafting before the bill gets to its Second Reading.” Well, that conversation simply did not happen. “While it’s obviously not the end of the journey, it was very pleasing to have a positive indication that the Government recognises there is a need to amend section 15(3A)”—this is the one that this Supplementary Order Paper 120 removes altogether—“‘to make sure it’s consistent with the intent of adopting European practice. While European law does restrict software patents this is positive progress, and the view of our team is that is that this would be a good outcome for the New Zealand ICT industry.”

Clare Curran: Which parts?

Hon LIANNE DALZIEL: Not the ones that my colleague has just tabled in their submission in the House.

Clare Curran: Not the Kiwi software industry.

Hon LIANNE DALZIEL: The Kiwi software companies do not want this Supplementary Order Paper 120.

The blog post continues: “In summary, the MED confirmed earlier statements from Select Committee members … that the intent was to follow European law”—and I am not sure where that came from—and “The MED acknowledged that amendment is required to achieve this,”. Then it talks about who attended the meeting. Then it talks about Rory McLeod, director of the competition, trade, and investment branch, who “began with an update on the Patents Bill clause 15 (3A). He described the decision of the Select Committee as being to move to a ‘normal patentable situation as in Europe’, that did not allow patenting of software per se. Rory then went into some detail (partly in response to questions we had raised) about what the Select Committee intent was: The intent had never been to ban software patents outright (and the MED would have had serious concerns about that if it were proposed).” Well, that is precisely what we did.

It continues: “Software should be treated like other technology, so should have a technical purpose and be an inventive step to be patentable, as in Europe.”—and that is the problem in Europe. “Not just any software would be patentable, it would need to meet the above test. Embedded or not embedded is or was not the distinction that is intended. The signal that the Government wants to send is to follow European law and practice. The MED also now clearly acknowledge that clause 15(3A) is not adequate to convey this intent. It was great being able to present practical examples of world leading software being developed by Pingar and Aptimize,”—if I have pronounced those correctly—“and hear MED recognise the importance of these companies being able to seek patent protection.”

There was no mistake in what was discussed at that meeting, and I am not surprised that this blog post has been taken down off the website, and I am glad that I am going to have the opportunity to table it in the House, because it is, I think, really important that we know that behind the backs of the select committee, behind all of the proper processes that we had in place to deal with this major update of our patent law—

Hon Trevor Mallard: If it happened in the States we’d call it corruption.

Hon LIANNE DALZIEL: We would call it corruption in other countries, but, fortunately, New Zealand is a corruption-free country, so we would not call it corruption here. But there is no question that a process that had been fully agreed and properly worked through by the select committee has ended up being overturned by this meeting that we would not otherwise have known about.

So it is quite clear that there has been quite a substantial amount of work done behind the scenes—truly behind the scenes—and I believe that Parliament has a right to know that this is going on, and that we are opposing the changes that the Minister is putting forward. We invite the House to very carefully consider what has been laid before it, and to perhaps talk to the Minister. And maybe the Minister, when he has the opportunity in the Committee stage on this bill, might actually reflect upon the amendment that my colleague Clare Curran has proposed in Supplementary Order Paper 123, because it is on that condition that we will support the bill’s passage through the House.

I seek leave to table a post from the blog “patents4software”.

The ASSISTANT SPEAKER (Lindsay Tisch): Leave is sought for that purpose. Is there any objection? There is no objection.

• Document, by leave, laid on the Table of the House.

MIKE SABIN (National—Northland) : I will take a short call on this bill, the Patents Bill.

Hon Trevor Mallard: What’s that on his tie?

MIKE SABIN: It is Homer Simpson, Mr Mallard, a very well-known—

Hon Trevor Mallard: The member’s hero.

MIKE SABIN: He is reacting in quite the way I am sure he did on election night. Let us stick to the task at hand, shall we.

