CHART: Key deadlines in Microsoft-ActivisionBlizzard merger reviews in U.S., UK, EU, New Zealand between now and May 1

Here's an updated version of the chart I first showed on January 10 in order to visualize the next key deadlines in the merger reviews of Microsoft's acquisition of Activision Blizzard King (NASDAQ:ATVI) in four jurisdictions (click on the image to enlarge):

Here's a table of the key acronyms:

N.D. Cal.	United States District Court for the Northern District of California
MTD	(Microsoft's) motion to dismiss (the so-called gamers' lawsuit)
prot order	protective order (i.e., protection of confidential business information)
PI	preliminary injunction
FTC	(United States) Federal Trade Commission
CMA	(UK) Competition & Markets Authority
DG COMP	(European Commission's) Directorate General for Competition
NZ ComCom	Commerce Commission of New Zealand

Note that all of this is in flux and some of those events may not (have to) happen. For instance, while the CMA is expected to publish its provisional findings next week, those response hearings in late February or early March will not necessarily be required. Also, in the so-called gamers' (actually lawyers') lawsuit in San Francisco, it is possible that Judge Jacqueline Scott Corley will rule on the protective order without holding the March 9 hearing. And if the motion to dismiss is granted, even if only in part, this may have implications for the preliminary injunction (possibly even obviating any PI hearing).

The European Commission won't necessarily exhaust its decision deadline. It issued an SO last week, to which Microsoft not has to respond (with the benefit of its lawyers' access to the case file), and Microsoft would be entitled to a hearing--but an agreement could be struck and that would obviate the need for a merger hearing in Brussels, but likely also result in a decision prior to April 11. But there is also the possibility of further delays in any jurisdiction, for example, because of "stop the clock" agreements.

The current chart shows some interesting potential effects of one decision on another. For instance, the decision in New Zealand has been pushed back since the last version of this chart and will be due shortly after the one in the UK.

Even more important is the fact that the current EU deadline is right before the preliminary injunction hearing in San Francisco. EU clearance would make things (even) harder for the class-action plaintiffs in California.

I will update this chart again in due course.

In case you missed them, here are my two previous posts on this merger topic:

• First procedural dispute between Sony and Microsoft in Activision Blizzard FTC proceeding: Sony suggests it will cost many millions of dollars to answer Microsoft's questions

• Meta-Within court ruling based on issues unrelated to FTC's Microsoft-ActivisionBlizzard case, but detrimental to FTC's and Sony's lawyers' credibility

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New Zealand regulator postpones Microsoft-ActivisionBlizzard decision from February 3 to April 28

The New Zealand Commerce Commission (NZ ComCom or NZCC) has pushed back its deadline for a decision on Microsoft's acquisition of Activision Blizzard King (NASDAQ:ATVI) from February 3, 2023 (next week's Friday) to April 28, 2023.

This does not tell us anything about what the decision will ultimately be. It appears to me that in the current environment, New Zealand's antitrust agency prefers to wait and see what will happen in other jurisdictions, particularly with a view to potential remedies such as a ten-year Call of Duty license to Sony. The NZCC has now sort of synced its schedule with those of at least two other jurisdictions:

• In November, the European Commission extended its deadline to April 11, 2023.

• The UK Competition & Market Authority's statutory deadline is April 26, 2023.

• Some other jurisdictions such as Australia and China are also widely expected to reach decisions either later this quarter or during the second quarter, but no precise dates are known.

I published a timeline chart two weeks ago, which I intend to update as soon as Judge Jacqueline Scott Corley of the United States District Court for the Northern District of California has set a new schedule for the briefing process concerning some class-action lawyers' motion for a preliminary injunction. In a week from today, Microsoft and the plaintiffs will propose a schedule (they may or may not agree on the same filing deadlines) further to a recent court order. Microsoft promised Judge Corley not to close the deal before March 31 at the earliest. That fact may also have been part of the consideration when the NZCC decided on the postponement announced today.

The competition authorities of four countries have already granted unconditional clearance to the transaction. In chronological order: Saudi Arabia, Brazil, Serbia, and Chile (where a survey of Call of Duty gamers produced some interesting results).

In the United States, Microsoft is entitled to discovery of third parties with relevant information--above all, Sony--both in the Federal Trade Commission's adjudicative proceeding as well as the private antitrust litigation in San Francisco. Yesterday a Sony motion became public. It indicates that Sony is obstructing Microsoft's request for documents and/or fact witnesses. On Friday (January 27), Sony will bring a motion to quash or limit Microsoft's subpoena unless some solution can be worked out in the meantime.

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CHART: Key deadlines in Microsoft-ActivisionBlizzard merger reviews in U.S., UK, EU, New Zealand between now and late April

A picture is sometimes worth a thousand words when looking at complex multi-jurisdictional matters, which is why I occasionally draw up battlemaps or other charts. Here's a chart that I've just created to show the key deadlines coming up between now and late April in the ongoing reviews of (and litigations over) Microsoft's acquisition of Activision Blizzard (NASDAQ:ATVI) in four jurisdictions (United States, United Kingdom, European Union, and New Zealand) (click on the image to enlarge; it will also look at lot better if you do):

In my previous post on this topic, I provided an update on the so-called gamers' lawsuit (which is actually a lawyers' lawsuit) in the Northern District of California, which has been reassigned to United States District Judge Jacqueline Scott Corley. While only a sideshow, that piggybacking case has the potential to repeatedly make news in the months ahead by virtue of the high degree of transparency of federal civil litigation in the United States (and especially in that district).

In the FTC's in-house case (wouldn't we all like the luxury to put our cases before our own judges?), Administrative Law Judge (ALJ) D. Michael Chappell issued a scheduling order on January 4, but it was yesterday that I first spotted the order on the FTC's website. It was previously known that the trial would be held in August, subsequently to which it can take a number of months for a decision to come down. But if Microsoft and Activision Blizzard King are otherwise ready to close the deal, the FTC will have to move for a preliminary injunction in federal court, as it acknowledged at least week's case management hearing. The class-action lawyers in California are already seeking a PI, but the originally scheduled PI hearing (February 16) has been vacated and I believe the most likely date is March 23, the day for which Judge Corley has scheduled a case management conference.

