Bringing innovation to New Zealand|
by Canadian software founder
There's been much discussion about the current Patents Bill and the removal of patentability of software in New Zealand. This article, written by the founder of a Canadian software company in the process of relocating to New Zealand, outlines why he thinks doing away with software patents is a good idea.
As an American co-founder of a Canadian software company that is preparing to relocate to New Zealand (provided that the proposed ban on software patents is passed), I recently visited your country on a scouting trip.
I met with New Zealand Trade and Enterprise (NZTE), experienced your culture, tramped through beautiful landscapes, and searched for a new place of business.
Why relocate to New Zealand?
Given that Canada has several government programs to help fund small businesses, as well as lower prices and taxes than New Zealand, why would a Canadian software company relocate across the globe?
The answer is simple: a ban on software patents.
In North America, software patents cover general ideas, and are not used for their intended purpose of protecting the disclosure of an invention to the public. Indeed, software can be distributed without revealing its inner workings, and many patented ideas are obvious to technology professionals.
Instead, software patents are wielded as weapons by lawyers, who frequently incorporate businesses with the sole purpose of purchasing patents and suing as many companies as possible. These businesses, called "patent trolls", act as parasites that extract cash from successful companies via the legal system. They have no customers, do no other business, and contribute nothing to technological advancement. Feeding on small and large corporations alike, they become a major disincentive for innovation.
Software patents can also be wielded by companies against competitors (and their customers) for strategic business reasons, in particular to keep innovation out of the market. Microsoft, for example, collects royalties from the sale of Android phones due to supposed violation of their patents, despite doing no work on this technology themselves. Many North American businesses accept these lawsuits as a matter of course.
Personally, it makes me sick. Why would anyone want to create in that environment?
Why software is different
Software companies are unique in that the creation of a product is mostly a mental exercise. Once the first version of a product has been created, the unit cost of the second or even thousandth copy is almost zero. In contrast to an agricultural or manufacturing business, costs do not increase as additional units are produced.
Therefore, on a level playing field, a small startup company with talented employees can quickly dominate the market by developing products that better suited their customers needs. Although such a small company could thrive in a free market, large companies use software patents to force government intervention via the legal system to hinder such competition.
Rather than basing their business on skilled workers and advanced technology, they instead use large legal teams to obtain profit by extorting money from competitors under the threat of lawsuit. I resent the idea of paying protection money to a competitor, because I dare to challenge them with superior products in the marketplace.
Barriers and the US
Unfortunately, the US will do everything in its power to prevent the creation of a software entrepreneur paradise. The Trans-Pacific Partnership Agreement (TPPA) has important implications for New Zealand's sovereignty: in particular, the US is attempting to force its own version of intellectual property law upon New Zealand in exchange for easier access of agricultural products to the US.
The reality is that the US economy is collapsing, with many Americans unemployed or homeless while the government continues to run up enormous debts. With average Americans needing very cheap food to survive this "rainy day", US markets may not be very profitable for New Zealand exporters. The US is afraid of losing its position as a technology leader in the world and is attempting to artificially maintain its relevance by negotiating treaties that cripple innovation in other nations.
In Canada and the United States, where anti-competitive software companies lobby governments to maintain the status quo, there is only option left to entrepreneurs unwilling to engage in this software patent farce: emigration. A New Zealand ban on software patents would attract many frustrated young and innovative companies such as my own.
Entrepreneurs could then focus on customer satisfaction and innovation, and could fairly challenge market leaders. Combined with the Pacific Fibre project and the beauty of New Zealand, I cannot imagine starting a software business anywhere else.
Could you imagine the benefit to New Zealand's economy if the next generation of tech leaders were located there? I believe that we are witnessing the birth of a new Silicon Valley, and I intend to be amongst the first founding companies.
Software companies do not pollute aside from their electricity usage, and will leave the natural beauty of New Zealand intact for future generations, while also providing them with wealth and opportunity.
US Patent law
One might worry that the US always has the recourse to ban the sale of products that infringe on American software patents. But suppose that a New Zealand company had invented the relational database, and the US had banned its sale due to infringement of a software patent? Who would be more harmed by such a law: the New Zealand software company, or the American businesses who would be unable to use the software to enhance their own profitability?
I personally have no issue with the loss of the American market, because even now my Canadian corporation avoids it due to the American appetite for frivolous lawsuits. If other New Zealand firms wish to enter the US market, their exported products are subject to American law anyways, so a domestic software patent ban doesn't hurt them.
However, the patent ban might protect them from jealous American companies who wish to retaliate in New Zealand courts.
Making New Zealand home
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.
(Regrettably, I must write this article anonymously since our relocation has not yet been publicly announced.)
NZCS welcomes articles looking at all aspects of software patents, for and against. If you would like to submit an article for consideration please contact the editor.
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Contributed content is the opinion of the author only, and not necessarily the view of IITP.