I will take a short call on the Patents Bill, which updates and replaces the Patents Act of 1953. The members opposite have alluded to the fact that there was significant political consensus on the bill in its early passage through the Commerce Committee and they have traversed the concerns they raised with regard to Supplementary Order Paper 120 from the Hon Craig Foss. I do not intend to cover that any more other than to say that I am sure that, as this matter moves further, through the Committee stage, members on both sides of the House will work diligently to ensure that the right outcome is achieved in the interests of New Zealand, because this bill very much goes to the heart of growing the economy through the innovation that New Zealand has become so known for. In fact, this bill and its updates do reflect the commitment that this Government has to growing the economy and supporting our innovative sector as one of our four key priorities to grow a more productive and competitive economy, and providing that platform through this bill is a very good example of that.

One of the very important aspects, if I can talk in just broad terms, is the fact that patent rights granted in New Zealand can in fact be somewhat broader than those of other countries for the same invention, which does place New Zealand at something of a disadvantage. This bill really aims to strengthen the criteria for granting—

Clare Curran: No it doesn’t. It’ll end up in the courts.

MIKE SABIN: Well, on this side of the House we think it does. You are quite entitled to object to that, of course, and I am sure you will—not you, Mr Speaker, but that member.

Clare Curran: Have you read it?

MIKE SABIN: I have read the bill—certainly the relevant parts I am going to speak to. What the bill does is bring New Zealand patent law into line with best practice international standards. It helps address concerns by Māori related to patents on major indigenous plants and animals and traditional knowledge. It takes account of international developments, it simplifies procedures in terms of granting patents, and it streamlines procedures for challenging the grant of a patent. So while it seems obvious that the Opposition members from the Labour benches have chosen to focus simply on the Supplementary Order Paper introduced by the Minister, I think it is clear that there is a lot of other good work going on in this bill. I am certainly very comfortable to commend this bill to the House and to see that the good work that is going on here will be available to New Zealanders as it passes into law. Thank you.

The ASSISTANT SPEAKER (Lindsay Tisch): I understand the next call is a split call. I will ring the bell at 4 minutes.

Hon DAVID CUNLIFFE (Labour—New Lynn) : It is a pleasure to take a short call on the Patents Bill. Labour supports this bill but, importantly, at this stage only, pending clarification of the Government’s willingness to accept our own Supplementary Order Paper 123 in Clare Curran’s name, which, of course, is backed by the vast majority of New Zealand’s innovators. It stipulates that a computer program “does not prevent an invention that makes use of an embedded computer program from being patentable.” It leaves the boundaries of embedded software to be determined by the Government on a case by case basis, as is appropriate. It would be a nonsense, frankly, to make any computer program patentable, because subprograms could be used to block the development of innovation. So we are putting that matter on the floor of the House for the Government to listen to. We are signalling very clearly that our support for the rest of the bill is contingent and conditional on the Government’s willingness to accept what has the almost universal support of the industry—perhaps Microsoft and a couple of others excepted—but the list of names of New Zealand’s finest innovative young companies is, I think, incontrovertible—

Clare Curran: The patent attorneys support it.

Hon DAVID CUNLIFFE: —and, of course, the Institute of Patent Attorneys, as my colleague Clare Curran reminds me, supports that amendment.

You know, sometimes something like the Patents Bill is seen as a technical, boring piece of legislation, but it is hugely important to understand the importance of patenting to our economy and to our economic development future. If we do not want to be just exporting raw logs or exporting raw milk and if we want to have a high-value, high-income, high-export economy, we absolutely survive by our brains, not just by our brawn. Our brains have to produce something that is novel and new, and that can then be defended against others who want to copy that. The way we do that is through the patent law. This law makes it clear that you have to be really new, really novel, in order to get a patent, and that is probably appropriate.

The bill has had bipartisan support from its outset. It was originally introduced by Labour; it has been worked on by National. These are complex issues, and it is good to see MPs cooperating across the House to try to get the best possible result for New Zealand businesses, because we all as Kiwis share a common interest in our exporters being able to do as well as possible in international markets. For that reason the bill does not cave in to the big pharmaceutical industry, which wanted to extend the 20-year terms of pharmaceutical patents. It does not allow people to patent medical procedures, because that is not in the interests of public health.