The UK Competition & Markets Authority (CMA) has not stated precise dates for the various milestones between now and the final decision deadline (April 26). For instance, the publication of its findings has been slated for late January or early February, which is kind of vague.

In the EU, the key question is whether--and if so, when--a Statement of Objections would come down. An SO is a key requirement for due process reasons. Subsequently, the notifying parties get some time to file a written response (with the benefit of access to DG COMP's case file), and are entitled to a hearing. Given that certain minimum amounts of time are necessary for all of that, an SO has to issue about two months to two and a half prior to a decision deadline. The deadline here has been extended once, and could be extended again. I've seen reports that expect a hypothetical SO to be handed down in January, but I've also heard from a third-party Brussels source that the EU merger review should reach that key milestone only next month. Microsoft told ALJ Chappell that the plan was to resolve the matter in the EU and the UK based on specific commitments, which would then be proposed to the FTC. This also makes a further postponement of the EU deadline a possibility (DG COMP gets more time when commitments are offered late in the game).

There has been speculation in the media that an SO would issue prior to an agreement on remedies, but again, that is just speculation.

In merger reviews, deadlines are not always exhausted. For example, when the UK CMA gave notice of a recent extension, it explicitly stated that the objective was to reach a conclusion sooner. That's why the above chart just reflects what is publicly known today. Things can change any moment, be it because of postponements or decisions being made sooner.

The transaction has already been cleared in four jurisdictions, most recently Chile.

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U.S. patent reform movement lacks strategic leadership, fails to leverage the Internet

Approximately ten years ago I became an anti-software patent activist. I ran a Europe-wide campaign in 17 languages (not the first one in Europe to advocate the abolition of software patents, but it was forceful enough for me to win the European Campaigner of the Year award from the Economist Group that went to Austrian-born Governor Schwarzenegger two years later). Meanwhile I've done my first couple of patent filings and intend to do more, and there's no way I would return to anti-patent campaigning (I was already done with that in 2006). I do, however, believe that some serious reform is needed in the U.S., and in Europe there's a risk of very negative side effects of what would be a good thing per se (a more unified and less expensive European patent system). In this post I want to share my observations on why the U.S. patent reform effort is apparently on the verge of defeat (though these things can sometimes change overnight in politics).

[Update on May 21] Sen. Leahy, whose commitment to reform is questionable, has taken the reform bill off the Senate Judiciary Committee agenda, at least for now. [/Update]

When my brothers in arms and I were fighting the patent establishment in Europe, Twitter didn't exist, nor did anyone outside of Harvard University know Facebook. We used mailing lists and Wikis, and to a lesser degree conventional discussion forums, for communication and coordination. Even with those limited tools, we were able to build serious pressure on EU policy-makers over the Internet. Many websites had anti-software-patent banners, some on an ongoing basis, others just during "web demos" ahead of key decisions.

There was a Europe-wide community of anti-software-patent activists. A few of its members were active on a daily basis, and others just from time to time. There was a grassroots network that was able to mobilize people very quickly and effectively to take action -- and a pretty significant number of them were small business owners, who obviously had less time available for this effort than students but were more important to politicians. I'm not aware of anything like that in the U.S., where there's no shortage of professionally-designed websites by lobby groups (all of which look more or less the same) -- in that regard, we had some shortcomings -- but there is no community of activists. Just a bunch of lobbying entities.

As long as it's using the very same tools as its opponents, the U.S. patent reform movement should not be surprised about the current stalemate. The pro-patent camp also has money to spend on web designers and lobbyists. It may have even more money available because the pro-patent camp has a more centralized structure. So what you get is a bunch of lobby group websites that all look very similar.

Ten years ago, large companies like Google were unwilling to lend any financial support to critics of the patent system. Nowadays, companies like Google, Facebook and Twitter, but even certain hardware makers such as Cisco, pour money into patent reform initiatives. But they won't be able to solve the problem by trying to outspend those who oppose meaningful reform. They won't win unless they realize that the most valuable currency in politics is not money: at the end of the day it's all about voters.

Many victims of patent trolling have indeed contacted U.S. politicians. And this has had an effect, which is noticeable when politicians speak at hearings. But you can get only so far with advocacy. There will be politicians, such as apparently certain Senate Democrats, who are beholden to the patent system and/or large corporations supporting it. There's no way you can convince them because they don't even want to understand what's wrong with the system. They are beholden to trial lawyers and certain corporations.

That's where more of the same won't help. It's where you have to become truly combative and play hardball in order to break the resistance. And to do that, you must fight both smart and hard. Your movement must also be effective as a pressure group to bring about serious change. Once you've figured out a politician will never be on your side, you must make him or her pay a political price for it. You want his party base to be so outraged that he or she will worry about this having a potential effect on the next primary or general election. Obviously, patent policy is not the kind of subject that can decide an election at any level on its own. But it can be one of various factors, and a very vocal group that can mobilize its supporters effectively will appear stronger than it may be in numbers.

The U.S. patent reform effort is too conventional, too predictable, too unimaginative. It's playing the game by rules that favor its opponents instead of changing the rules and bringing to bear its strength, which is that there's a far greater number of people who are unhappy with the state of the patent system than people who would actively support it.

The pressure group that started the European fight against software patents, the Foundation for a Free Information Infrastructure (FFII), sometimes stepped over the line, but overshooting a little bit occasionally is better than running an anemic, stolid campaign like the push for U.S. patent reform. The FFII attacked politicians who were firmly on the other side. It maintained Wiki pages on which it documented the pro-software-patent activities and statements by those politicians. It published and dissected statements, speeches, and letters those politicians sent to voters, just to explain to people what those politicians really said and did. This really had politicians concerned. Many politicians and their staffers kept track of what the FFII wrote about them, and sometimes even called up the FFII to request edits. Those politicians (and their staffers) were concerned that this information could influence the way that their peers, journalists, friends, neighbors, and especially their voters viewed them.

Apparently the U.S. patent reform movement knows very well who the obstructors of reform are. But it's not enough to put the blame on unnamed Senate Democrats. You have to name and shame them. You have to publish and dissect their statements and explain how those politicians harm Main Street businesses and consumers. You have to show how they act against the public interest only because it means more money in the trial lawyers' pockets. You have to expose them as the friends of patent trolls that they are. You won't convince them that way, but they may proceed with greater caution and, ideally, at some point give up their resistance to reform because they realize the price is too high.

In politics, the enemy of your enemy is your friend. In Europe, we had entrepreneurs as well as Attac activists. In the U.S., the patent reform movement should think about who the enemies of their enemies -- the Senate Democrats who oppose reform -- are. For example, many of the people who promote patent reform may be left of the political center, but the small business owners who are affected by patent trolling are usually not. In any event, if certain Senate Democrats oppose the public interest in patent reform, why doesn't the patent reform movement find a way to get, for example, Rush Limbaugh and his relatively new Young Conservatives website to talk about it? Or Glenn Beck? They reach large audiences. It may be possible to get them interested in a story of Senate Democrats acting against Main Street interests, especially if there is some well-researched material available on the Internet that exposes the friends of the trolls.

Obviously, the kinds of conventional lobby groups that are members of the Main Street Patents Coalition, such as the American Hotel & Lodging Association or the National Association of Federal Credit Unions, can't play the name-and-shame game. Even the Electronic Frontier Foundation, though some of its positions on IP are very extreme, wouldn't want to do that. Those kinds of groups need to maintain good relations with politicians all the time. And patent reform, while important, is only one of many things they're interested in, so they can't burn bridges.

That said, those traditional lobby groups could lend logistical and, if structured intelligently, also financial support to activists who are willing to spend time on this, whose exclusive political focus would be on patent reform and who would be willing to break the rules of D.C. lobbying in order to win.

Without financial support from the likes of Google, Cisco and Facebook, we broke pretty much all the rules of Brussels lobbying, and while we didn't achieve the abolition of software patents in Europe (they continue to be granted and enforced on a daily basis), we created a situation in which both camps agreed that it was best to have no new EU-wide law on software patentability. For the first and I believe still the only time in EU history, the European Parliament threw out a bill at a second reading, i.e., without any negotiations with the EU Council (the other legislative body in the EU). Against the rules, we made EU history.

I can't imagine that it wouldn't be possible to form such an activist community in the U.S., especially with the dynamics of today's social media. There are many people out there who would love to make a contribution to patent reform. There should be an online community that they can join, and which will organize online campaigns as well as local meetings. A place where they can exchange ideas and educate themselves.

The European anti-software patent movement consisted not only but to quite some extent of free and open source software activists. Many of them came across as overly ideological, but there were also academics and small business owners. Discussions were sometimes difficult, but usually fruitful. It should be possible to have similar dynamics in the U.S. as well.

All volunteer organizations face one fundamental problem: there will always be more people who want to offer their views than people who want to do the grunt work. But if a community is large enough, and if it has great leadership, then it can get a lot done.

Run-of-the-mill lobbying and grassroots activism can be a powerful combination. Sometimes grassroots activism is created organically, such as in Europe. But companies with a strategic interest in connection with a key policy issue can also find and (indirectly) support individuals who have the skills and the energy to create and organize such a movement.

If the U.S. patent reform movement had first-rate strategic leadership, then its leaders would have studied in detail how European anti-software patent activists achieved a historic rejection of a legislative proposal. They would also have tried to learn as much as possible from the recent legislative process in New Zealand. Of course, America is different. The topics are also different: in the U.S. the reform movement is too cowardly to speak out against software patents at the level of subject matter (admittedly this is harder to do in the U.S. than elsewhere, but the positions of the U.S. reform movement are way too soft to begin with and then get diluted in the political process, which is why nothing meaningful is achieved in the end). So the U.S. patent reform movement just uses trolls as a pretext for litigation reform, while the political processes in Europe and New Zealand were about patent-eligible subject matter. There's also a fundamental difference between the U.S. two-party system and the multi-party EU landscape. Still, if the masterminds of the U.S. patent reform initiative had been serious about winning, they would have done some thorough research on what worked and what didn't work elsewhere, in order to then determine which of those lessons learned abroad would also help them in their country. It's quite clear that they didn't do that. All they came up with was the very same kind of D.C. lobbying that the supporters of the current state of the patent system can also do (and possibly do even better). Apparently this isn't working.

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Follow-up on New Zealand: patent offices and judges don't interpret patent law like geeks do

My tale-of-caution post on yesterday's adoption of a patent reform bill in New Zealand has been one of my most popular writings this month -- popular in terms of the interest it has drawn, not in terms of the message that certain Internet crowds would have preferred. The stated goal of that post was not to curry favor with any audience, but to discuss the matter responsibly.

This follow-up post has two distinct parts. In the first part I'll explain the discrepancy between mainstream media reports that New Zealand has banned/outlawed/whatever software patents and the more nuanced and cautious opinions expressed by IP-focused writers, including a couple with whom I don't always agree. In the second part I'll try to explain with what kind of mindset one has to approach a piece of substantive patent law when trying to assess the effect it will have further down the road. What may appear crystal clear to a geek usually doesn't have its broadest meaning when patent offices and courts of law have to make sense of it. I think there are some easy ways to show why that New Zealand law isn't tantamount to the abolition of software patents.

Disconnect between mainstream media and IP-focused writers

Most media reports on the decision have been misguided, and have in turn misguided the readers of those articles. Interestingly, even an overtly (and sometimes shrill) anti-IP blog named Techdirt has been far more measured and closer to accuracy this time than all those mainstream IT media, saying that "New Zealand Sort Of Bans Software Patents" (emphasis mine) and that "while the intentions appear to be good, some of the language in the bill may open some loopholes, so we'll be interested to see how the bill is actually interpreted, and what happens within the actual tech sector". This more cautious take by Techdirt should give all those people pause who attributed, in certain discussion forums, my analysis, which was more than anything else an effort to prevent people from making false business decisions in reliance on political spin, to the fact that I have (voluntarily and proactively) disclosed consulting relationships with industry players Microsoft and Oracle, who presently support strong IP protection for software. It should also be food for fought for those who dismiss Intellectual Asset Management magazine's analysis as biased because its readers are mostly patent lawyers.