One thing that I still have a lingering concern about—and I want to put it on the floor of the House for the record—is that I do have some concerns about requiring patents to be novel after a global search of international precedents, rather than on the basis of New Zealand novelty. The reason for that is that it becomes an impediment to small, emerging companies, which may not have the resources to pay a patent attorney to do a complete global search. The counterargument is, of course, we live in a global market; if you are going to defend globally, you have to be prepared to accept that. What I would warn, and I think it is a multipartisan issue, is that most New Zealand companies by world standards are small companies, so we have to have a law that is relatively user-friendly if we want our small stars to take on the big guys and hold their own.

Most innovators, even the Googles and the Facebooks and the Apples, started in a garage somewhere, off in Palo Alto. We have got lot of garages in New Zealand—[Bell rung]—1 minute—with incredibly innovative Kiwis coming up with the Googles of tomorrow. This bill is really important, because it has to get the balance right between making it easy to innovate and secure enough, when you get a patent, to be able to defend it against the world.

An interesting thing: I have a relation—I will not name him—who is a very good patent attorney, and he tells me that 90 percent of the patents patented in New Zealand are defensive patents by major international corporations. Less than 10 percent of the patents in New Zealand are done by New Zealanders. We need to shift that over time.

Mr Speaker is giving me the signal, so I will close now. Labour supports the bill this far, but only if my colleague Ms Curran’s Supplementary Order Paper is adopted in a bipartisan fashion by the Government—

The ASSISTANT SPEAKER (Lindsay Tisch): Sorry to interrupt the honourable member. His time has expired.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I seek leave to make a personal explanation about one of the comments I made during my speech.

The ASSISTANT SPEAKER (Lindsay Tisch): Leave is sought for that purpose. Is there any objection? There is no objection.

Hon LIANNE DALZIEL: It has been drawn to my attention that I made a mistake in relation to where Brett O’Reilly was employed. He was employed in the business and innovation and investment section of the Ministry of Science and Innovation. That was prior to its merger with the Ministry for Business, Innovation and—

Hon Member: “Mobie”.

Hon LIANNE DALZIEL: “Mobie”—yes.

The ASSISTANT SPEAKER (Lindsay Tisch): Thank you.

GARETH HUGHES (Green) : Kia ora, Mr Speaker. Ngā mihi nui ki a koutou. Kia ora. I rise to speak on the Patents Bill and its ugly cousin, the Minister’s amendments. I am pleased to be saying the Green Party will be voting against this bill on its second reading. I mean, talk about messing it up. It is high time we updated our antiquated 1950s patent law. I know it is laughed at around the world. It is laughed at by patent lawyers. It is good we are modernising it, but talk about messing it up. Where we have messed it up, where the Minister has dropped the ball, is around software patents. The Minister has irresponsibly tabled this significant amendment, which has muddied this crystal-clear, unambiguous consensus that came out of the Commerce Committee that software should not be patented.

Software should not be patented, because what we are talking about is code. It is like we are talking about maths. Copyright is fine. This is about protecting New Zealand’s thriving, growing information and communications technology and software development industry. Foss has muddied the waters with the introduction of two new words—only two words—“as such”, which is what is scaring our thriving industry. The industry, quite rightly I think, is describing it as a stab in the back. They are describing it as being thrown under the bus. These are not your extremists. These are people like the New Zealand Institute of IT Professionals. We are talking about the Open Source Society. We are talking about InternetNZ. We are talking about some very respected, very influential people, and we hope the Government listens to them, because it has introduced this huge legal—

Clare Curran: Orion Health

GARETH HUGHES: I do not want to miss anyone out: the Open Source Society, Orion Health, and Jade Software Corporation Ltd. I have got only 5 minutes, so I will not go through the whole list, because there are another 1,000 people and software developers who have added their names to this list.