There's an undeniable discrepancy between the assessments of IP-focused blogs/websites on the one hand and mainstream media on the other hand. Now, whom should you trust if you don't have the time and background to research the whole issue for yourself? That's your choice, but you should at the very least be cautious when you see that IP-focused people throughout the political spectrum -- from radically anti-IP (Techdirt) to moderate (this blog, because I used to campaign against software patents but do understand the industry's perspective as well) to consistently pro-IP (IAM Magazine's Joff Wild and I disagree from time to time, such as on standard-essential patents) -- do not portray the New Zealand decision in the simplistic black-or-white manner in which mainstream IT media do. Even in case you assume that Techdirt's Mike Masnick (who said he was surprised when it turned out he had received funding, indirectly, from Google), IAM's Joff Wild and I are agenda-driven while mainstream media are not (or to a lesser degree), the presumed agendas of the three of us IP bloggers cover the entire spectrum.

Substantive patent law (the rules of patentability, including patent-eligibility) is a highly specialized subject. Patent law is way more specialized and, to the general public, far less accessible than most (if not all) other fields of law, and substantive patent law is a thin vertical slice, and by far the most abstract part, of patent law. In my anti-software-patent lobbying efforts I once met a Member of the European Parliament who's a law professor and he asked me questions about this for almost two hours because he wanted to understand the intricacies of software patentability rules. Keep this in mind when choosing which kind of sources to trust.

The Internet is huge, but you won't find a reporter for a totally independent mainstream publication who really understands this particular field.

Before we get to the question of competence: mainstream journalism isn't always as independent as you might think. Some publishers have stricter disclosure rules than others. Even where the rules are in place, you won't find 100% compliance across an entire industry. IT websites are typically advertising-funded. It's not advisable to assume that editorial decision-makers never care about the interests of the major advertisers who fund them. And journalists always depend on their readers. Populist headlines are quite useful for link-baiting, even if inaccurate. Just to be clear, most of the journalists I know seem perfectly honest, so most of the time the problem is just that they have to do several stories a day on a variety of subjects. They simply can't, even if they give it their best, have the same detailed understanding of a given topic as people who've been focusing on these complex issues and processes for years. Furthermore, they have space constraints and must keep things short and simple for an audience, but even experts frequently can't be accurate and short/simple at the same time.

I often get asked why my blog doesn't allow comments, and why comments are deactivated on almost all of my Google+ posts. (I do, of course, get responses on Twitter, and sometimes I answer there.) That's because there's too much half-knowledge out there that is too time-consuming to address. I'd have to debunk stupidity after stupidity to prevent readers from getting confused by pretenders -- people who use specialized terminology, invoke laws and cite to judicial decisions but actually don't know what they're talking about. I believe my time is better spent on other activities, and this blog is basically a by-product of, and promotional tool for, my work as a consultant.

To be clear, independent journalism is important, and there are literally hundreds of journalists I've been in contact with just over the last few years, most of whom I totally respect and try to help with information when they request it. They do an important job, and their efforts and mine are complementary, except that there can be situations in which I disagree with mainstream media. For one example, let me refer you to Philip Elmer-Dewitt's article on how I was right and mainstream media were wrong on the March 1, 2013 Apple v. Samsung damages ruling. Philip notes that "[a]lmost lost in the flood of 'Apple setback' headlines was the lone voice of FOSS Patent's Florian Mueller, who pointed out that what was being described as a drastic cut in a $1.05 billion award could, in theory, turn out to be an increase". By now, everyone knows that I was right because Samsung acknowledged it. I was even being conservative: Samsung says Apple is claiming "vastly greater damages" in the retrial. If you insisted on the broadest definition of independence, you'd have had to rely on the mainstream press, which told you that Apple was going to get less money out of this case. But, with the greatest respect, independence does not compensate for incompetence. I always say what I believe in, and even if people suspect that I want to do clients a favor, there are examples when I get things right that others get wrong. A more recent example is the scope of a U.S. import ban Apple won against Samsung. Most of the initial media reports said that only certain older devices were banned. But the import ban would also apply to any newer (including future) devices that infringe in the same way. I published the letter the ITC sent to U.S. Customs because it leaves no doubt about the potential scope of the order.

Let me close this first section by conceding that there is a conundrum facing everyone trying to obtain information on these cases. On the one hand, mainstream media get certain things in these highly-specialized contexts completely wrong, and I've talked to various lawyers involved with the smartphone disputes (mostly when I saw them in German courts, where U.S. counsel is frequently also present) who told me they find my blog fundamentally more reliable on their cases than even the most reputable financial papers, which sometimes don't even understand who's actually won a lawsuit (if there's a mixed ruling). On the other hand, the kinds of people who specialize on these issues -- even anti-IP activists like the Techdirt author or a certain European anti-software patent organization -- will sooner or later have some financial relationship of some sort with some industry player, even if indirectly, such as through membership fees paid to industry associations or donations made to non-governmental organizations. These major players are like an elephant in a room: they're everywhere. You'd also be hard-pressed to find a professor in the relevant fields (law, economics, computer science) who's never ever represented or advised a client, never taken money for a study, never appeared in court as an expert witness. The holy grail of someone who's competent enough to have consulting and other opportunities with large organizations but stays totally independent -- and still finds enough time to stay up to date on all the details of an issue -- simply doesn't exist. That's the number one reason why specialized blogs like this one not only exist but thrive.

How patent examiners and judges interpret substantive patent law in practice

When laypeople read in the New Zealand bill that something isn't patentable if the invention lies solely in it being a computer program, they think that this can be interpreted in only one way: no more software patents. But they have to understand that legal professionals and software engineers are divided by a common language, to the extent that even the meaning of words like "invention" and "computer program" differ greatly between everyday use and legal use. If a given company told its software developers that they can no longer obtain patents on inventions matching that criterion, they'd stop filing any patent applications because it would look to them like a waste of time -- but if the same company sent the same instructions to its patent department, the lawyers would simply conclude that they have to draft around the exclusion, and that's what they would do from there on out.

What additionally complicates this is bias. More than 2,000 years ago, Julius Caesar wrote in his Commentary on the Gallic War (parts of which I had to translate from Latin in high school) that "fere libenter homines id quod volunt credunt" -- people believe quite readily that what they want to be the case is the case. Even if it's not. The Romans capitalized on this through certain stratagems, making their enemies believe that they were on a retreat, only to launch a massive assault once their enemies relaxed. It worked again and again.

In theory, patent examiners and judges should read substantive patent law without any bias. And many of them try hard to. And the one thing they certainly won't have is an anti-patent bias. New Zealand's patent office is not going to be interested in interpreting the law in a way that would require it to lay off half or more of its staff. It will have to apply the law, and it may receive instructions from the executive government. But it won't approach this new piece of legislation with a "good riddance" mindset.

The patent prosecution process is inevitably skewed because it's easier for a patent examiner to grant an application than to reject it. If you grant it, anyone against whom it's asserted later has to deal with the problem. As long as you reject it, the patentee's patent attorney will keep trying to persuade you to grant it, and will amend the claims and other parts of the documents until you're satisfied.

The foregoing is not a consideration for the courts who rule on the validity of a patent. Still, you can't expect any judicial activism of the abolitionist kind. Judges look at it from both angles. On the one hand, there must be limits to what is patentable. On the other hand, they know that patent law also means innovators are entitled to protection, provided that their inventions meet certain criteria.

When you have to balance boundaries with entitlement, New Zealand's new law doesn't provide nearly the degree of clarity that mainstream media would have you believe. A phrase like "lies solely in it being a computer program" is very interpretable; the examples of one patent-eligible and one patent-ineligible invention are worlds apart and not clear enough; and when you then see that lawmakers intended to keep "embedded" software within the scope of patent-eligible subject matter, but consider that the question of whether software is "embedded" can in most cases not be answered based on a technical solution for which someone seeks a patent (just like software developers who write "embedded" software may very well use code in it that they previously used in non-embedded software, or the other way round), then you know that all of the line drawing that needs to be done is now your job. This happens all the time, not just in connection with patents: politicians can't reach a consensus on a clear-cut, sharp set of rules, so they produce something vague and leave it to the courts to sort it out. And courts tend to find that an invention is not subject to an exclusion if the exclusion isn't sufficiently clear. That's the way it works, most of the time.

The NZ patent reform bill is not clear. I'll tell you what would be clear, or relatively speaking, clearer:

• If New Zealand had adopted Richard Stallman's proposal of a broad exclusion from enforcement, then it would simply be impossible to sue software developers and users over patents, regardless of what those patents cover. (This would, of course, depend on whether the exclusion from enforcement is phrased clearly by lawmakers, but I just assumed so for the sake of the argument.)

• The NZ law would at least be a whole lot clearer if the examples of a patent-eligible and a patent-ineligible kind of invention were closer to each other. The example of an auto-complete application using a database and forms doesn't mean much: based on that description alone, the rather permissive European Patent Office wouldn't grant you a patent, and even the most permissive USPTO most probably wouldn't.

  The auto-complete example misses the point. The tricky area in which to draw the line involves software that makes a technical contribution, such as a file system that stores data more efficiently, a database that runs certain types of searches more quickly, security software that detects attempts to hack a system, video codecs -- and those inventions can be implemented in hardware as well, so an exclusion that merely refers to computer programs (and uses an auto-complete program as an example) doesn't really capture them.

  Video codecs, which I just mentioned, are a particularly good example: the NZ patent reform bill doesn't say that graphics adapters are no longer patentable. Now, if someone patents a technique that can be used in a graphics adapter, but someone else implements it in software, then he may get a software patent in the sense of a patent that software developers and users may be found to infringe. The patent office can't reject the patent application because the law doesn't say that innovations relating to graphics adapters are no longer patent-eligible (this also was never the intention of any UK court, by the way). But at the enforcement stage, there's no exclusion in NZ of the kind that Richard Stallman advocates. So the patent can be granted, and an infringer can ultimately be held liable, with all that it entails.

I'm confident that these explanations have already furthered many people's understanding of the issue. It's a difficult subject, and I encourage everyone with an interest in understanding this in more detail to study the European situation. The U.S. approach (which the Supreme Court described as inclusive in its Bilski opinion) is that the scope of patent-eligible subject matter has boundaries, but no exclusions of the kind that Europe has had for several decades now, and that people overrate in connection with the New Zealand patent reform bill. Of course, most of the people who reported and commented on the New Zealand decision have never even read a single European court decision on patent-eligible subject matter. (By the way, just this month I've requested the Federal Patent Court to let me inspect the record of roughly two dozen pending nullity -- i.e., invalidation -- cases.)

Almost a decade ago, the Council of the European Union adopted a proposal on software patents that I was fighting hard against. If you believe that the New Zealand law abolishes software patents, how would you have liked this article from the European proposal, for example?

"Article 4.A

A computer program as such cannot constitute a patentable invention.

A computer-implemented invention shall not be regarded as making a technical contribution merely because it involves the use of a computer, network or other programmable apparatus. Accordingly, inventions involving computer programs, whether expressed as source code, as object code or in any other form, which implement business, mathematical or other methods and do not produce any technical effects beyond the normal physical interactions between a program and the computer, network or other programmable apparatus in which it is run shall not be patentable."

Doesn't that sound even better than the NZ law? And it gets even better, seemingly, if I show you how the European proposal defined "technical contribution", a term that also comes up in the article I quoted above:

"Article 2b

(b) 'technical contribution' means a contribution to the state of the art in a field of technology which is new and not obvious to a person skilled in the art. The technical contribution shall be assessed by consideration of the difference between the state of the art and the scope of the patent claim considered as a whole, which must comprise technical features, irrespective of whether or not these are accompanied by non-technical features."