So the Government introduced this huge legal loophole with no consultation, and with no ability for the Commerce Committee to have any scrutiny over it. It is highly irresponsible. The Government is looking to Europe, but I do not know why you would look to Europe on this measure, when what we see there is a great deal of litigation. What we want to see in New Zealand, if we want to see our economy going forward, is we want to have our innovators innovating. We do not want to have our innovators litigating, and that is exactly what we are going to see under this bill. The Government has thrown away that consensus. We saw on the select committee that software should not be patentable—copyright is perfectly fine. You know, it was a unanimous call out of the select committee, out of all the parties involved.

I think it is patently absurd that this Government is standing up here today, saying: “Well, we don’t think the software should be patented too.” If that is what it believes, it should say it in the laws of our country and not just say it in the House. This is what the IT industry wants to hear. And the key question that has got to be asked is who benefits from the changes—

Hon Trevor Mallard: Microsoft.

GARETH HUGHES: We know it is the multinationals. We know they are the ones with the deep pockets and the big legal teams that are going to benefit from this bill. I do not want to talk ill of patent lawyers, because, as Mr Cunliffe pointed out, there is a great deal of defensive patenting. Many of them do a great job. What we want to see, though, is our creators, be they manufacturers or software developers, creating, not litigating.

We saw the Government sit on its hands for years, despite the very strong calls of the industry to get a move on and pass the patents law as it came out. A big concern is that the Trans-Pacific Partnership was influencing that—I think quite rightly so. We see our Government literally throwing policemen out of helicopters to arrest an alleged copyright infringer—the Megaupload case—and the Skynet legal case laws. We saw the US Government offering to write the legislation for the Government. We should be rightly concerned.

It is irresponsible, because we have had no select committee scrutiny of this significant change to the legislation. It changes the whole effect of the law. I called for the Government to send it back to the select committee. I acknowledge that people have been waiting an awful long time for this law to get passed, but they want to see a good law passed; they do not want to see this.

We have heard only a red herring justification from the Government of why it is doing it. The fact is that this red herring that it is clasping on to is trying to mask the fishy thing that is happening. Everyone agrees that user-invented software should be patentable, just not the software in it. The irony is that the Government is introducing even more legal uncertainty into the issue. We are going to see more legal cases, and I think the Fisher and Paykels of this world should be concerned, because now they are going to have to decide what “as such” means. It is going to be the lawyers who are going to be benefiting, not the creators, not the innovators, and not the manufacturers.

I would like to congratulate all the groups that have formed the No Software Patents in NZ group. It has come up with an elegant, common-sense, simple solution, which I urge the Government to adopt. Look, it is simple: the Government needs to either throw out this amendment before we vote on it or support the amendment.

Hon TREVOR MALLARD (Labour—Hutt South) : I am pleased that the Government has decided not to take its last call, because it gives a chance for the Opposition to reinforce the position that we are in. What has become clear over the last few days is that this Government has been captured. The Minister of Commerce has been captured by offshore people who are involved in the software industry.

It is vitally important to thousands of jobs in smaller businesses around New Zealand that we have a clear policy in this area, one that is easily understood on the face of the legislation and not one that has to be sorted out time and time and time and time again in the courts. I, like only a few members now, was a member at the time when Vodafone was trying to set up in New Zealand and Telecom was the organisation that was the incumbent. Telecom chose time after time after time to try to block Vodafone, almost never successfully. It used any possible ambiguity in the law to take a case, to take it to the High Court, to take an appeal, to take it to the Court of Appeal—I think the Supreme Court did not exist in New Zealand then—and on occasion to take it even to the Privy Council. The reason that it was able to do that was that there was a bit of doubt in a number of areas of law that had become dated and did not work. These people from Telecom knew that they had the big pockets. Telecom clearly had the big pockets, and it knew that the longer it could delay, the better its chance of preserving its monopoly and its position for a period of time.