Well, even the above language, which appears at first sight to constitute a clearer exclusion of software inventions from patent law, would have allowed for most software patents to be granted. You don't have to take my word for it. I'll just refer you to the analysis published at the time by the Foundation for a Free Information Infrastructure (FFII), the NGO that started the European anti-software-patent movement. Here's how the FFII commented on Article 4.A of the European proposal:

"This article is based on a JURI amendment (= amendment from the people who also run the Council's working party) that made it through the EP Plenary Session only because it is meaningless and therefore harmless. The Council's additions however make this amendment harmful. They use the wording of Art 52 EPC and insinuate that a 'program as such' is only the 'expression' side of this program, i.e. narrow copyright-style claims that nobody would write into a patent anyway. This interpretation does not conform to the usual requirements of interpretation of laws and is not currently in use at the patent courts. It deprives Art 52 EPC of all limiting meaning."

You may now be confused, but hopefully at a higher level. Don't take exclusions from the scope of patent-eligible subject matter at their face value. It's a lot more complex than that.

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New Zealand Parliament adopts UK approach to software patents, allows broad swaths of them

I just learned on Twitter, from a patent attorney supporting software patents who is very happy about this outcome, that the New Zealand Parliament has adopted a patent reform bill containing a compromise wording on the patent-eligibility of software inventions. Three years ago I commented on the legislative process in New Zealand and cautioned people that abolition wasn't certain because there were clear signs of political support for software patents. For example, the proposal that was on the table at the time said in a footnote that smartphone inventions, almost all of which are software patents, should remain patentable. Based on today's decision I can say with certainty that abolition absolutely positively did NOT happen. (Formally, a third parliamentary reading occurred after that tweet, but it was merely a formality).

While I can see on Twitter that the movement pushing for abolition declares victory, that's not only inaccurate but also an irresponsible thing to do. From the perspective of abolitionists (and I know a thing or two about this because I founded and used to run the European NoSoftwarePatents campaign), the glass in New Zealand is not even half-full. It's still almost entirely empty. I understand that politicians and political movements like to overstate their achievements only to please their supporters/voters, and in this case the spin-doctoring may be driven by a desire to influence political debates in other jurisdictions and the evolution of case law in New Zealand, where there will obviously be some degree of uncertainty now, in some areas, as the courts have to apply the first patent reform bill in decades.

I advocate realism and rationality here because it's the only responsible thing to do. If people are misled to believe that New Zealand has (largely or entirely) abolished software patents, they will make decisions that they will sorely regret when they find out the truth too late. Some innovators will be discouraged from filing applications for software patents, and later they may be sued by those who know that software is still largely patent-eligible in New Zealand and won't have patents of their own to defend themselves with. And some people will believe they are free to infringe -- until they get sued and a court holds them liable. I can't prevent others from engaging in reality distortion, but my conscience doesn't allow me to tell anything other than the truth on this.

I'm now going to explain why the New Zealand outcome is far from large-scale abolition, and why the "compromise" is mostly a victory for those promoting, not those opposing, software patents.

Three years ago, the bill contained a broad statement that "[a] computer program is not a patentable invention" (§ 15-3A). It turned out to be unworkable, and clarifications like smartphones being patentable showed that the intent never really was to do away with all software patents. But a broad statement it was, and the compromise adopted today contains the European "as such" wording. In Europe, hundreds of thousands of software patents have been granted because an exclusion of computer programs "as such" is not an exclusion of patents on software inventions that make a technical contribution. Simply put, "as such" excludes certain aspects of software from patent-eligibility, but not all of them. It largely excludes parts that are protected by copyright law anyway, as opposed to the technical solutions to technical problems that are the province of patent law. The supplementary order adopted in New Zealand says this:

Subsection (1) [which says, like the 2010 bill, that a computer program is not an invention] prevents anything from being an invention or a manner of manufacture for the purposes of this Act only to the extent that a claim in a patent or an application relates to a computer program as such.

[emphasis mine]

Again, "as such" alone doesn't really mean a huge difference between U.S. and European rules on patent-eligibility. The U.S. approach of "everything under the Sun made by Man" being patent-eligible is obviously the most permissive one, but I follow litigation on a cross-jurisdictional basis and in the smartphone patent disputes I watch the vast majority of software patents asserted in the U.S. also exist, or could have been successfully applied for if the patentee had so elected, in Europe.

The New Zealand compromise doesn't stop there, and it then seeks to clarify "as such":

A claim in a patent or an application relates to a computer program as such if the actual contribution made by the alleged invention lies solely in it being a computer program.

[emphasis mine]

The order then goes on to provide examples of what falls within the scope of patent-eligibility in accordance with this sentence. That sentence on it own would not really mean anything. Most of those hundreds of thousands of European software patents also don't cover inventions that lie solely in being a computer program. There's a clear technicity requirement.

The bill provides two examples, one of an invention meant to be patentable under the compromise bill (a washing machine that does a better job at washing clothes) and one meant to be excluded ("a process for automatically completing the legal documents necessary to register an entity", using standard computer hardware). These examples still don't really provide much clarification because these are two extremes, and for line-drawing you need a narrow corridor, not the broadest one imaginable. If the improved washing machine was excluded from patent-eligible subject matter, the patent system would be confined to little more than molecular pharmaceutics. As for the auto-completion of legal documents, the bill only says that "[t]he hardware used is conventional" and that "[t]he only novel aspect is the computer program", and that "[t]he mere execution of a method within a computer does not allow the method to be patented", but most of the hundreds of thousands of software patents we have in Europe are patented because of a technical contribution that goes beyond what this description says. In fact, the auto-complete example in the New Zealand bill is so vague that, without a greater degree of specificity, it wouldn't even be useful for the purpose of illustrating differences between U.S. and European software patent-eligibility rules.

It would be an understatement to say that there is a broad corridor between the two extreme examples contained in the New Zealand bill. The courts in New Zealand are now left to do all of the line-drawing work because politicians, who ultimately realized that they couldn't deprive domestic inventors of protection and isolate their country on the international scene by violating the TRIPS agreement, didn't really do so. At best, one can read between the lines of that bill that there was some pressure to be restrictive in connection with software patents -- but restriction is a fundamentally different thing than abolition.