What we have now is a group of overseas-owned companies that had an agent who was working for them, who is alleged—I do not know this for a fact, but I will rely on the comments made by my colleague the Hon Lianne Dalziel. The person who was the agent for these multinational software companies working against the interests of New Zealand software companies is now the person who is drafting the rules for the Minister. If that is the case, it is an absolute disgrace—an absolute disgrace—if that person is employed by the Ministry of Business, Innovation and Employment. I want to say that I have worked with the Chief Executive of the Ministry of Business, Innovation and Employment before, Mr David Smol. I think he is a highly ethical person who has an understanding of the rules of the Public Service. I am working on the assumption that he is not aware of what is going on here, because it is happening down the chain a bit. But I do give notice that the Labour Party will be pursuing this, because it is just not ethical for someone to jump from the employ of the group of overseas-owned software companies into a job where they are drafting the rules and changing what was, I understand, the unanimous view of the Commerce Committee on this.

I tell you what: this issue is not a new issue. It is not a simple issue. I can remember discussions on this issue when I was the Minister for Economic Development, and those discussions go back probably to 2006 and 2007—around those times. It is not simple. The select committee, I think, made a lot of progress. It got the basic policy position right, and then the Government, motivated by big offshore interests, working for—I want to now say, to go back, that apparently the individual worked for the Ministry of Science and Innovation. I think that is in the Ministry of Business, Innovation and Employment now, is it?

Clare Curran: It is. He worked for Science and Innovation at the time.

Hon Lianne Dalziel: Not at the time.

Hon TREVOR MALLARD: But not at the time—but not at the time. The point that I want to make is that there was unanimity coming out of the select committee, there is another position that has come from the Minister, and there is now a third position, which might be even better than the select committee position—certainly a bit clearer. It has been drafted by my colleague Clare Curran, with the advice of some people who have a lot of knowledge in the legal area and in the drafting area. It is something that will mean the intention is clear and we are unlikely to get litigation in this area.

Clare Curran: Elegant solution.

Hon TREVOR MALLARD: The member claims that she is elegant in her solution. I can accept that her claim is true. But the point that I would like to make is that there are over a thousand New Zealand companies—and not little companies. I do not know how many members opposite are aware of Orion Software and the incredible international work that it does, but I think most people are aware of Jade. People in this House who are not aware of Jade are people who are pretty ignorant. They are the big companies, but there are over a thousand small companies. One can wander down Jackson Street in Pētone and go upstairs to find probably a dozen places where people are developing software. Some of those places have only one person working there—they are a sole trader. Some of them have two, three, five, or 12 people working there.

Their businesses are being placed at risk by Craig Foss. I want to ask Craig Foss why he wants to destroy the jobs that exist in Pētone. Why does he hate New Zealand software developers so much that he wants Microsoft, that he wants other offshore companies like IBM and similar people, to be able to tie them up in courts, when he could have clear law that will do what he says he wants to do anyway?

• Sitting suspended from 6 p.m. to 7.30 p.m.

Hon TREVOR MALLARD: I thought I would conclude my speech by quoting from Philip Fierlinger from Xero. He is its head of software design. He said: “We have chosen not to seek software patents because we don’t believe they are good for the industry. They divert resources and attention, both when creating and enforcing. More importantly, they stifle innovation and restrict competition. Competition is a good thing. We welcome competition as a motivation to build a better product. We also stand on the shoulders of giants—our predecessors who designed and invented fundamental software mechanisms and patterns that make software what it is today.” That is a New Zealand innovator. That is the sort of person who will be locked out by the giant, international companies, if the Minister’s Supplementary Order Paper 120 is agreed to.

The Labour members will support the second reading of the Patents Bill, but we plead with the National Party members to look at Supplementary Order Paper 123 in the name of Clare Curran and to support it. I want to make it absolutely clear that the Committee stage will take a very long time, because we will fight them tooth and nail if that amendment is not agreed to, and we will not support later stages of this bill if, in fact, the National Party decides to support overseas-owned, giant semi-monopolies—semi-monopolies—against our local software designers.

• Bill read a second time.