The story that is being told by New Zealand politicians and lobbyists/activists is that the New Zealand patent reform bill adopts the UK case law on software patents, which is described as the most restrictive one in Europe. In the smartphone patent cases I watch, challenges to the validity of patents are regularly brought in UK courts, typically in hopes of influencing decisions by German courts, where most European infringement complaints are filed. And the UK is anything but a "no software patents" jurisdiction. Therefore, New Zealand won't be a "no software patents" country either.

The rate of success of defendants in infringement proceedings, or plaintiffs in declaratory judgment complaints seeking the invalidation of patents, is indeed very high in the UK, but that's not because of patent-eligibility rules. There are various reasons for this. One thing I noticed in various smartphone cases is that UK judges tend to frequently find patents obvious over "common general knowledge", while German courts (particularly the German courts hearing infringement cases, in which the validity of a patent is looked at cursorily but not actually adjudicated) want to see evidence in the form of prior art references (documents, products etc.).

For a case study that shows what the UK approach really comes down to (and what future New Zealand patent-eligibility case law may very well look like after today's patent reform vote), I recommended an HTC v. Apple case. The England and Wales High Court threw out four Apple patents, but even though HTC claimed that every one of them was a software patent and therefore covered an ineligible invention, it prevailed only once -- and even that finding of patent-ineligibility was reversed on appeal! As a result, one of the two claims of that patent survived, and the other one was still found invalid, but only on obviousness grounds. The lower court had basically found that the patent in question, EP2098948 on a "touch event model", didn't have a technical effect but merely made life easier for programmers by giving better structure to code. This is very similar to the New Zealand concept of an invention lying solely in it being a computer program: there's something about it that is limited to the intangible realm of code, not the real world of programmed devices. And even that reasoning wasn't affirmed on appeal.

I'm in no position to predict what the New Zealand courts are going to make of this bill, but I can tell you based on my intimate knowledge of the European situation (I'm based in Germany and follow patent disputes in many countries, including several European countries, which obviously include the UK) that the courts and the patent office in New Zealand still have massive wiggle room to allow software patents, so if I were a corporate executive who cared about the New Zealand market, I would definitely continue to file software patent applications, and I wouldn't consider it responsible to assume that I can just go ahead and infringe.

When all of this settles out, some of the people who celebrate today will be very disappointed to find that the New Zealand patent reform bill isn't nearly as restrictive, let alone abolitionist, as they used to think. By the time they find out, many of today's politicians may not be in office anymore.

[Update] I did a follow-up post the next day that explains all of this further. I'd like to stress that the NZ patent reform bill doesn't disallow patents on graphics adapters, so, for one example, it's still possible to patent video compression techniques, which can later be asserted against infringing software. That's an example that also came up in the European software patentability debate about a decade ago, in which I participated rather actively. [/Update]

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New Zealand software patents: abolition isn't certain

In recent months, many proponents of software patents and those favoring their abolition have not only been anxiously awaiting the Bilski decision by the Supreme Court of the United States but also locked horns over New Zealand's patent reform bill.

New Zealand is more or less antipodal to where I live, and I don't have any contacts down under. That makes it harder to comment, but by now I believe to have gathered enough information to be comfortable with expressing my view of the situation there.

I've come to the conclusion that it's too early to tell what the outcome will be, and I'll explain the different directions in which things might go, and why.

Believe me: substantive patent law is a very complicated matter, and it takes a lot of specialized knowledge -- not just common sense -- to figure things out properly. Hartmut Pilch, the founder and former president of the FFII, is a true expert in that field. We worked together closely. Initially, my NoSoftwarePatents campaign was independent from the FFII but coordinated many activities with Hartmut's organization. Later, I handed the campaign website to the FFII. Hartmut and I know how resilient software patents are, and we concur that the abolition of software patents in New Zealand is far from certain at this stage. I quote Hartmut on the New Zealand situation further below. In order for his insightful comments to be understandable, I have to provide some background.

Jubilant abolitionists and a minister being a typical politician

On 15 July, the two New Zealand organizations leading the fight against software patents cheered an announcement by New Zealand commerce minister Simon Power that a patent reform bill containing a general exclusion of software patents should pass without further amendments:

• The New Zealand Open Source Society (NZOSS) wrote:
  "Minister Announces No Software Patents"


• The New Zealand Computer Society (NZCS) announced:
  "It's official: Software will be unpatentable in NZ"

But what did the commerce minister actually say? His announcement is typically political, leaving different doors open. Its headline: "Minister announces way forward for software patents"

If I saw only that headline, especially the word "for" in front of "software patents", I would expect the text below to be a ringing endorsement of software patents. That headline certainly doesn't announce a state of no software patents at all. Much to the contrary, the first paragraph says:

"Commerce Minister Simon Power has instructed the Intellectual Property Office of New Zealand (IPONZ) to develop guidelines to allow inventions that contain embedded software to be patented."

Again, that doesn't sound like the door is closed. IPONZ is New Zealand's patent office, which after the parliamentary process will get to work out the details of what is and what isn't patentable there.

The process so far

New Zealand is overhauling its patent law. The law presently in force is the Patents Act of 1953. Within the New Zealand Parliament, the Commerce Committee took the lead on the new patent bill, which was presented by the country's government in July 2008. The Commerce Committee discussed controversial issues, such as software patents, with stakeholders. On 2 April 2010, the Commerce Committee amended the government bill and presented its first-reading report (HTML, PDF).

The key passage related to software patents is Article 15 para. 3A:

(3A) A computer program is not a patentable invention.

For the proponents of software patents, this straightforward exclusion went too far. According to the software patent wiki, they convinced New Zealand commerce minister Simon Power that instead of that exclusion the law should be modeled after the European Patent Convention (EPC). The EPC, too, excludes computer programs from the scope of patentable subject matter, but only "as such". Some background on the way the European Patent Office and European courts interpret an exclusion of software as such is contained in this earlier blog posting.

A New Zealand blogger (who set up New Zealand's first government web server back in 1995) called the reactions of the pro-patent camp "disingenuous."

Temporarily the abolitionist camp was worried that the legislative proposal could still be changed. Therefore, it's understandable that NZOSS and NZCS celebrated the commerce minister's announcement that he and the parliamentary committee agreed to pass the bill unchanged. It seems that the opposition to software patents that two leading New Zealand software companies -- Orion Healthcare and Jade Corporation -- mounted played an important role.

So what's next down under?

The New Zealand Herald interpreted Minister Power as saying that "[g]uidelines rather than a law change will be used to allow inventions that contain embedded software to be patented."

In other words, the law will contain an exclusion of software patents, but the national patent office will draw up guidelines that will allow patents on inventions containing embedded software.

The law is broad and general. Many may believe that it would be sufficient to simply say "a computer program is not a patentable invention" in a law. Wrong. The biggest issue in substantive patent law is line-drawing. We as programmers may have a clear idea of what a "computer program" is, and what it is not. But when a patent application gets filed, the word "computer program" may not appear in it at all, even though computer programs could infringe a patent that would be granted on such an application. The patent claim (the scope of the patent) can be an "apparatus" or a "method". It doesn't have to say "computer program" at all.

Embedded software

So what is "embedded software" and inhowfar is it different from a computer program? That will now be the subject of much discussion in New Zealand, I guess. The commerce committee's bill says in its footnote 4:

Embedded software is computer software which plays an integral role in the electronics it is supplied with (e.g. cars, pacemakers, telephones, and washing machines).

Note the word "telephones"! Today's smartphones are pretty powerful and functional computers. The software that plays an integral role in running them isn't too different (in terms of operating systems, programming languages etc.) from the software running on a server or a desktop PC.

So the New Zealand patent office (IPONZ) will have to come up with guidelines that enable patent examiners to make a distinction between "computer program" and "embedded software", with the latter even including the software powering smartphones.

What does this mean in practice? Let me give an example: if someone filed a patent application for an "apparatus for the storage and retrieval of contact data", the patent office might grant the patent because this would be a typical smartphone application (every smartphone comes with an address book). But the patent claims could ultimately also read on an address book program for a personal computer.

Contributory infringement

Some may think it doesn't matter to programmers and software distributors because they can never infringe such a patent. Actually, they can: the legal theory is called "contributory" or "indirect" infringement. The idea is that the infringement as a whole requires hardware and software. But if the software plays an essential role in it, then publishing and selling such software would be a contributory (indirect) infringement of the aforementioned device patent. In practical terms, a contributory infringement comes with pretty much the same negative consequences as a direct one: the patent holder can seek an injunction and indemnification even against an indirect infringer.

So those guidelines are now critical. The law is the law, but it's not detailed enough for patent examiners to work with. The guidelines will determine the daily work of the patent office there. IPONZ will have to be careful in designing those guidelines because ultimately a court could determine that certain patents go against the law. The guidelines won't have the status of a law. A court will review the decisions taken by IPONZ (if applications or third parties appeal those decisions) and will then decide, case by case, whether the patent office interpreted the law correctly. Over time that would provide more clarity.

This means that it may actually take a number of years before it's clear whether or not New Zealand allows software patents. The IPONZ guidelines will certainly give an indication as to what that authority plans to do. Still it will remain to be seen exactly how the guidelines are applied, and what the courts ultimately say.

Possible results

I have to repeat it: that law isn't clear. Not even with the straightforward exclusion of software patents. It says that a computer program isn't a patentable invention. It doesn't say that methods that could be implemented in or by a computer program -- as well as in other forms, such as hardware -- aren't patentable. For the reasons I explained above, those are different things.

If you define a software patent as a patent on software (and only that), the law will probably take care of that problem. But a more pragmatic definition is that a software patent is a patent that can be infringed by software developers, publishers and users. The New Zealand bill doesn't take care of that question. This will depend on the guidelines and, ultimately, the courts.

How could they draw the line? The problem is that this can't be fine-tuned like the fishing quotas that two countries negotiate. It's a pretty polarized situation where there's either a far-reaching exclusion that abolishes large parts of the entire patent system, or you get, like in Europe, an exclusion on the surface that ultimately results in patents that read on software, even if those patent applications may be phrased in a way that doesn't suggest so to a layman.

Both approaches are possible outcomes when the objective is to distinguish "computer programs" from "embedded software":

• The abolitionist approach would be to accept patents on devices containing embedded software only if the technical contribution of the invention relates to an advancement in an applied natural science. For an example, a car brake controlled by a computer may use an algorithm to computate the most efficient use of the available braking power based on road conditions. Under a restrictive regime concerning software patents, the device as a whole would be patented only if the computer-controlled car brake uses what experts call "controllable forces of nature" in an innovative way resulting in a shorter braking distance. A better memory management algorithm within the car brake's controlling software would not be considered patentable.


• The liberal approach would also consider software running on a standard computer to be "embedded." In other words, as long as the software is outside the computer on some medium, it's considered software -- once you actually run it on a computer, the device as a whole could under certain circumstances be considered a technical invention containing embedded software. Also, this raises the question of whether operating system software is embedded software by definition (especially when considering that smartphone and PC operating systems are slightly different variants of general-purpose operating systems).

The jury is still out

At the start of this I mentioned Hartmut Pilch, the founder of the European anti-software-patent movement. When he saw a mutual friend of ours declaring (on his Facebook wall) victory based on the first reports from New Zealand, Hartmut wrote the following comments (which he authorized me to quote, with a clarification he later inserted):

"They will have to watch this very closely and we too. The backlash of the patent mass-producer lobby will be enormous and the opportunities for [IPONZ] and courts to misunderstand or otherwise dodge the lawmaker's instructions manifold.
One obvious way for the patent lawyers to twist the new law will be to interpret it as a call from the lawmaker to follow European i.e. EPO examples, with the added (false but effective) argument that TRIPs doesn't allow anything else."

TRIPs is the international Agreement on the Trade-Related Aspects of Intellectual Property Rights, and it requires patents to be "available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application."

As you can see, the devil is in the details. I'll continue to watch the process and will comment on it again sooner or later.

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